Sunday, January 22, 2017

For Attorneys Representing Community Associations: A Primer On FDCPA Class Actions And How To Avoid Them

(This post is adopted from the materials presented at the CAI Law Seminar in Las Vegas, Nevada on January 20, 2017)

Demystifying the FDCPA Class Action For HOA Attorneys

      Consumer attorneys have been filing FDCPA class actions against collection attorneys for decades, and the pace of those filings has increased sharply in the past ten years.  Attorneys who collect for national banks, debt buyers or other financial institutions have been regular targets in FDCPA class actions.  Attorneys who engage in collection work for community associations, however, have managed to remain off of the FDCPA class action radar.  This may now be changing as consumer attorneys are starting to focus more on your practice area.  This is another way of saying welcome to the FDCPA Class Action Party – you got here late.

       Any standardized statement that you make, or any standardized practice that you engage in, while collecting for your community association clients can be the target of an FDCPA class action.  As you evaluate your firm’s risk to these cases, you will want to review every consumer-facing interaction of the firm top to bottom, including any letter forms utilized, your standard telephone practices and voicemail messages, the complaints, pleadings, discovery requests, and the post-judgment collection practices you employ.  You will also want to evaluate all third party interactions that your firm engages in, such as contacts with relatives of the debtor, co-workers, interactions with consumer reporting agencies, and the procedures of the vendors that your firm employs, such as process servers. In some jurisdictions, even statements that you make to a court, or to your opposing counsel, may be governed by the FDCPA, so these practices should also be evaluated for compliance with the Act.

       If your firm is served with a class action complaint, you certainly must turn your attention to it immediately.  But there is no reason to panic.  There is a long road between the filing of a putative class action and the actual certification of a class by a court, and the plaintiff faces a lot of hurdles along the way. A class action lawsuit is only as strong as the claim that has been asserted by the class representative(s) who filed the case, and if their claim is not viable, the entire case fails.  Even if the class representative has a viable claim, that does not mean the case will necessarily be certified as a class action, or that it must be settled as one.  Class actions are the exception, not the rule.  The normal rule is that the aggrieved party is only allowed to pursue his or her own claims.  If that person can also meet all the requirements of Rule 23 of the Federal Rules of Civil Procedure, then the case may be certified as a class action.  But many putative class actions never make it that far.

Conducting Class Action Triage

      If an FDCPA class action complaint is served on your firm, you will want to do some immediate triage on the case to ensure that you are taking your defense in the right direction. Is the FDCPA claim asserted by the named plaintiff legally viable?  For cases that appear to be of marginal merit, your first instinct may be to file a motion to dismiss the complaint.  A motion to dismiss can be a great way to dispose of class action before it gets off the ground. You should consider the risks of filing such a motion, however, because in many jurisdictions, FDCPA claims can be decided by the Court as a matter of law.  You will ask the Court to rule in your favor as a matter of law on the motion, but are you prepared to lose this case as a matter of law in response to your motion? 

You should consider the entire account history of the named plaintiff and how that will impact the optics of the case. If the case optics are favorable for you, then how will they be best presented to the court?  You may be better off developing the facts of the claim and then presenting your defense in the form of a summary judgment motion, so the facts of the case can shine in your favor.

           What is the communication or practice that is being challenged by the plaintiff?  Is this a case that targets a core part of your firm’s business model, or a key part of your client’s business?  Or is this just a drafting mistake made by your firm that you need to correct anyway?  The answer to these questions will help you assess the true stakes of the case, and they can impact your decision on whether to seek to settle the case, or fight it, and how best to get to your desired goal.

         Finally, you should immediately begin your assessment of whether the case will be able to meet the Rule 23 requirements. What do you know about the class representative's account history and whether there are unique defenses to his claim?  You should pull his entire file to assess it for weaknesses in his ability to represent the class.  What do we know about the assigned judge?  It makes sense to see how this judge has ruled on FDCPA cases or other similar consumer protection cases in the past, and to determine the judge’s track record on certifying class actions of any type. 

Who is the attorney who filed the suit?  Some attorneys who file class actions are simply trying to leverage the case into a larger individual settlement, and they have no intention of following the case through to class certification.  Other attorneys have an established track record of pursuing and certifying FDCPA class actions.  Is this a dabbler, or a veteran FDCPA class action attorney? Your approach to the case may be significantly impacted by the identity of the attorney who filed it. 

Who is your defense attorney?  You should be working with an attorney who is experienced in defending FDCPA cases generally, but who also has experience defending class actions.  You should take an active role in your own defense, but resist the urge to represent yourself in an FDCPA class action unless the attorneys in your firm already have significant experience in this area.

Rule 23 Requirements

In many respects, a defendant is at a distinct advantage in an FDCPA class action.  From the moment you are served with the complaint, you have access to much of the evidence the plaintiff needs to pursue class certification.  You can immediately begin your assessment of the named plaintiff in the case, and you can start gathering evidence to defend against the plaintiff’s class certification motion, which likely will not be heard for several months.  The plaintiff will bear the burden of proof on the class certification motion, and the courts have made it clear that certifying a class is not a rubber stamp process. The Supreme Court has held that a district court must conduct a “rigorous analysis” of all the Rule 23 requirements. General Tel. Co. Of Southwest v. Falcon, 457 U.S. 147, 161 (1982). 

Plaintiff attorneys will often argue that the allegations of the complaint must be assumed true in a class certification motion, but this is not correct.  The Supreme Court has also observed that “class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action,” and that “it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.”  Falcon, 457 U.S. at 160; see also Powers v. Credit Mgmt. Servs., Inc., 776 F.3d 567, 569 (8th Cir. 2015) (district court abused discretion certifying FDCPA class “by failing to conduct rigorous analysis . . . of what the parties must prove that Rule 23 requires”) (citations and quotation marks omitted).

Numerosity

In order to prevail on a motion for class certification, plaintiff must show the class is “so numerous that joinder of all members is impracticable.”  See Fed. R. Civ. P. 23(a)(1). Generally this means at least 40 similarly situated class members, but “classes of fifteen or less are too small.”  Gomez v. Rossi Concrete, Inc., 270 F.R.D. 579, 588 (S.D. Cal. 2010); see also Ikonen v. Hartz Mountain Corp., 122 F.R.D. 258, 262 (S.D. Cal. 1988) (classes of twenty generally “are too small” and classes of forty or more are “numerous enough”).

The Court may make reasonable inferences about numerosity but the Court may not speculate that it exists.  Plaintiff needs to provide the court with evidence.  Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1267-68 (11th Cir. 2009) (district court’s “inference of numerosity” without supporting evidence “was an exercise in sheer speculation”); Smith v. City of Oakland, 2008 WL 2439691, *1 (N.D. Cal. June 16, 2008) (numerosity argument was “unsupported by anything other than ‘mere speculation’”); Thorne v. ARM, Inc., 2012 WL 3090039 (S.D. Fla. June 28, 2012) (no proof of numerous class members with section 1692d(6) claims).

Commonality

The Plaintiff bears the burden of proving that “there are questions of law or fact common to the class.”  See Fed. R. Civ. P. 23(a)(2). Commonality requires proof that class members have “suffered the same injury” and evidence their claims turn on a “common contention” that “must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011); Powers v. Credit Mgmt. Servs., Inc., 776 F.3d 567, 571-73 (8th Cir. 2015) (reversing certification of FDCPA class where, inter alia, to resolve plaintiff’s theory of liability, every state-court collection lawsuit needed to be reviewed).

Typicality/Adequacy

Plaintiff also bears the burden of proving typicality and adequacy in order to prevail on a motion for class certification.  Typicality means evidence that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.”  Fed.R.Civ.P. 23(a)(3).  Adequacy requires proof that named plaintiff and class counsel will “fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a)(4).

A defendant should immediately start gathering evidence regarding the named plaintiff and the particular circumstances of their account.  It is possible to upend an FDCPA class action if you can prove that the class representative is not typical of the rest of the class, or if the class rep would not be adequate.  See, e.g., Beck v. Maximus, Inc., 457 F.3d 291 (3d Cir. 2006) (remanding FDCPA class action to determine if BFE defense rendered class rep atypical and inadequate); Savino v. Computer Credit, Inc., 164 F.3d 81 (2d Cir. 1998) (denying certification in FDCPA case; class rep testified inconsistently on whether he received letter at issue); Dotson v. Portfolio Recovery Associates, 2009 WL 1559813 (E.D. Pa. June 3, 2009) (denying certification of FDCPA class action; unique defenses re: plaintiff’s credibility and cognitive disabilities). 

Predominance

Plaintiff also must prove “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” See Fed. R. Civ. P. 23(b)(3); see also Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 947 (9th Cir. 2009) (Rule 23(b)(3) not satisfied where proceeding as a class would “require a fact-intensive, individual analysis of each employee's exempt status”); Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1189 (9th Cir. 2001)(affirming denial of cert:  “[i]mplicit in the satisfaction of the predominance test is the notion that the adjudication of common issues will help achieve judicial economy (Citation).”).

Courts have denied class certification in FDCPA class actions when they conclude that resolution of the class claims would require a series of mini-trials regarding the particular circumstances of each account.  See, e.g., Lee v. Javitch, Block & Rathbone, 522 F. Supp. 2d 945, 958-59 (S.D. Ohio 2007) (Rule 23(b)(3) not satisfied: whether affidavit violated FDCPA “would depend upon individual circumstances that pertain to that class member.”); Corder v. Ford Motor Co., 283 F.R.D. 337, 343 (W.D. Ky. 2012) (individual inquiries needed to determine if trucks of class members were purchased “primarily for personal, family or household purposes”; noting “this court will not certify a class action under the premise that Ford will not be entitled to fully litigate that statutory element in front of a jury. . . .”); OnStar Contract Litig., 278 F.R.D. 352, 381 (E.D. Mich. 2011) (defendant could not be deprived of the right to litigate defenses to each class member’s claim to prove that cars were not leased primarily for “personal, family or household purposes”).

Letter claims

      Collection attorneys are particularly vulnerable to FDCPA class actions targeting collection letters, since there is no way to dispute the contents of a letter, and most collection letters are forms that are used over and over again.  There are countless FDCPA class actions and individual actions filed that have successfully challenged the contents of collection letters.  See, e.g., Janetos v. Fulton, Friedman & Gullace, LLP, 825 F.3d 317 (7th Cir. 2016) (granting summary judgment for plaintiff in FDCPA class action where defendant’s letter failed to specifically identify the name of the current creditor); Avila v. Riexinger & Assoc., LLC, 817 F.3d 72 (2d Cir. 2016) (reversing dismissal of FDCPA class action where defendant’s letter stated “current balance” but failed to disclose balance might increase due to interest and late fees); Roundtree v. Bush Ross, P.A., 304 F.R.D. 644 (M.D. Fla. 2015) (certifying FDCPA class action; initial demand letter allegedly overshadowed notice of debtor’s rights required by section 1692g); Hanson v. JQD, LLC, 2014 WL 3404945 (N.D. Cal. July 11, 2014) (denying motion to dismiss FDCPA class action complaint; defendant sent letters to class seeking to collect late fees and threatening foreclosure allegedly in violation of California law); McCarter v. Kovitz Shifrin Nesbit, 2015 WL 74069 (N.D. Ill Jan. 5, 2015) (certifying FDCPA class action where initial demand letter allegedly overshadowed the notice required by section 1692g of the Act).

Collection Complaint claims

       Collection complaints filed in state court, and other discovery or pleadings served in state court actions, have been a fertile ground for FDCPA class action attorneys.  These suits often argue that a pleading, or a state court collection practice, does not comply with state law, and because it does not comply with state law, it also violates the FDCPA.  If a client has provided the attorney with incorrect information, that can also lead to an FDCPA claim against the attorney.  There are numerous examples of FDCPA claims that are based on state court pleadings or state court collection practices.  See, e.g., Marquez v. Weinstein, Pinson & Riley, P.S., _F.3d_, 2016 WL 4651403 (7th Cir. 2016) (collection complaints violated FDCPA where they alleged debt would be “considered valid” if not disputed within 30 days of the date of the complaint); Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109 (9th Cir. 2014) (collection complaints violated the FDCPA where they identified incorrect “original” creditor that had made the loans to class members); McCollough v. Johnson, et al., 637 F.3d 939 (9th Cir. 2011) (service of requests for admission on pro se defendant seeking admissions that law firm knew were false violated FDCPA).

Third Party Disclosure Claims

      The FDCPA not only regulates the contents of all of your direct communications with consumers, it also regulates the interactions that you have with third parties while engaged in debt collection.  This includes conversations with third parties while seeking to collect, such as family members or co-workers, messages left with third parties (either live, or on voice mail), interactions with consumer reporting agencies, and the conduct undertaken by vendors that you may retain, such as process servers.  All of your third party practices should be evaluated to guard against such claims.  See, e.g., Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015 (9th Cir. 2012) (sending collection letters to work address “care of” the employer violated 1692c(b)); Halbertstam v. Global Credit and Collection Corp., 2016 WL 154090 (E.D.N.Y Jan. 12, 2016) (leaving a message with a third party with the collector’s callback information was improper third party disclosure in violation of FDCPA).

        Attorneys who collect for community associations have increasingly become targets for FDCPA class actions in recent years.  To reduce your exposure to these claims, a fresh look at all of your standardized practices and communications is well worth your time and effort.

Monday, August 22, 2016

The “Least Sophisticated Debtor” Is Getting More Sophisticated, And Has An Improved Memory Too

When collectors get sued in an FDCPA action, they face a steep uphill battle.  Courts apply the very pro-consumer “least sophisticated debtor” standard when evaluating a collector’s communications, and most violations of the Act are “strict liability” – meaning the debtor can win the case without proving the collector intended to violate the statute.  Recently, however, the “least sophisticated debtor” seems to have gotten more sophisticated, and his memory about his account and his past communications with the collector has improved.  

Courts have gradually demanded more of the “least sophisticated debtor” and have rejected suits based on hypertechincal misstatements and strained interpretations of the Act.[i]  Even when a collector’s statement is false or misleading, it must also be “material” or it does not violate the FDCPA.[ii]  And in a significant recent trend, courts have insisted that the challenged communication cannot be considered in a vacuum.  Even though the “least sophisticated debtor” standard is objective, that hypothetical debtor is charged with knowledge of the account’s history, and the communication at issue must be considered in the context of all other communications made to the plaintiff regarding the debt.[iii] 

A striking example of this trend is the Ninth Circuit’s decision in Davis v. Hollins Law Firm, _F.3d _, 2016 WL 4174747 (9th Cir. Aug. 8, 2016).  There, the collection law firm defendant communicated with plaintiff on a number of occasions, and each time the firm identified itself as a “debt collector,” as required by section 1692e(11) of the FDCPA.  Id. at *2.  In a subsequent voice mail message, however, the defendant’s employee stated only “Hello, this is a call for Michael Davis from Gregory at Hollins Law. Please call sir, it is important, my number is 866-513-5033. Thank You,” without specifically reciting he was a “debt collector.”  Id. at *3.  Although the trial court felt this was only a “de minimus” violation of section 1692e(11), it entered judgment in favor of Davis.  Id.  On appeal, the Ninth Circuit reversed.

The Court observed that the overarching purpose of the FDCPA “is to prevent debt collection actions that frustrate consumers' ability to chart a course of action in response to a collection effort.”  Id. at *1.  The Court applies “an objective standard” to decide whether the “least sophisticated debtor” would be misled by the communication.  Id. at *4.  The standard presumes “that the debtor has a basic level of understanding, which does not include bizarre or idiosyncratic interpretations of the communication at issue.  We also must avoid taking a hypertechnical approach.”  Id. (citations, quotation marks omitted).  

The Court emphasized that while the “least sophisticated debtor” standard protects consumers, it must be interpreted in a way that protects collectors from “bizarre or idiosyncratic” interpretations of collection communications.  The Court stated: “Even though the least sophisticated debtor may be uninformed, naive, and gullible, the debtor's interpretation of a collection notice cannot be bizarre or unreasonable.  Courts have carefully preserved the concept of reasonableness and have presumed that debtors have a basic level of understanding and willingness to read [the relevant documents] with care in order to safeguard bill collectors from liability for consumers' bizarre or idiosyncratic interpretations of collection notices.”  Id. at *1. (citations, quotation marks omitted).

 In addition, a collector’s statement must be “material” in order to be actionable under the FDCPA.  Id. at *2.  This means a false or misleading statement does not violate the FDCPA, unless it also frustrates the ability of the consumer to intelligently choose an appropriate response.  “Immaterial errors, by definition, would not frustrate a debtor's ability to intelligently choose an appropriate response to a collection effort.”  Id.  

With this in mind, the Ninth Circuit concluded the failure to expressly state the voicemail was from a “debt collector” did not violate section 1692e(11).  Significantly, the Court noted that “given the extent of the prior communications” between Davis and the law firm, and given “the context,” the voice mail message complied with the Act: “We conclude, given the extent of the prior communications, that the voicemail message's statement that the call was from "Gregory at Hollins Law" was sufficient to disclose to a debtor with a basic level of understanding that the communication at issue was from a debt collector.  Indeed, any other interpretation of Daulton's voicemail message would be bizarre or idiosyncratic. Given the context, the call was not false, deceptive, or misleading, and would not frustrate consumers' ability to intelligently chart a course of action in response to a collection effort.  Although Daulton's voicemail message did not expressly state that Hollins Law is "a debt collector," § 1692e(11) does not require a subsequent communication from the debt collector to use any specific language so long as it is sufficient to disclose that the communication is from a debt collector, as it was here.”  Id. at *4.
             
The decision in Davis continues an encouraging new trend for collectors.  Consumers cannot simply pluck a single communication out of a series of interactions with a collector and argue that, when read in isolation, a minor misstatement contained in it would be confusing to the least sophisticated debtor.  Rather, the challenged communication must be materially false or misleading when evaluated in the context of the entire account history and all prior communications relating to the debt. 






[i] See, e.g, Wahl v. Midland Credit Mgmt., Inc.,556 F.3d 643, 645 (7th Cir. 2009) (“The unsophisticated consumer isn’t a dimwit.  She may be uninformed, naive, and trusting, but she has rudimentary knowledge about the financial world and is capable of making basic logical deductions and inferences.”) (citations and internal quotations marks omitted); Campuzano-Burgos v. Midland Credit Mgmt., Inc., 550 F.3d 294, 299 (3d Cir. 2008) (“Even the least sophisticated debtor is bound to read collection notices in their entirety.”); Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360, 363 (2d Cir. 2005) (“[E]ven the least sophisticated consumer can be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care.”) (citations and internal quotation marks omitted).

[ii] See, e.g.,  Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1034 (9th Cir. 2010); Hahn v. Triumph Partnerships LLC, 557 F.3d 755 (7th Cir. 2009) (letter that accurately stated total amount due did not violate §§ 1692e or e(2)); Wahl, 556 F.3d at 646 (“If a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA - even if it is false in some technical sense.”); Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 596 (6th Cir. 2009).

[iii] See Wahl, 556 F.3d at 645-46 (the “unsophisticated consumer, with a reasonable knowledge of her account’s history, would have little trouble concluding that the ‘principal balance’ included interest charged by [the original creditor].”); McNair v. Maxwell & Morgan, P.C., 142 F. Supp. 3d 859, 871 (D. Ariz. 2015) (“ The least sophisticated debtor is charged with a reasonable knowledge of both communications between the debtor and the debt collector, and the account's history.”) (citations omitted); Goodrick v. Cavalry Portfolio Services, LLC, 2013 WL 4419321 (D. Ariz. Aug. 19, 2013) (“[E]ven the most unsophisticated debtor would not have been confused by Defendant's failure to say that Plaintiff's longstanding loan was continuing to accrue interest.”).

Saturday, May 21, 2016

Consent Order Compliance: Navigating The CFPB’s Unofficial “Rules” Governing Debt Collection

          The CFPB has entered into consent orders with major creditors, debt buyers and law firms during the past year relating to key areas of their collection practices.  The consent orders impose significant new requirements relating to data integrity, dispute handling, debt substantiation, debt sales, affidavit practices, and litigation practices.  The orders are not formal “rules” from the CFPB, nor are they “binding” on anyone, other than those identified in the orders.  In a speech given on March 9, 2016 to the Consumer Bankers Association, however, the CFPB Director, Richard Cordray, stated it would be “compliance malpractice” for other companies not to take “careful bearings” from the consent orders when assessing how to comply with the consumer protection laws.

          What unwritten “rules” can we glean from the string of consent orders that began in July 2015, with an order between the CFPB and Chase Bank USA, N.A., continued in September 2015, with orders against Encore Capital Group and Portfolio Recovery Associates, and culminated in orders with Frederick J. Hanna & Associates, Citibank, N.A., and Pressler & Pressler in January, February and April, 2016, respectively?  One theme that emerges is that the CFPB expects all participants in the collection space – creditors, debt buyers, and attorneys – to ensure that all other companies they deal with are using accurate and complete data, and are collecting in compliance with the consumer protection laws.

          Data Integrity, Debt Substantiation and Dispute Handling – The allegations in the consent orders reflect the CFPB’s deep skepticism with the way consumer disputes are handled, and the accuracy and integrity of the data creditors and collectors have used.  Although none of the allegations were proven to be true, and every one of the companies denied the allegations made by the CFPB when agreeing to the orders, the CFPB claimed the following:

                     •         Creditors allegedly failed to maintain accurate data about their own accounts or the accounts they acquired from other entities, and failed to properly investigate consumer disputes. This allegedly led to the sale of accounts with inaccurate balance or APR data, and the sale of accounts that were not owed, because they were opened as a result of fraud, the account holder was deceased or in bankruptcy, or the account had been settled or paid in full.

•         Debt buyers allegedly purchased accounts with inaccurate or unreliable balance information.  They allegedly signed purchase and sale agreements that disclaimed the accuracy of data sold, and limited the availability of media they could obtain from the sellers.  When media was obtained, debt buyers allegedly did not review it to compare it with the electronic data they had been provided, nor did they require their law firms to do so before filing suit.  Debt buyers allegedly continued to buy from sellers who had previously provided them with bad data, or who had promised to supply account documents but had been unable to do so.  When consumers disputed debts outside of the 30-day validation period, debt buyers allegedly made consumers prove they did not owe the debts, and did not obtain or review account documentation to investigate the disputes.  Nor did debt buyers inform their attorneys if accounts had been disputed.

          To address these concerns, the CFPB consent orders imposed the following “rules” relating to data integrity, debt substantiation and dispute handling:

•         Creditors agreed to adopt procedures to ensure that they sell accurate documents and account information to debt buyers, and that sale contracts prohibit the buyers from collecting unless sufficient account level documentation had been provided.  Future debt sales must include twelve to eighteen months of account statements as well as a copy of the terms and conditions that apply to the accounts sold.  Accounts with unresolved disputes should not be sold, and information about recent disputes and how those disputes were resolved must be provided to the buyer.

•         Debt buyers agreed to conduct a heightened review of account documentation with respect to 1) any accounts that have been disputed verbally or in writing, 2) any accounts purchased as part of a portfolio that contains “unsupportable or materially inaccurate information,” or 3) any accounts purchased pursuant to an agreement that lacks “meaningful and effective” representations regarding the accuracy and validity of the accounts, or the availability of media.  The review must be of “Original Account Level Documentation” (“OALD”) reflecting the charge-off or judgment balance, and OALD is defined as “(a) any documentation that a Creditor or that Creditor's agent (such as a servicer) provided to a Consumer about a Debt; (b) a complete transactional history of a Debt, created by a Creditor or that Creditor's agent (such as a servicer); or (c) a copy of a judgment, awarded to a Creditor or entered on or before the Effective Date.” If the claimed amount the debt buyer seeks to collect is higher than the charge off balance, the debt buyer must also review an explanation of how the amount was calculated and why it is authorized by the agreement or law.

                     •         Attorneys agreed not to threaten suit or initiate suit for a debt buyer without possessing of OALD reflecting the customer’s name, last four digits of the account number at charge off, the claimed amount (excluding post charge off payments), and, if suing under a breach of contract theory, the terms and conditions relating to the account.  In addition, attorneys must possess a certified or otherwise properly authenticated bill of sale or other document evidencing transfer of the debt to each owner, which must include a “specific reference to the debt being collected” and any one of the following:  1) a document signed by the consumer evidencing the opening of the account; or 2) OALD reflecting a purchase, payment, or other actual use by the consumer.

          Affidavit And Litigation Practices – The allegations of the consent orders also reflected the CFPB’s criticisms of the affidavit and litigation practices employed by creditors, debt buyers and attorneys.  Again, although none of these allegations were proven true, the CFPB claimed the following:

•         Creditors were accused of using affidavits signed by individuals who lacked personal knowledge of the record-keeping practices they described, or who had not actually reviewed the business records they referenced. Affidavits were allegedly notarized without properly administering an oath or witnessing the signature.  Dates and signatures were allegedly inserted after affidavits had been notarized, and dates were allegedly changed after affidavits were signed.  Creditors allegedly obtained judgments against consumers for incorrect amounts, and failed to promptly notify consumers or move to vacate judgments.

•         Debt buyers allegedly used affidavits which claimed personal knowledge of the debt or of the seller’s account-level documentation, where the affiant had only reviewed computer screens of data.  Affidavits allegedly made false representations that the generic terms and conditions specifically applied to the account.  Affiants allegedly claimed they had knowledge of account agreements but those agreements could not be located.  Debt buyers allegedly used seller affidavits which falsely stated that “hard copy” records had been reviewed by the seller’s affiants.  Debt buyers referred too many accounts to law firms staffed with too few attorneys, did not require those attorneys to review OALD before filing suit, did not tell the attorneys that the sellers had disclaimed the accuracy of the account data or had put limits on the availability of documentation.

•         Attorneys allegedly sued for debt buyers who lacked chain of title information, and without knowing if media would be made available or if the sellers had disclaimed the accuracy of the data provided, used affidavits when the attorney knew or should have known the affiant lacked personal knowledge, filed too many lawsuits and spent too little time reviewing account records, relied too much on computers and non-attorney staff to determine which accounts were suit-worthy and whether the amount due, interest, fees, date of last payment, and venue were correct.

          To address these concerns, the consent orders imposed the following “rules” relating to affidavit and litigation practices: 

•         Creditors must use affidavits with facts supported by “Competent and Reliable Evidence,” (“CRE”) which is defined as “documents and/or records created by Respondent in the ordinary course of business, which are capable of supporting a finding that the proposition for which the evidence is offered is true and accurate, and which comport with applicable laws and court rules.”  All affidavits must be based on personal knowledge of the affiant, who must actually review the referenced records and the affidavit for accuracy, and affidavits may not misrepresent the date of execution, the amount owed, or that the debt is supported by CRE.  Creditors must have written standards for training and quality control of affiants.  They may not pay affiants for volume and they must employ sufficient affiants to handle the workload.


•         Debt buyers may not use affidavits that falsely state the affidavit was executed in the presence of a notary, that generic documents actually apply to the consumer’s account, that documents have been reviewed when they have not been, or that the affiant has reviewed the affidavit when he has not.  Debt buyers may not file a collection lawsuit unless they posses OALD reflecting the customer’s name, last four digits of account number at charge off, the claimed amount (excluding post charge-off payments), and if suing for breach of contract, the terms and conditions for the account.  If the claimed amount in the suit is higher than the charge-off balance, the debt buyer must also be prepared to explain for how the increase was calculated and why it is permissible by contract or law. Debt buyers also must possess a certified or properly authenticated bill of sale or other document evidencing transfer of the debt to each owner of the account, which must include a “specific reference to the debt being collected,” plus either of the following: 1) a document signed by the consumer evidencing the opening of the account; or 2) OALD reflecting a purchase, payment or other actual use by the consumer.

•         Attorneys may not submit an affidavit to any court that falsely represents personal knowledge of the validity, truth, or accuracy of the character, amount or legal status of any debt; falsely represents the affidavit has been notarized if not executed in the presence of a notary; contains an inaccurate statement, including that attached documentation relates to the specific consumer; misrepresents the affiant's review of OALD or other documents; or falsely states the affiant has personally reviewed the affidavit.  Attorneys may not file suit against a consumer unless they have logged into their software system to create a record they have accessed the account, and have reviewed OALD showing name, last four digits of account number at charge-off, the claimed amount (excluding any post charge off payments), and if suing under a breach of contract theory, the applicable terms and conditions.  Attorneys must review a certified or properly authenticated bill of sale or other document evidencing transfer of the debt to each owner which must include a “specific reference to the debt being collected”, plus any one of the following:  1) a document signed by the consumer evidencing the opening of the account; or 2) OALD reflecting a purchase, payment or other actual use by the consumer.  Attorneys must also confirm, using “methods or means proven to be historically reliable and accurate,” that the statute of limitations has not expired, that the debt is not subject to bankruptcy, and that the identity of the consumer, address, and venue are correct.

          Navigating the unwritten “rules” from consent orders – It is worth repeating that none of the factual allegations made by the CFPB were ever proven to be true, and the consent orders are not binding on any company not identified in the orders.  Having said this, any company that wants to take “careful bearing” of the orders as suggested by Director Cordray might ask some of the following questions about the accounts it handles, or that are being handled for it:

What is your criteria for identifying disputes and are you giving disputed accounts any heightened scrutiny or other special handling?
Are you training your staff to correctly identify disputed accounts and to promptly report them?
Has the seller disclaimed the accuracy of the data sold?
Has the seller restricted the availability of media?
Has the seller failed to provide media when asked?
Has the media supplied by the seller conflicted with the electronic data the seller supplied?
Are there certain portfolios that contain a high percentage of problem accounts?
Do you possess OALD reflecting the claimed amount, as well as OALD reflecting a purchase, payment, or actual use by the consumer?
Has the affiant reviewed OALD?
What have you done to confirm the affiant has personal knowledge of the facts attested to? 
Have you confirmed the affiant reviewed the affidavit and that it was executed in the presence of a notary?
Have you confirmed the attachments relate to the consumer’s account?
Has a record been created of the steps that were taken to verify the accuracy of the affidavits submitted to the court?
What is the proper role of attorneys, non-attorneys, and computers in preparing the complaint?
Should there be a maximum number of accounts, complaints, or letters that an attorney can review and approve in one day?
What information and documents have been provided to support the factual allegations of the complaint?
What documents have been reviewed to confirm the information supplied supports the factual allegations made in the complaint?
What investigation have you done to confirm the correct consumer is being sued, in the right venue, and that statute of limitations has not run?
What has been done to document attorney involvement?


Tuesday, December 15, 2015

Is The CFPB’s Collection Litigation Strategy Consumer Friendly?

   Collection attorneys who are nervous about the risks involved in handling consumer accounts can relax.  The CFPB has devised an ideal litigation strategy for you to follow.  Let’s take a closer look at what the Bureau wants you to do to make sure it dovetails with the CFPB’s consumer protection goals.

          First, if your client plans to place accounts with your office, you should ensure the client has access to or possesses all the evidence needed to file suit and win the case at trial.  Next, as soon as an account is placed with your office, you should sue the consumer quickly, before the expiration of the shortest possible statute of limitations period.  Finally, when you sue the consumer, you better mean business.  A dismissal may be viewed by the CFPB as an admission of guilt by your firm and your client – an acknowledgment that you never had sufficient evidence to support your claims, and that you did not intend to pursue the case through judgment. 

          In sum, in order to protect consumers, the CFPB wants you to follow this litigation strategy:  quickly sue all accounts placed with your office, and take every contested case to trial to get a judgment against the consumer. This description is too sarcastic, you say?  You may be right.  But let’s examine the positions taken by the CFPB to see if this summary of its ideal litigation strategy is accurate.

          There is no question the CFPB wants you to sue consumers quickly. The Bureau believes that filing a lawsuit after the statute of limitations expires violates the FDCPA and the Consumer Financial Protection Act.  See, e.g., CFPB Amicus Brief in Delgado v. Capital Management Services, LP, filed August 14, 2013.  Any attorney who files suit after the limitations period has run puts the attorney and the client at risk.  If there are two possible limitations periods that might apply to your client’s claims, the wisest path is to select the shorter of the two.  To avoid risk, attorneys must sue consumers faster. 

          The CFPB has also been openly hostile to the practice of dismissing collection lawsuits.  In the Spring 2014 Supervisory Highlights, it said the filing of a lawsuit is a “representation” to a consumer that the company intends to establish that the consumer owes the amount claimed in court filings.  See CFPB Spring 2014 Supervisory Highlights, p. 14.  If the case is dismissed after the consumer answers, the CFPB says the dismissal may be evidence that the company made a false representation when it filed suit.  Id.  This anti-dismissal mantra was repeated at page 19 of the CFPB 2015 Annual Report To Congress On The FDCPA.  Given this, whenever an attorney dismisses a consumer lawsuit, he may be putting himself or his client at risk. 

          The CFPB also wants attorneys to ensure that their clients have sufficient documents to prevail in the lawsuits they file against consumers.  In its July 2014 suit against the Frederick J. Hanna & Associates law firm, the CFPB faulted the firm for filing lawsuits for debt buyers who allegedly did not have “basic documents, such as the original contracts” or chain of title information, and for submitting affidavits signed by persons who lacked personal knowledge of their contents.  See CFPB v. Frederick J. Hanna & Associates Complaint, ¶¶ 20, 23 The Hanna firm allegedly did not confirm whether documentation to support the client’s claims would be made available, and did not review the clients’ purchase and sale agreements for disclaimers regarding the accuracy or validity of the debts.  Id. ¶ 24.  According to the CFPB, the firm “routinely” dismissed cases, and did so at a higher rate when the consumer retained an attorney.  Id.  ¶ 22.  The CFPB says these alleged practices violated the FDCPA and the Consumer Financial Protection Act.  Id.  ¶¶ 28-45.

          All of these themes were confirmed in the CFPB’s September 2015 Consent Orders with Encore Capital Group, Inc. and Portfolio Recovery Associates, LLC.  The Bureau faulted both companies for buying portfolios where the seller had placed restrictions on the availability of media.  See Encore/CFPB September 2015 Consent Order, ¶¶ 32-35; PRA/CFPB September 2015 Consent Order, ¶¶ 29-32.  Encore was accused of using “scattershot litigation” tactics, including filing suit without verifying that account-level documentation existed to support the claims.  See Encore Consent Order, ¶ 51.  Both companies were criticized for misrepresenting their intent to “prove the debt, if contested” – and this allegation was based in part on their filing lawsuits without sufficient documentation.  See Encore Consent Order, ¶¶ 48-53; PRA Consent Order, ¶ 67-70.  Both companies allegedly threatened to sue, or actually filed suit, on claims where the statute of limitations had expired.  See Encore Consent Order, ¶¶ 65-69; PRA Consent Order, ¶¶ 56-59.  Both are now required to possess detailed documentation and information before filing suit, presumably to ensure they can pursue cases through judgment even if contested by the consumer.   See Encore Consent Order, ¶ 129; PRA Consent Order, ¶ 116.

          What message should collection attorneys glean from all of this CFPB activity?  Arguably, the Bureau is telling attorneys:  “Go Big or Go Home.”  To minimize risk, you should not accept new placements unless your clients have access to the documents and witnesses needed to prove the claim at a contested trial.  Once an account is placed with your office, sue the consumer quickly to avoid risks with the statute of limitations.  If the consumer files a response, do not dismiss the case – litigate the case through trial and get a judgment.  Follow all of these steps and you can help the CFPB achieve its consumer protection goals.

Tuesday, November 10, 2015

Will You Know A “Dispute” When You See It?

            How can a collector accurately identify, track, and respond to consumer disputes when the FDCPA does not define what a “dispute” is?  When Supreme Court Justice Potter Stewart famously stated, “I know it when I see it,” in Jacobellis v. Ohio, 378 U.S. 184 (1964), he was not talking about consumer disputes.  But his catch phrase succinctly described how it can be a struggle to define common words in different contexts.  How exactly do you define a consumer “dispute”?  Are you sure you will know a dispute when you see it?
          Collectors have to recognize when a consumer is disputing a debt so they can react appropriately.  But so far, nobody has managed to define what a “dispute” is under the FDCPA.  Consider for example whether any of the following statements qualify as a “dispute” by the consumer:
                     •         “I don’t remember this account.”
                     •         “I think I paid that one off.”
                     •         “The balance doesn’t sound right because I think my credit limit was only $500.”
           •         “I don’t recognize the name of your firm or your client.”
                     •         “Do you have any proof that I owe this?”
                     •         “I’m not going to talk to you until you send me documents.”
           •         “My ex-husband agreed to pay this as part of our divorce.”
                     •         “I think my insurance company was supposed to cover this.”
                     •         “I hired a debt consolidator who agreed to pay all my debts.”
                     •         “The television that I bought with the card never worked.”
                     •         “Stop calling me about this account.”
          A consumer advocate might argue that some or all of the statements listed above qualify as a “dispute” by a consumer, but a collector could reasonably conclude that none are.  Some of the statements express uncertainty about whether the debt is due, or about the amount owed.  Others raise questions whether someone else agreed to pay the debt.  Some ask the collector for more information; others ask the collector to stop further contact.  But none of these statements provide the collector with specific information indicating why the consumer believes he may not be responsible for payment. 
          The context of these statements is also important.  Were these comments made during the course of a collection phone call, or in a letter sent to the collector?  What else was said during the call or in the letter?  How did the phone call end?  What else, if anything was included with the letter?
          It is strange that Congress never bothered to define the term “dispute” in the FDCPA, given the important role that disputes play in the statute’s framework.  Collectors must notify consumers in writing of their right to “dispute” a debt, or any portion thereof, with their initial communication.  See 15 U.S.C. § 1692g(a).  Collection activity during the 30-day period after the notice is sent may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt.  Id. § 1692g(b). 
          Collectors must treat disputed debts differently.  If a consumer verbally disputes a debt within thirty days of receiving the validation notice, the collector is not entitled to assume the debt is valid.  Id. § 1692g(a)(3).  If the dispute was in writing and within thirty days of receipt of the validation notice, the collector must cease all further collection activity until it mails validation of the debt to the consumer.  Id. § 1692g(b). 
          Even if the dispute is received outside of the thirty-day validation period, a collector violates the Act if it communicates or threatens to communicate “credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.” Id. § 1692e(8).  Where a consumer owes more than one debt and makes a single payment, the collector cannot apply the payment to any disputed debt.  Id. § 1692h. 
          In short, the word “dispute” appears in numerous places throughout the FDCPA, and the existence of a “dispute” imposes important obligations on collectors, but Congress never tells us what exactly qualifies as a “dispute” in these contexts. 
          Congress was more clear about disputes when it wrote the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (the “FCRA”).  Under the FCRA, a furnisher of credit information must conduct a reasonable investigation of a direct dispute received from a consumer if it relates to 1) the consumer's liability for the debt (e.g., identity theft, fraud); 2) the terms of the account (e.g., the balance, payment amount); 3) the consumer's performance or other conduct concerning an account (e.g., current payment status, date, or amount of a payment), or 4) other information in a consumer report that bears on the consumer's creditworthiness.  See 16 C.F.R. § 660.4(a).  A furnisher may deem a dispute to be “frivolous or irrelevant,” however, if the consumer fails to provide the furnisher with sufficient information to investigate.  See 15 U.S.C. § 1681s–2 (a)(8)(F)(i)(I); 16 C.F.R. § 660.4(f).  Given that the FCRA and the FDCPA are both part of the Consumer Credit Protection Act, it is reasonable to believe Congress would want a “dispute” to be defined the same way, and handled by collectors in the same way, under the FCRA and the FDCPA. 
          Consumer disputes are also a main focus of the CFPB, so maybe the Bureau will ultimately define what a “dispute” is.  The Bureau gathers information about consumer complaints, including complaints about collectors’ alleged failure to properly handle consumer disputes, and publishes reports about them to Congress.  See Fair Debt Collection Practices Act, CFPB Annual Report 2015
          The CFPB has also imposed new requirements for handling disputed debts in recent enforcement proceedings.   The September 2015 consent orders with Encore Capital Group, Inc. and Portfolio Recovery Associates, LLC provide that if a debt is “disputed” by a consumer, Encore and PRA must take additional steps to substantiate the debt before proceeding with collection.  See Encore Order, ¶ 129, PRA Order, ¶ 116.  The CFPB also required Encore to notify the collection agencies and law firms it retains whenever a debt has been previously disputed by the consumer.  See Encore Order, ¶ 134. 
          If the CFPB ultimately promulgates debt collection rules, it may finally provide a definition of a “dispute” under the FDCPA.  In numerous questions posed by the CFPB in its Advanced Notice Of Proposed Rulemaking relating to potential rules under the FDCPA, the Bureau strongly suggests it is considering rules that would define a “dispute” and further regulate the handling of disputes by collectors.  See ANPR, Questions Nos. 2, 5, 20, 31-53.
          At this point, it is unclear when the CFPB will publish rules, or whether those rules will include a clear definition of what a “dispute” is.  Until then, collectors will have to refine their own definition of disputes so they can implement procedures for tracking and responding to them.


            

Monday, March 23, 2015

Is Your Envelope “Benign” Under The FDCPA?

            The FDCPA prohibits a collector from placing “any language or symbol” on a debt collection envelope, other than the collector’s address.  That’s right, you read that sentence correctly – absolutely nothing can be safely placed on the envelope, except for the collector’s address.  A collector cannot even put its own name on the envelope, unless the collector is certain the name does not indicate that the company is in the debt collection business. 

            There has been a lot of litigation relating to envelopes recently, but section 1692f(8) of the FDCPA, which regulates collection envelopes, is not new.  It has been a source of frustration for collectors for decades.  Fortunately, some courts have recognized that a strict application of section 1692f(8) may lead to absurd results, and have held that “benign language” on an envelope does not violate the FDCPA.  Not every court has adopted the “benign language” exception to section 1692f(8), however, and it is not always easy to predict what language will fit within the exception.  How do you know if your envelope is “benign” or not?

            Section 1692f(8) of the FDCPA prohibits a collector from using “any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.”  15 U.S.C. § 1692f(8).  By its plain language, the only “language or symbol” that can appear on the envelope is the collector’s address.  The collector’s name can only be on the envelope if the name does not indicate the company is in the collection business.  Courts have held that collectors may violate section 1692f(8) simply by placing their own name on the envelope.  See, e.g., Keasey v. Judgment Enforcement Law Firm, PLLC,  2014 WL 1744268, **3-4 (W.D. Mich. Apr. 30, 2014) (section 1692f(8) violated by use of name “Judgment Enforcement Law Firm” on envelope); Rutyna v. Collection Accounts Terminal, Inc., 478 F. Supp. 980, 982 (N.D. Ill. 1979) (envelope stating company name “COLLECTION ACCOUNTS TERMINAL, INC.” violated section 1692f(8): “The purpose of this specific provision is apparently to prevent embarrassment resulting from a conspicuous name on the envelope, indicating that the contents pertain to debt collection.”); but see Simmons v. Med-I-Claims, 2007 WL 486879, *9 ( C.D. Ill. Feb. 9, 2007) (rejecting as “frivolous” plaintiff’s claim that use of name “Med-I-Claims” on envelope violated section 1692f(8)).

            Some courts have recognized that section 1692f(8) was enacted to prevent embarrassment to consumers, and language or symbols that do not disclose the collection purpose of a letter are “benign” and do not violate the statute.  For example, in Strand v. Diversified Collection Servs., Inc., 380 F.3d 316 (8th Cir. 2004), plaintiff argued that defendant’s envelopes violated section 1692f(8) because they “included the terms ‘D.C.S., Inc.’ above the return address, ‘PERSONAL AND CONFIDENTIAL’ in capital boldface type, and ‘IMMEDIATE REPLY REQUESTED’ in capital reverse typeface” along with an image of the company’s logo “depicting a grid with an upward-pointing arrow and the initials ‘DCS.’”  Id. at 317.  The Court stated: “We first observe Ms. Strand invites us to read § 1692f(8) to create bizarre results likely beyond the scope of Congress's intent in enacting the statute.  Under her literal reading of § 1692f(8), a debtor's address and an envelope's pre-printed postage would arguably be prohibited, as would any innocuous mark related to the post, such as ‘overnight mail’ and ‘forwarding and address correction requested.’”  Id. at 318.  The Strand Court relied upon legislative history indicating that section 1692f(8) was designed to prevent disclosure that the letter pertains to debt collection as well as FTC Staff Commentary stating that words like “Personal” or “Confidential” on an envelope would not violate the statute.  Id. at 319.  The Court held, as a matter of law, “the language and symbols were benign because they did not, individually or collectively, reveal the source or purpose of the enclosed letters.”  Id. 

            Consistent with Strand, other courts have recognized the “benign language” exception to section 1692f(8).  See, e.g., Goswami v. American Collections Enter., Inc., 377 F.3d 488, 492 (5th Cir. 2004) (envelope with half-inch thick blue bar across front and words “Priority Letter” in white did not violate section 1692f(8), because subsection “only prohibits markings on the outside of envelopes that are unfair or unconscionable, such as markings that would signal that it is a debt collection letter and tend to humiliate, threaten, or manipulate debtors.”); Johnson v. NCB Collection Servs., 799 F. Supp. 1298, 1305 (D. Conn. 1992) (no violation to use terms “Revenue Department” and “Personal and Confidential” on envelope: “Nothing in the innocuous designation of ‘Revenue Department’ distinguishes the letter from other permissible forms of correspondence such as direct billings from creditors for debts not yet past due. The mere use of the departmental designation ‘Revenue Department’ in the return address of a collection notice is simply not the type of abusive collection practice that the FDCPA was intended to reach.”); Lindbergh v. Transworld Sys., Inc., 846 F. Supp. 175, 180 (D. Conn. 1994) (envelope with symbol comprised of blue stripe and the word “TRANSMITTAL” did not violate section 1692f(8), because symbol did not pertain “to debt collection in any way” and the “mechanical interpretation of section 1692f(8)” would not comport with the structure or purpose of the FDCPA); Masuda v. Thomas Richards & Co., 759 F. Supp. 1456, 1466 (C.D. Cal. 1991) (envelope containing notice that theft of mail or obstruction of delivery is federal crime, as well as words “PERSONAL & CONFIDENTIAL” and “Forwarding and Address Correction Requested” did not violate section 1692f(8): “Congress' interest in protecting consumers, however, would not be promoted by proscribing benign language.”).

            It is risky to rely on the “benign language” exception.  Many courts have never formally recognized the exception, or have held that the words or symbols used by the collector did not fall within it.  For example, in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014), the Court held the collector violated section 1692f(8), because the debtor’s account number was visible through the window of the envelope.  The Court declined to adopt the “benign language” exception, noting that the language of section 1692f(8) was “unequivocal.”  Id. at 303.  Even if a “benign language” exception existed, however, the Court held disclosure of the account number was not benign, because it “implicates a core concern animating the FDCPA – the invasion of privacy.”  Id.  The Douglass Court summarized:  “The account number is a core piece of information pertaining to Douglass's status as a debtor and Convergent's debt collection effort.  Disclosed to the public, it could be used to expose her financial predicament.  Because Convergent's disclosure implicates core privacy concerns, it cannot be deemed benign.”  Id. at 303-04; see also Peter v. GC Servs. L.P., 310 F.3d 344, 352 (5th Cir. 2002) (envelope containing words “US Department of Education. . . . Official Business.  Penalty for Private Use $300" violated section 1692f(8):  “We do not need to reach the issue of whether § 1692f(8) implicitly includes an exemption for benign language, since the Defendants' impersonation of the Department of Education is certainly not benign.”); Kryluk v. Northland Group, Inc., 2014 WL 6676728, *11 (E.D. Pa. Nov. 21, 2014) (granting consumer leave to amend complaint to add section 1692f(8) claim where account number was visible through envelope’s window); Voris v. Resurgent Capital Servs., LP, 494 F. Supp. 2d 1156 (S.D. Cal. 2007) (envelope with words “return service requested” and “You are Pre-approved* See conditions inside” may violate section 1692f(8) by causing debtor to discard envelope without reading section 1692g notice inside:  “[I]f printed language on an envelope causes a debtor damage, loss of rights, or other harm, the language is not benign.”).

            Have you looked closely at your collection envelopes lately?  Given the renewed focus on section 1692f(8) claims, now is probably a good time to ensure that your envelopes do not have any language or symbol on them that may run afoul of the Act.