tag:blogger.com,1999:blog-78813353993855175732024-03-08T04:49:51.900-08:00FDCPA Defense BlogCase law developments and information of interest to FDCPA defendantsTomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.comBlogger52125tag:blogger.com,1999:blog-7881335399385517573.post-2101988332360639382020-01-08T16:22:00.001-08:002020-01-08T16:35:28.924-08:00Sixth Circuit Holds Consumer Lacked Standing To Pursue “Meaningful Attorney Involvement” Claim<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">If
a law firm sends a letter seeking to collect the correct amount, from the
correct consumer, on behalf of the correct creditor, can the consumer still
sue, claiming the firm violated the FDCPA because no attorney was “meaningfully
involved” in preparing the letter?<span style="mso-spacerun: yes;"> </span>The
Sixth Circuit recently held the answer is “no” in <i>Buchholz v. Meyer Njus
Tanick,P.A.,</i> _F.3d_, 2020 WL 35431<span style="mso-spacerun: yes;"> </span>(6th
Cir. 2020), because the consumer suffered no “concrete injury” as a result of
the letter and therefore lacked standing to pursue the claim in federal
court.<span style="mso-spacerun: yes;"> </span>The <i>Buchholz</i> decision should
provide powerful support for creditors rights attorneys who are fighting
against “meaningful involvement” claims.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
plaintiff in <i>Buchholz</i>, a Michigan resident, received two letters from a
Minneapolis-based law firm, defendant Meyer Njus Tanick, PA (“MNT”) regarding
accounts he owed to Synchrony Bank. <i>Id</i>.
at *1. Both letters allegedly included a
“pre-populated or stock signature” of Karna Harms, who plaintiff claimed was
MNT’s only Michigan-based attorney. <i> </i><i>Id.</i>
Buchholz alleged that given the high volume of letters processed by Harms and
the other MNT attorneys, no attorney could engage in a “in a meaningful review of
the underlying accounts prior to determining whether to send the collection
letters.” <i>Id.</i> According to Buchholz, sending the letter on
firm letterhead created the impression that an attorney “has reviewed the file
and made the professional considered determination to send the letter.” <i>Id.</i> Importantly, however, Buchholz did not
claim these were not his accounts, or that the letters contained in any
inaccuracies. <o:p></o:p></span></div>
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<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
Sixth Circuit affirmed the district court’s decision to dismiss the complaint
for lack of subject matter jurisdiction, because Buchholz lacked standing under
Article III of the Constitution.<span style="mso-spacerun: yes;"> </span>As the
Court noted: “Not all disputes have a home in federal court.<span style="mso-spacerun: yes;"> </span>Article III limits the judicial power to
resolving actual ‘Cases’ and ‘Controversies,’ not theoretical questions.”<span style="mso-spacerun: yes;"> </span><i>Id</i>. at *2.<span style="mso-spacerun: yes;">
</span>Plaintiffs are required to show they suffered a “concrete” injury, i.e.,
an injury that is “real and not abstract.”<span style="mso-spacerun: yes;">
</span><i>Id.</i><span style="mso-spacerun: yes;"> </span>That injury must also be
“fairly traceable” to the challenged conduct of the defendant.<span style="mso-spacerun: yes;"> </span><i>Id. </i><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
<i>Buchholz</i> Court rejected the argument that plaintiff had standing to sue because
he allegedly suffered undue “anxiety” that he would be sued if he did not
promptly pay.<span style="mso-spacerun: yes;"> </span><i>Id.</i> at *5.<span style="mso-spacerun: yes;"> </span>“In other words, Buchholz is anxious about
the consequences of his decision to not pay the debts that he does not dispute
he owes.”<span style="mso-spacerun: yes;"> </span><i>Id</i>. at *6.<span style="mso-spacerun: yes;"> </span>This type of “self-inflicted” injury does not
confer standing.<span style="mso-spacerun: yes;"> </span><i>Id. </i><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
Sixth Circuit also rejected the notion that Buchholz had standing to sue based
the defendants’ alleged “procedural violation” of failing to conduct a
meaningful attorney review before sending the letters.<span style="mso-spacerun: yes;"> </span>The Court stated:<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">"[E]ven
assuming MNT violated the statute by misrepresenting that an attorney had
reviewed Buchholz’s debts, we find ourselves, like we were in Hagy, unable to identify
any harm to come from that violation. Buchholz gives us no reason to believe he
did not owe the debts. He does not allege, for example, that the statute of
limitations has expired, that res judicata precludes MNT from collecting the
debts, or even that MNT miscalculated the amounts he allegedly owes. . . .We
are at a loss for how MNT’s letters caused any harm, much less harm that
Congress intended to prevent when it enacted the FDCPA."<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;"><i>Id</i>.
at *9.<span style="mso-spacerun: yes;"> </span>In sum, because Buchholz was
unable to show he suffered the type of harm that Congress tried to prevent when
it passed the FDCPA, or harm that was cognizable at common law, the Sixth
Circuit held the district court had correctly dismissed his complaint for lack
of Article III standing. <i>Id</i>. at *10.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; mso-bidi-font-size: 11.0pt;">The
<i>Buchholz </i>decision contains a well-reasoned application of the Supreme Court’s
Article III jurisprudence, but perhaps more-importantly, the outcome of the
case just makes sense.<span style="mso-spacerun: yes;"> </span>The FDCPA does
not give a consumer a license to sue the attorney retained by his creditor just
because the consumer disagrees with the procedure they think the attorney used
when preparing a letter for his client.<span style="mso-spacerun: yes;">
</span>If the contents of the letter are accurate, then the FDCPA has not been
violated. Well done, Sixth Circuit.<span style="mso-spacerun: yes;"> </span>Well
done.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com0tag:blogger.com,1999:blog-7881335399385517573.post-90179568333596678892019-04-17T10:25:00.000-07:002019-04-17T10:25:47.261-07:00Why Every Lawyer And Client Should Be Fighting To Stop The "Meaningful Attorney Involvement" Doctrine From SpreadingFew things are more fundamental in the law than the principle that a lawyer owes a duty of loyalty to the client, a duty to be vigorous advocate within the bounds of the law, and a duty to maintain the client’s confidences and preserve the attorney-client privilege. Clients expect this of their attorneys, as they should. These core legal principles have slowly been under attack, however, by an amorphous creation called the “meaningful attorney involvement” doctrine.<br />
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For the lawyers unfamiliar with this doctrine, imagine a scenario where your client’s adversary could sue you directly, claiming you were not “meaningfully involved” when you were handling a matter for your client. How could this third party possibly have standing to sue you based on the process that you determined was appropriate for representing your client? Would any court tolerate such a claim? If the claim were allowed to proceed, how would you defend against it while still preserving the attorney-client privilege and your client’s confidences?<br />
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Although this scenario may sound far-fetched, it is an everyday occurrence for creditors’ rights attorneys, who have been targeted by “meaningful attorney involvement” lawsuits for years. Indeed, the “meaningful attorney involvement” theory has been embraced by the Consumer Financial Protection Bureau (“CFPB”) in its enforcement actions against large creditors’ rights law firms. The CFPB is expected to announce proposed debt collection rules in the near future that may incorporate the theory.<br />
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These lawsuits and regulatory actions are a threat to the core principles underlying the attorney-client relationship. All attorneys, and their clients, should be united in fighting against the continued use and expansion of the “meaningful attorney involvement” theory. If this can happen to creditors’ rights attorneys and their clients, might you and your clients be next?<br />
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<b>What Is It Like To Be Named In A “Meaningful Attorney Involvement” Suit?</b><br />
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For those lawyers who are unfamiliar with “meaningful attorney involvement” lawsuits, consider for a moment what it would be like to be named as a defendant in one.<br />
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Imagine a week in the office that starts off on a positive note. You land a big new client, who owns a valuable trademark and tells you a competitor has been infringing it. The client provides you with information about the claim. Applying your expertise and years of training, you quickly conclude the client has good faith basis for alleging trademark infringement. You draft a letter to the competitor, stating the facts as you understand them, demanding that the infringement cease and desist, and inviting the competitor to call you to discuss a resolution. All is well.<br />
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At the end of that week, however, things go sour. A process server knocks on your office door, and hands you a copy of a summons and a federal court complaint. You are personally named as a defendant. Your law firm is also named a defendant. Your client’s competitor never responded to your demand letter, but the competitor has now sued you and your firm. What is the claim?<br />
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The complaint alleges that your demand letter was false and misleading, because you were not “meaningfully involved” in reviewing your client’s files before you sent the letter on your client’s behalf. The competitor does not deny that it infringed your client’s trademark. Rather, the competitor is suing you and your firm because you allegedly determined too quickly that the infringement had occurred. The complaint seeks damages and attorney’s fees. It is served along with discovery requests, asking you to turn over all of your client’s files. A notice of your deposition is served, where your client’s adversary plans to ask you questions about what you did before you sent the letter.<br />
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This scenario sounds completely outrageous, right? We can assume this case will get bounced out of federal court immediately, right? No judge would ever seriously entertain such an obvious shakedown, right?<br />
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To the contrary, this is a real description of the “meaningful attorney involvement” lawsuits that are currently being litigated in courts across the country. Welcome to everyday life as a creditors’ rights attorney.<br />
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<b>Where Does The “Meaningful Attorney Involvement” Doctrine Come From?</b><br />
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How could the “meaningful attorney involvement” doctrine have ever gotten off the ground? It makes no sense. The communications between the lawyer and the client concerning the basis for the client’s claim are plainly privileged. The nature of review conducted by an attorney before a demand letter is sent is also privileged. The attorney gets to decide, in consultation with the client, and based on the attorney’s professional judgment, what to review and how long to review it before sending a demand letter. There is no viable way for a third party to file a lawsuit against an attorney based on this process.<br />
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How, then, can the adversary of the attorney’s client file an independent federal court action against the attorney, and claim the attorney was not “meaningfully involved” in sending the demand letter? How did everything go wrong for creditors’ rights attorneys?<br />
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The “meaningful attorney involvement” doctrine evolved out of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, <i>et seq</i>. (the “FDCPA”). You can read the entire FDCPA from front to back, however, and you will not find the term “meaningful attorney involvement” defined or even mentioned anywhere in the statute. Instead, you will come across section 1692e(3) of the FDCPA, which contains a simple rule: a debt collector may not make a “false representation or implication that any individual is an attorney or that any communication is from an attorney.” 15 U.S.C. § 1692e(3). In other words, if you are not a lawyer, the FDCPA prohibits you from falsely stating or implying that you are a lawyer. This is a sensible and uncontroversial prohibition.<br />
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The early “meaningful attorney involvement” cases did not even involve letters mailed by attorneys. Instead, the letters had been mailed by collection agencies that had used an attorney’s letterhead in a misleading fashion. In <i>Clomon v. Jackson</i>, 988 F.2d 1314 (2d Cir. 1993), a collection agency sent letters to “approximately one million debtors each year” using a computerized mass-mailing system, on letterhead listing “P.D. Jackson, Attorney at Law, General Counsel, NCB Collection Services,” and containing a mechanically-reproduced “signature” of an attorney. <i>Clomon</i>, 988 F.2d at 1316-17. But the attorney “played virtually no day-to-day role in the collection process” – he never reviewed the letters, and never decided whether or when the collection agency should mail them. <i>See id.</i> The Court concluded the letters were not “from” the attorney “in any meaningful sense of the word.” <i>Id</i>. at 1320.<br />
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Similarly, in <i>Avila v. Rubin</i>, 84 F.3d 222 (7th Cir. 1996), a collection agency owned by an attorney generated and mailed letters on attorney letterhead “‘signed’ with a mechanically reproduced facsimile” of the attorney’s signature. <i>Avila</i>, 84 F.3d at 225. Nearly 270,000 letters were mailed each year, and the attorney had not personally prepared, signed, or reviewed any of them. <i>See id</i>. The Court observed that “Rubin has no real involvement in the mailing of dunning letters to debtors,” <i>id</i>. at 228, and that the “true source of the ‘attorney’ letters was a collection agent who pushed a button on the agency’s computer.” <i>Id</i>. at 230.<br />
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<i>Clomon</i> and <i>Avila</i> thus did not involve letters “from” an attorney. The letters were mass-produced by collection agencies and designed to appear as if they came from attorneys. Over time, however, consumer advocates convinced some courts to use the <i>Clomon</i> and <i>Avila</i> decisions to support “meaningful attorney involvement” claims regarding letters that were, in fact, mailed by attorneys. <i> See, e.g., Nielsen v. Dickerson</i>, 307 F.3d 623, 635 (7th Cir. 2002) (attorney’s letter violated section 1692e(3) where attorney had not “meaningfully involved himself in the decision” to send letter); <i>Lesher v. Law Offices Of Mitchell N. Kay</i>, 650 F.3d 993, 1003 (3d Cir. 2011) (letter from law firm violated section 1692e where it “falsely impl[ied] that an attorney, acting as an attorney, is involved in collecting Lesher's debt.”).<br />
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As this disturbing trend in the case law continued, some courts allowed litigants to take invasive discovery regarding the process used by an attorney when evaluating and preparing a demand letter for the client. <i>See, e.g., Miller v. Wolpoff & Abramson, L.L.P.</i>, 321 F.3d 292, 307 (reversing summary judgment in favor of attorneys on “meaningful involvement” claim to allow plaintiff to take discovery on “precisely what information the [attorneys] reviewed, how much time was spent reviewing plaintiff's file, and whether any legal judgment was involved with the decision to send the letters and ultimately to initiate litigation . . .”).<br />
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The “meaningful attorney involvement” doctrine subsequently expanded beyond demand letters, and has been applied in cases that challenge the process used to prepare pleadings that were, in fact, filed by attorneys. <i>See, e.g., Bock v. Pressler & Pressler, LLP</i>, 30 F. Supp. 3d 283 (D.N.J. 2014).<br />
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<b>Can The Federal Government Target Me And My Clients Using The “Meaningful Attorney Involvement” Doctrine?</b><br />
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Fighting off “meaningful attorney involvement” cases filed by consumer attorneys is incredibly expensive and disruptive. But what would it be like if the federal government targeted you and your clients using this theory? Well you can creditors’ rights attorneys, who are already painfully aware of the answer to this question.<br />
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The Consumer Financial Protection Bureau (“CFPB”) has targeted large creditors’ rights law firms using the “meaningful attorney involvement” theory, and beginning in 2016, the CFPB announced a series of consent orders with the firms that imposed specific requirements on the information and documentation those attorneys must review before sending collection letters or filing collection lawsuits on behalf of their clients. S<i>ee, e.g., Consumer Fin. Prot. Bur. v. Frederick J. Hanna & Assocs, et al</i>., United States District Court, Northern District Of Georgia, Case No., 1:14-cv-02211-AT, Docket 61-1, Stipulated Final Judgment and Order; <i>In the Matter of: Pressler & Pressler, LLP, et al</i>., Administrative Proceeding File No. 2016-CFPB-0009; <i>In the Matter of: Works & Lentz, Inc., et al</i>., Administrative Proceeding File No. 2017-CFPB-0003.<br />
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In a rare victory for creditors’ rights attorneys, a law firm recently defeated a “meaningful attorney involvement” action filed by the CFPB following a four-day trial. <i>See Consumer Fin. Pro. Bur. v. Weltman, Weinberg & Reis Co., L.P.A</i>., 2018 WL 3575882 (N.D. Ohio July 25, 2018). The government had not alleged that the letters sent by the law firm included false statements about the amount that the consumers owed. Instead, the CFPB claimed the letters “falsely imply that an attorney was meaningfully involved in the collection of the debts to which the letters relate.” <i>Id</i>. at *2.<br />
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After days of detailed testimony from members of the law firm regarding the procedures they employed for their clients prior to generating and mailing demand letters, the court held the firm had proven that “attorneys were meaningfully and substantially involved in the debt collection process both before and after the issuance of the demand letters.” <i>Id</i>. at *11. When the Weltman firm subsequently sought to recover the attorneys’ fees it had spent defending the case, however, the court denied the motion. <i>See Consumer Fin. Prot. Bur. v. Weltman, Weinberg & Reis Co., L.P.A.</i>, 2018 WL 5257602 (N.D. Ohio Oct. 22, 2018).<br />
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<b>Why Every Lawyer And Client Should Fight Against The Spread Of The “Attorney Meaningful Involvement” Doctrine</b><br />
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All attorneys, and their clients, should be disturbed by the evolution of the “meaningful attorney involvement” and its implications for the legal profession. Lawyers who do not have a creditors’ rights practice may be tempted to dismiss the theory as an anomaly, a unique risk that was knowingly assumed by a limited group of practitioners who are subject to the FDCPA. But it is important to remember that the phrase "meaningful attorney involvement" is not contained anywhere in the plain language of the FDCPA. Indeed, the “meaningful attorney involvement” doctrine arose from cases that did not even involve letters sent by attorneys.<br />
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The FDCPA does not give consumers, federal courts, or federal regulators the power to regulate the private interactions between a creditors’ rights attorney and the client. The judiciary, not Congress, establishes professional standards for the bar and oversees the conduct of attorneys. <i>See Paul E. Iacono Structural Eng'r, Inc. v. Humphrey,</i> 772 F.2d 435, 439 (9th Cir. 1983) (“[T]he regulation of lawyer conduct is the province of the courts, not Congress.”). This is a point that has been emphatically demonstrated by litigation initiated by the American Bar Association against the Federal Trade Commission. <i>See ABA v. FTC</i>, 430 F.3d 457, 472 (D.C. Cir. 2005) (rejecting argument that Congress gave FTC the power to regulate attorneys under Gramm-Leach Bliley Act: “Congress has not made an intention to regulate the practice of law ‘unmistakably clear’ in the language of the GLBA”) (citations omitted).<br />
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All attorneys and their clients should reject the “meaningful attorney involvement” doctrine. It has morphed into an undefined standard of care that gives consumers and federal regulators a license to challenge all aspects of a creditors’ rights attorney’s representation of the client. The FDCPA was not passed by Congress as a means to regulate the practice of law or to dictate the relationship and workflow between a client and an attorney. Clients and lawyers have the right to decide what level of attorney review or “involvement” is appropriate for collection matters. No federal statute, including the FDCPA, should be misinterpreted in a way that so fundamentally interferes with the attorney-client relationship.<br />
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Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com10tag:blogger.com,1999:blog-7881335399385517573.post-50124035582270365552019-02-03T09:12:00.002-08:002019-02-28T12:27:11.613-08:00Trends In FDCPA Litigation Filed Against HOA Attorneys<br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Attorneys<span style="letter-spacing: -.35pt;"> who </span>regularly<span style="letter-spacing: -.5pt;"> </span>engage<span style="letter-spacing: -.45pt;"> </span>in<span style="letter-spacing: -.35pt;"> </span>collection<span style="letter-spacing: -.3pt;"> </span>work<span style="letter-spacing: -.3pt;"> </span>for <span style="letter-spacing: -.05pt;">community</span><span style="letter-spacing: -.55pt;">
</span>associations<span style="letter-spacing: -.3pt;"> have increasingly become
targets for lawsuits filed by professional consumer attorneys under the </span>Fair<span style="letter-spacing: -.4pt;"> </span>Debt<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>Collection<span style="letter-spacing: -.25pt;"> </span>Practices<span style="letter-spacing: -.2pt;"> </span>Act (“FDCPA” or “the Act”),<span style="letter-spacing: -.3pt;"> </span>15<span style="letter-spacing: -.35pt;"> </span>U.S.C.<span style="letter-spacing: -.35pt;"> </span>§<span style="letter-spacing: -.25pt;"> </span>1692<span style="letter-spacing: -.3pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">et.<span style="letter-spacing: -.35pt;"> </span>seq.,<span style="letter-spacing: -.35pt;"> </span></span></i>and analogous<span style="letter-spacing: -.2pt;"> </span>state<span style="letter-spacing: -.35pt;"> </span>laws.<span style="letter-spacing: 2.65pt;">
</span>These suits can be costly, distracting, and can create significant
tensions between HOA attorneys and the management companies and associations they serve.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">FDCPA litigation
in this sector appears to be on the rise, and as more people move into planned
communities, it seems unlikely to go away any time soon. For this reason, HOA attorneys who engage in
conduct regulated by the FDCPA should stay abreast of the many recent FDCPA<span style="letter-spacing: -.45pt;"> </span>decisions<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.3pt;">and litigation trends that
can significantly </span><span style="letter-spacing: -.05pt;">impact</span><span style="letter-spacing: -.3pt;"> </span>their<span style="letter-spacing: -.4pt;">
</span>compliance<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">obligations</span><span style="letter-spacing: -.3pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span>litigation<span style="letter-spacing: -.35pt;"> </span>risks.<span style="mso-spacerun: yes;">
</span>Attorneys should also start an open dialogue on FDCPA risks with the management
companies and associations they serve. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The FDCPA has
been with us for forty years, and it has yielded thousands of published decisions.<span style="mso-spacerun: yes;"> </span>The case law in this area can be very
frustrating, as it is riddled with circuit splits, unresolved issues, and unpredictable balancing tests which can turn on disputed facts.<span style="mso-spacerun: yes;"> </span>This post is intended to cover some of the
basic concepts that bear on any FDCPA claim, and to provide a general overview
of litigation trends and risks that may be of special concern to HOA attorneys
and their clients.<span style="mso-spacerun: yes;"> </span>It was adopted from a
presentation given on the subject at the January 2019 CAI Law Seminar.</span><o:p></o:p></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b style="mso-bidi-font-weight: normal;"><u>Are Unpaid HOA Obligations “Debts” Under
The FDCPA?</u></b><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Before exploring litigation risks, let’s
start with some of the basics.<span style="mso-spacerun: yes;"> </span>Are
unpaid homeowner assessments and related charges imposed by HOAs subject to the
FDCPA?<span style="mso-spacerun: yes;"> </span><span style="mso-bidi-font-family: "Times New Roman";">This issue can be more nuanced than it might appear at first
glance.<o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">The unpaid obligations owed to your
HOA clients will not always qualify as a “debt” under the FDCPA.<span style="mso-spacerun: yes;"> </span>The Act defines a “debt” as “any obligation
or alleged obligation of a consumer to pay money arising out of a transaction
in which the money, property, insurance or services which are the subject of
the transaction are primarily for personal, family, or household purposes. . .”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See</i>
15 U.S.C. §1692a(5).<span style="mso-spacerun: yes;"> </span>If you or your firm
are embroiled in FDCPA litigation, do not concede that a “debt” was incurred
without examining the issue closely. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-bidi-font-family: "Times New Roman";">Determining </span>whether a
“debt”<span style="letter-spacing: -.35pt;"> </span>was<span style="letter-spacing: -.25pt;"> </span>incurred<span style="letter-spacing: -.15pt;"> </span>by<span style="letter-spacing: -.5pt;"> </span>a property owner<span style="letter-spacing: -.35pt;"> can </span>fact-intensive.<span style="mso-spacerun: yes;"> </span>This
threshold issue should not be assumed based upon a reading<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">CCRs</span><span style="letter-spacing: -.35pt;"> </span>or<span style="letter-spacing: -.4pt;"> the paperwork documenting </span>the<span style="letter-spacing: -.35pt;"> </span>purchase<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>property.<span style="letter-spacing: 2.9pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">See<span style="letter-spacing: -.35pt;"> </span>Turner<span style="letter-spacing: -.25pt;"> </span>v.Cook</span></i>,<span style="letter-spacing: -.4pt;"> </span>362<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.3pt;"> </span>1219,<span style="letter-spacing: -.35pt;"> </span>1226-27<span style="letter-spacing: -.35pt;"> </span>(9th<span style="letter-spacing: -.3pt;"> </span>Cir.<span style="letter-spacing: -.35pt;"> </span>2004)<span style="letter-spacing: -.35pt;">
</span>(proving<span style="letter-spacing: -.3pt;"> </span>existence<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.4pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>“debt”
under<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span>FDCPA<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">is</span><span style="letter-spacing: -.4pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>“threshold”<span style="letter-spacing: -.35pt;"> </span>issue<span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.3pt;"> </span>every<span style="letter-spacing: -.5pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span>action).<span style="mso-spacerun: yes;">
</span>To the contrary, the determination of whether a “debt” was incurred may
require an examination of <span style="mso-bidi-font-family: "Times New Roman"; mso-bidi-font-weight: bold;">“<b><u>the<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>transaction<span style="letter-spacing: -.4pt;"> </span>as<span style="letter-spacing: -.3pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">whole</span></u></b></span><span style="letter-spacing: .05pt;">,</span><span style="letter-spacing: -.4pt;"> </span>paying<span style="letter-spacing: -.3pt;"> </span>particular<span style="letter-spacing: -.4pt;"> </span>attention<span style="letter-spacing: -.4pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>purpose<span style="letter-spacing: -.4pt;"> </span>for<span style="letter-spacing: -.4pt;"> </span>which<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>credit<span style="letter-spacing: -.35pt;"> </span>was<span style="letter-spacing: -.35pt;"> </span>extended<span style="letter-spacing: -.3pt;">
</span>in<span style="letter-spacing: -.3pt;"> </span>order<span style="letter-spacing: -.45pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span>determine<span style="letter-spacing: -.4pt;"> </span>whether<span style="letter-spacing: -.45pt;">
</span>[the]<span style="letter-spacing: -.45pt;"> </span>transaction<span style="letter-spacing: -.4pt;"> </span>was<span style="letter-spacing: -.35pt;"> </span>primarily<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>consumer<span style="letter-spacing: -.55pt;"> </span><span style="letter-spacing: .05pt;">or</span><span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">commercial</span><span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.45pt;"> </span>nature.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">See<span style="letter-spacing: -.3pt;"> </span>Bloom<span style="letter-spacing: -.3pt;"> </span>v.<span style="letter-spacing: -.3pt;"> </span>I.C.<span style="letter-spacing: -.3pt;"> </span>System,<span style="letter-spacing: -.3pt;"> </span>Inc</span></i>.,<span style="letter-spacing: -.35pt;"> </span>972<span style="letter-spacing: -.2pt;"> </span>F.2d<span style="letter-spacing: -.2pt;"> </span>1067,<span style="letter-spacing: -.35pt;"> </span>1068<span style="letter-spacing: -.15pt;"> </span>(9th<span style="letter-spacing: -.2pt;"> </span>Cir.<span style="letter-spacing: -.3pt;"> </span>1992)<span style="letter-spacing: 2.4pt; mso-font-width: 99%;"> </span>(emphasis<span style="letter-spacing: -.4pt;"> </span>added,<span style="letter-spacing: -.5pt;"> </span>citation<span style="letter-spacing: -.35pt;">
</span>and<span style="letter-spacing: -.4pt;"> </span>quotation<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">marks</span><span style="letter-spacing: -.45pt;"> </span>omitted)<span style="letter-spacing: -.45pt;">
</span>(personal<span style="letter-spacing: -.35pt;"> </span>loan<span style="letter-spacing: -.35pt;"> </span>from<span style="letter-spacing: -.65pt;"> </span>friend<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>used<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>start<span style="letter-spacing: -.2pt;"> </span>software<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">business</span><span style="letter-spacing: -.2pt;"> </span>not<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“debt”</span><span style="letter-spacing: -.3pt;"> </span>under<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>Act:<span style="letter-spacing: 3.0pt;"> </span><span style="letter-spacing: -.05pt;">“Neither
the lender's motives nor the fashion in which the loan is memorialized are
dispositive of this inquiry.”).<span style="mso-spacerun: yes;"> </span></span>This<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.45pt;"> involve </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.35pt;"> </span>only<span style="letter-spacing: -.55pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>review<span style="letter-spacing: -.35pt;">
</span>of<span style="letter-spacing: -.35pt;"> </span>documents<span style="letter-spacing: -.3pt;"> </span>relating<span style="letter-spacing: -.2pt;">
</span>to<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>transaction itself,<span style="letter-spacing: -.35pt;"> </span>but
also<span style="letter-spacing: -.3pt;"> </span>an<span style="letter-spacing: -.25pt;"> </span>evaluation<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>debtor’s<span style="letter-spacing: -.3pt;"> </span><b><u style="text-underline: black;"><span style="mso-bidi-font-family: "Times New Roman";">conduct<span style="letter-spacing: -.25pt;"> </span></span></u></b>before<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>after<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">obligation</span><span style="letter-spacing: -.25pt;"> </span>was<span style="letter-spacing: 2.5pt; mso-font-width: 99%;"> </span>incurred.<i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";"> <span style="mso-spacerun: yes;"> </span>See<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">Slenk</span><span style="letter-spacing: -.4pt;"> </span>v.
Transworld<span style="letter-spacing: -.35pt;"> </span>Sys.,<span style="letter-spacing: -.4pt;"> </span>Inc.</span></i><span style="mso-bidi-font-family: "Times New Roman";">,<span style="letter-spacing: -.4pt;"> </span>236<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">1072,</span><span style="letter-spacing: -.4pt;"> </span>1075<span style="letter-spacing: -.3pt;"> </span>(9th<span style="letter-spacing: -.35pt;"> </span>Cir.<span style="letter-spacing: -.4pt;"> </span>2001).<o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">Unpaid HOA assessments relating
to rental properties generally do <b style="mso-bidi-font-weight: normal;"><u>not</u></b>
qualify as “debts” under the FDCPA.<span style="mso-spacerun: yes;"> </span>Although
assessments on properties used as the obligor’s primary residence likely are
“debts” subject to the Act, unpaid obligations imposed on an owner of a rental
property are incurred for business purposes and are not subject to the Act. <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See, e.g., Lowe v. Maxwell & Morgan</i>,
322 F.R.D. 397 (D. Ariz. 2017) (denying class certification; individualized
inquiries re: use of properties by putative class members); <i style="mso-bidi-font-style: normal;">Connelly v. Ekimoto & Morris, LLLC</i>,
2018 WL 33129597 (D. Hawaii July 5, 2018) (unpaid assessments for condo where
plaintiffs did not reside not a “debt”).<span style="mso-spacerun: yes;">
</span>Where the plaintiff contends that a rental property was originally
purchased with the intent to reside in it as a primary residence, and the
plaintiff did in fact reside in the property for a period of time, the examination
is even more complicated.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Compare Sayeed v. Cheatham Farms Master HOA</i>,
2018 WL 4297480 (C.D. Cal. 2018) (analyzing use of property at the time when
assessments at issue were incurred) <i style="mso-bidi-font-style: normal;">with</i>
<i style="mso-bidi-font-style: normal;">Haddad v. Alexander, et al</i> 698 F.3d
290 (6th Cir. 2012) (intent of debtor at time of purchase controls).<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-bidi-font-family: "Times New Roman";">Most courts have held that fines
imposed by HOAs are not “debts” covered by the FDCPA.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See,
e.g., Berg v. Ayesh,</i> 2014 WL 2603890 (D. Kansas 2014) (HOA fines not debts
under FDCPA); <i style="mso-bidi-font-style: normal;">Mlnarik v. Smith, Gardner,
Slusky, Lazer, Pohren & Rodgers, LLP</i>, 2014 WL 6657747 (N.D. Cal. Jul.
28, 2014) (fines imposed by HOA did not arise out of “consensual transactions
or business dealings, but a unilateral penalty”).<span style="mso-spacerun: yes;"> </span>If a fine is not a “debt” than it would
follow logically that attorney’s fees and costs incurred while attempting to
recover the fine also would not be covered.<span style="mso-spacerun: yes;">
</span>At least one court, however, has suggested that an HOA fine may qualify
as a “debt” subject to the FDCPA.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See Agrelo v. Affinity Management LLC</i>,
849 F.3d 944 (11th Cir. 2016).</span><o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Arial, Helvetica, sans-serif;">Are You Engaged In “Debt Collection”
Under The FDCPA?<o:p></o:p></span></u></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">Even where a “debt” is involved,
there is still the question of whether you or your law firm are engaged in
“debt collection” under the FDCPA.<span style="mso-spacerun: yes;"> </span>This may
turn not only on what you are saying or doing, but the context in which the FDCPA
claim arises.<span style="mso-spacerun: yes;"> </span>Again, HOA practitioners
who are involved in FDCPA litigation should analyze this issue closely.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">The Act does not define the term
“debt collection” and the courts have come to different conclusions on what it
means. <span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See Glazer v. Chase Home Fin. LLC</i>, 704 F.3d 453, 460 (6th Cir.
2013) (“Unfortunately, the FDCPA does not define ‘debt collection,’ and its
definition of ‘debt collector’ sheds little light, for it speaks in terms of
debt collection.”) (citations omitted); <i style="mso-bidi-font-style: normal;">Gburek
v. Litton Loan Serv. LP</i>, 614 F.3d 380, 384 (7th Cir. 2010) (“Neither this
circuit nor any other has established a brightline rule for determining whether
a communication from a debt collector was made in connection with the
collection of any debt.”). <span style="mso-spacerun: yes;"> </span>As discussed
below, it is possible that the United States Supreme Court may clarify the
issue this term.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">Must a communication (<i style="mso-bidi-font-style: normal;">e.g.,</i> a letter, pleading, or phone call)
make an express demand for payment of money on a debtor in order to constitute
“debt collection” under the FDCPA? <span style="mso-spacerun: yes;"> </span>The Ninth
and Tenth Circuits have held said “yes” a collector is not engaged in “debt
collection” under the FDCPA unless the challenged communication makes a demand
for payment of money. <span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See, e.g., Ho v. ReconTrust Co., NA</i>, 840
F.3d 618, 621-623 (9th Cir. 2016) (mailing notice of default and notice of sale
to debtor, which threatened foreclosure, was not attempt to collect money from debtor,
and thus was not “debt collection” under FDCPA; “The notices at issue in our
case didn’t request payment from Ho.”); <i style="mso-bidi-font-style: normal;">Obduskey
v. Wells Fargo</i>, 879 F.3d 1216, 1221 (10th Cir.) (following <i style="mso-bidi-font-style: normal;">Ho</i>; “Because enforcing a security
interest is not an attempt to collect money from the debtor, and the consumer
has no “obligation . . . to pay money,” non-judicial foreclosure is not covered
under FDCPA) (citations<span style="mso-spacerun: yes;"> </span>omitted), <i style="mso-bidi-font-style: normal;">pet. for cert. granted</i>, 138 S. Ct. 2710
(2018).<span style="mso-spacerun: yes;"> </span>These cases arose in the context
of non-judicial foreclosures.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">Other circuit courts, however,
have held that a communication may amount to “debt collection” under the FDCPA,
even without a demand for payment of money on the debtor. <span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See,
e.g., McCray v. Federal Home Loan Mortg. Corp.</i>, 839 F.3d 354, 360 (4th Cir.
2016) (“nothing in [the] language [of the FDCPA] requires that a debt
collector’s misrepresentation [or other violative actions] be made as part of
an express demand for payment or even as part of an action designed to induce the
debtor to pay.”) (citation omitted); <i style="mso-bidi-font-style: normal;">Gburek</i>,
614 F.3d at 386 (letter offering to discuss “foreclosure alternatives” was
attempt to collect a debt: “Though it did not explicitly ask for payment, it
was an offer to discuss Gburek’s repayment options, which qualifies as a
communication in connection with an attempt to collect a debt.”); <i style="mso-bidi-font-style: normal;">Glazer</i>, 704 F.3d at 461 (FDCPA applied
to judicial foreclosure complaint, despite absence of any allegation that it
made a demand for payment of money on debtor: “Thus, if<span style="mso-spacerun: yes;"> </span>the purpose of an activity taken in relation
to a debt is to ‘obtain payment’ of the debt, the activity is properly
considered debt collection.”); <i style="mso-bidi-font-style: normal;">Kaltenbach
v. Richards</i>, 464 F.3d 524, 526-28 (5th Cir. 2006) (attorney who filed foreclosure
action may be “debt collector” under FDCPA, despite absence of any allegation
that attorney made demand for payment of money).<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">The Supreme Court may bring some
clarity this term when it hears the <i style="mso-bidi-font-style: normal;">Obduskey</i>
case. The Court is expected to address in <i style="mso-bidi-font-style: normal;">Obduskey</i>
whether the FDCPA applies to communications made in connection with
non-judicial foreclosure proceedings. The decision in <i style="mso-bidi-font-style: normal;">Obduskey</i> may also clarify whether communications that do not
include a request for payment from the debtor are subject to the FDCPA.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b style="mso-bidi-font-weight: normal;"><u><span style="mso-bidi-font-family: "Times New Roman";">Are
You A “Debt Collector” Under The FDCPA?</span></u></b><span style="mso-bidi-font-family: "Times New Roman";"><o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">Even
if you are engaged in “debt collection” relating to a “debt” that is subject to
the FDCPA, there may be an open issue on whether you or your firm qualify as a
“debt collector” under the statute.<span style="mso-spacerun: yes;"> </span>Once
again, there is no clear test for making this determination.<span style="mso-spacerun: yes;"> </span>In the even a suit is filed, this analysis
should be done with respect to each named defendant.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-bidi-font-family: "Times New Roman";">The FDCPA applies to any “debt
collector” which the Act defines as </span><!--[if supportFields]><span
lang=EN-CA style='mso-ansi-language:EN-CA'><span style='mso-element:field-begin'></span><span
style='mso-spacerun:yes'> </span>SEQ CHAPTER \h \r 1</span><![endif]--><!--[if supportFields]><span
lang=EN-CA style='mso-ansi-language:EN-CA'><span style='mso-element:field-end'></span></span><![endif]-->“any
person who uses any instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the collection of any debts, <b style="mso-bidi-font-weight: normal;"><u>or</u></b> who regularly collects or
attempts to collect, directly or indirectly, debts owed or due or asserted to
be owed or due another.”<span style="mso-spacerun: yes;"> </span><a href="https://www.blogger.com/null" name="CTOA_126_CIT_126_15u_46_s_46_c_46_1692a_"></a>15 U.S.C. § 1692a(6)
(emphasis added).<span style="mso-spacerun: yes;"> </span>There is no question
that law firms and attorneys may in certain cases qualify as “debt collectors”
under the Act.<span style="mso-spacerun: yes;"> </span><!--[if supportFields]><span
lang=EN-CA style='mso-ansi-language:EN-CA'><span style='mso-element:field-begin'></span><span
style='mso-spacerun:yes'> </span>SEQ CHAPTER \h \r 1</span><![endif]--><!--[if supportFields]><span
lang=EN-CA style='mso-ansi-language:EN-CA'><span style='mso-element:field-end'></span></span><![endif]--><i>See
<a href="https://www.blogger.com/null" name="CTOA_126_CIT_126_514_32_u_46_s24_126_0"></a>Heintz v. Jenkins</i>, 514
U.S. 291, 294 (1995).<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; mso-bidi-font-family: "Times New Roman";">As
with many things in FDCPA jurisprudence, the courts have not developed any bright
line test for determining what term “principal purpose” or “regularly” means
under the Act. <span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Fox v. Citicorp Credit Servs., Inc</i>., 15 F.3d 1507, 1513 n. 5 (9th
Cir. 1994) (“principal purposes” of firm was debt collection when made up 80
percent of firm’s practice); <i style="mso-bidi-font-style: normal;">See James v.
Wadas</i>, 724 F.3d 1312, 1317-18 (10th Cir. 2013) (discussing factors used to determine
whether attorney or law firm “regularly” engages in debt collection such as to
qualify as a “debt collector”). <span style="mso-spacerun: yes;"> </span>Generally
speaking, however, if collection work is a small portion of your own practice, or
your firm’s overall practice, then it makes sense to closely analyze whether
you qualify as a “debt collector” under the statute.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See
Reyes v. Julia Place Condominium HOA</i>, 2017 WL 466359 (E.D. La. 2017) (law
firm did not “regularly” collect debts where collection was a small fraction of
firm’s work).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;"><o:p><u>FDCPA Risks Relating To The Balance You Are Collecting</u> </o:p></span></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">HOA attorneys
face significant<span style="letter-spacing: -.3pt;"> FDCPA risks relating to the
balances they seek to collect on behalf of their clients.<span style="mso-spacerun: yes;"> </span>These risks relate to the way that the
balances are described by attorneys, particularly if the balances may change in
ways that are difficult for attorneys to predict. <span style="mso-spacerun: yes;"> </span>The risks also relate to errors in the data
that have been supplied to attorneys by their clients.<o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">You would
think that it is safe to accurately list the exact balance due as of the date
of a collection letter.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>If a balance is going to increase, however, do
you need to explain this to the debtor, and if so, how can you do so safely?<span style="mso-spacerun: yes;"> </span>Debt collection attorneys have been sued for
implying that an increasing balance was static. <i style="mso-bidi-font-style: normal;">See Avila v. Riexinger & Associates, LLC</i>, 817 F.3d 72 (2d Cir.
2016) (letter stating the “current balance” as of the date it was mailed falsely
implied the balance was static).<span style="mso-spacerun: yes;"> </span>The <i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">Avila<span style="letter-spacing: -.3pt;"> </span></span></i>Court held<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>stating<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>“current<span style="letter-spacing: -.25pt;"> </span>balance”<span style="letter-spacing: -.4pt;">
</span>in<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>letter<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.45pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>misleading under the FDCPA unless<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>collector<span style="letter-spacing: -.4pt;"> </span>also<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">makes</span><span style="letter-spacing: -.25pt;"> </span>clear
to the debtor<span style="letter-spacing: -.45pt;"> </span>that<span style="letter-spacing: -.35pt;"> the </span>balance<span style="letter-spacing: -.4pt;"> </span>will<span style="letter-spacing: -.4pt;"> </span>increase.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id.</i>
at 77.<span style="mso-bidi-font-family: "Times New Roman";"><o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Collectors have also
been sued under the FDCPA, however, for failing to disclose that a static balance
is <b style="mso-bidi-font-weight: normal;"><u>not</u></b> increasing. <i style="mso-bidi-font-style: normal;">See Taylor v. Financial Recovery Services,
Inc</i>., 886 F.3d 212 (2d Cir. 2018) (collection letter stating “balance due”
need not state the balance was static).<span style="mso-spacerun: yes;"> </span>Although
the <i style="mso-bidi-font-style: normal;">Taylor</i> court soundly and persuasively
rejected the notion that collector is obligated to disclose when a balance is
not going up, other circuits have not yet addressed the issue.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="line-height: 102%; text-indent: 30pt;">The<span style="letter-spacing: -.35pt;">
problem with accurately describing the balance is not new. The </span>Seventh<span style="letter-spacing: -.25pt;"> </span>Circuit in<span style="letter-spacing: -.35pt;"> </span><i>Miller<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.4pt;"> </span>McCalla,<span style="letter-spacing: -.4pt;">
</span>Raymer,<span style="letter-spacing: -.4pt;"> </span>Padrick,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">Cobb,</span><span style="letter-spacing: -.4pt;"> </span>Nichols,<span style="letter-spacing: -.4pt;">
</span>&<span style="letter-spacing: -.8pt;"> </span>Clark,<span style="letter-spacing: -.4pt;"> </span>L.L.C.</i>,<span style="letter-spacing: -.45pt;"> </span>214<span style="letter-spacing: -.3pt;"> </span>F.3d<span style="letter-spacing: 2.4pt; mso-font-width: 99%;"> </span>872<span style="letter-spacing: -.35pt;"> </span>(7th<span style="letter-spacing: -.3pt;"> </span>Cir.2000),
tried to address the problem when it fashioned<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: -.05pt;">“safe</span><span style="letter-spacing: -.4pt;"> </span>harbor”<span style="letter-spacing: -.4pt;"> </span>language</span><span style="letter-spacing: 1.35pt; line-height: 102%; position: relative; text-indent: 30pt; top: -5.5pt;"> </span><span style="line-height: 102%; text-indent: 30pt;">that<span style="letter-spacing: -.25pt;"> </span>can<span style="letter-spacing: -.25pt;"> </span>be used<span style="letter-spacing: -.3pt;">
in that circuit </span>to<span style="letter-spacing: -.25pt;"> </span>describe<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">“amount</span><span style="letter-spacing: -.25pt;">
</span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debt”</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">in </span>circumstances<span style="letter-spacing: -.3pt;"> </span>where<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>account<span style="letter-spacing: -.3pt;"> </span>balance<span style="letter-spacing: -.35pt;">
</span>varies<span style="letter-spacing: -.2pt;"> </span>from<span style="letter-spacing: -.55pt;"> </span>day<span style="letter-spacing: -.45pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">day.</span></span><span style="text-indent: 30pt;">
</span><span style="letter-spacing: -0.05pt; line-height: 102%; text-indent: 30pt;">The <i>Miller </i>safe harbor language states: “As
of the date of this letter, you owe $ ___ [the exact amount due]. Because of
interest, late charges, and other charges that may vary from day to day, the
amount due on the day you pay may be greater. Hence, if you pay the amount
shown above, an adjustment may be necessary after we receive your check, in
which event we will inform you before depositing the check for collection. For
further information, write the undersigned or call 1-800- [phone number].” <i>Id</i>. at 876.</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">The
safety of this “safe harbor” language, however, is now an open question,
because collectors have also been sued for using the <i style="mso-bidi-font-style: normal;">Miller</i> “safe harbor” language.<span style="mso-spacerun: yes;">
</span><i style="mso-bidi-font-style: normal;">See Boucher v. Finance System of
Green Bay, Inc</i>., 880 F.3d 362 (7th Cir. 2018) (“debt collectors cannot
immunize themselves from FDCPA liability by blindly copying and pasting the
Miller safe harbor language without regard for whether that language is
accurate under the circumstances.”).<span style="mso-spacerun: yes;"> </span>Thus,
collection attorneys should not use the <i style="mso-bidi-font-style: normal;">Miller</i>
language in situations where it would make a letter inaccurate. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-tab-count: 1;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">You
cannot accurately describe the balance if your client has provided you with
inaccurate data to collect.<span style="mso-spacerun: yes;"> </span>Bad balance
data puts you and your firm at risk under the FDCPA.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See,
e.g., Calleja v. Cannon</i>, 2017 WL 362695 (D. Ariz. 2017) (law firm violated
FDCPA where HOA applied payments improperly).<span style="mso-spacerun: yes;">
</span>Common FDCPA claims filed against attorneys who have sought to collect
an inaccurate balance arise under section 1692e of the FDCPA, which prohibits
collectors from using false, deceptive or misleading communications, and
section 1692f of the FDCPA, which prohibits any false representation regarding
the character, amount or legal status of any debt.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">If the balance information provided by
your client is wrong and you get sued, you may be able to invoke the “bona fide
error” defense under section 1692k(c) of the FDCPA.<span style="mso-spacerun: yes;"> </span>This defense allows you to avoid liability if
your firm has procedures in place that are reasonably adapted to avoid errors.<span style="mso-spacerun: yes;"> </span>If your client has consistently sent data
that you know to be inaccurate, however, this increases your FDCPA risks and casts
doubt on any bona fide error defense.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See Reichert v. National Credit Servs., Inc.</i>,
531 F.3d 1002 (9th Cir. 2008); <i style="mso-bidi-font-style: normal;">see also</i>
<i style="mso-bidi-font-style: normal;">Reed v. ASAP Collection Services</i>,
2018 WL 3392101 (N.D. Cal. 2018) (“highly unlikely” that BFE defense will
prevail in light of number of times balances were misstated).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">When you seek to collect attorney’s fees for your HOA
clients, this can also present FDCPA risks, as this is a frequent target for
consumer and their attorneys.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Courts
have come to different conclusions on whether specific requests for attorney’s fees
violate the FDCPA. <span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See, e.g., Allison v. McCabe Trotter</i>, 2018 WL 3826674 (D.S.C. 2018)
(OK to file notice of lien seeking fees that had not been approved by court); <i style="mso-bidi-font-style: normal;">McNair v. Maxwell & Morgan, PC</i>, 893
F.3d 680 (9th Cir. 2018) (application for judicial foreclosure writ stating
attorney’s fees “are now” due violated FDCPA); <i style="mso-bidi-font-style: normal;">Carpenter v. Alessi & Koenig, LLC</i>, 2013 WL 5234253 (D. Nev.
2013) (plaintiff failed to prove attorney’s fees sought by defendant’s notices
were unreasonable); <i style="mso-bidi-font-style: normal;">Lott v. Vial
Fotheringham, LLP</i>, 2017 WL 4558050 (D. Or. 2017) (FDCPA violated where CCRs
did not allow interest on attorney’s fees).<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">Filing
Suit In The Correct Venue<o:p></o:p></span></u></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">Are you suing in the right courthouse?<span style="mso-spacerun: yes;"> </span>HOA attorneys also face risk relating to
their choice of venue in which to initiate legal actions against
consumers.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">The “venue” provisions of the FDCPA says that any collector
“who brings any legal action on a debt against any consumer shall – (1) in the
case of an action to enforce an interest in real property securing the
consumer’s obligation, bring such action only in a judicial district or similar
legal entity in which such real property is located; or (2) in the case of an
action not described in paragraph (1), bring such action only in the judicial
district or similar legal entity – (A) in which such consumer signed the
contract sued upon; or (B) in which such consumer resides at the commencement
of the action.”<span style="mso-spacerun: yes;"> </span>15 U.S.C. §
1692i(a).<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; text-indent: 0.5in;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="text-indent: 0.5in;">The appropriate “judicial district”
to bring a “legal action” is the smallest district recognized by the state
court system in which the firm initiates the action.</span><span style="text-indent: 0.5in;"> </span><i style="text-indent: 0.5in;">See
Olivia v. Blatt, Hasenmiller, Leibsker & Moore, LLC</i><span style="text-indent: 0.5in;">, 864 F.3d 492 (7th
Cir. 2017).</span><span style="text-indent: 0.5in;"> </span><span style="text-indent: 0.5in;">This may differ with the
requirements of state venue law, so HOA attorneys must be careful to ensure
that their suits also satisfy the FDCPA’s venue statute.</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="line-height: 102%;">If you are facing a wrong venue claim, consider whether
your legal action is “against” the consumer.<span style="mso-spacerun: yes;">
</span>Courts have generally held that garnishment actions are “against” the
garnishee, not the consumer.<span style="mso-spacerun: yes;"> </span></span><i style="mso-bidi-font-style: normal;"><span style="line-height: 102%;">See,<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>e.g.,<span style="letter-spacing: -.35pt;"> </span>Ray<span style="letter-spacing: -.35pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>McCullough<span style="letter-spacing: -.3pt;"> </span>Payne<span style="letter-spacing: -.35pt;"> </span>&<span style="letter-spacing: -.7pt;"> </span>Haan,<span style="letter-spacing: -.35pt;"> </span>LLC</span></i><span style="line-height: 102%;">,<span style="letter-spacing: -.4pt;">
</span>838<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.25pt;"> </span>1107,<span style="letter-spacing: -.35pt;">
</span>1111<span style="letter-spacing: -.25pt;"> </span>(11th<span style="letter-spacing: -.3pt;"> </span>Cir.<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>2016) (affirming order dismissing claim under
section 1692i against law firm; garnishment proceedings not “against” consumer
under Georgia law);<span style="letter-spacing: -.25pt;"> </span><i style="mso-bidi-font-style: normal;">Jackson<span style="letter-spacing: -.35pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Blitt<span style="letter-spacing: -.3pt;"> </span>&<span style="letter-spacing: -.7pt;"> </span>Gaines,<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: -.05pt;">P.C.</span></i><span style="letter-spacing: -.05pt;">,</span><span style="letter-spacing: -.35pt;"> </span>833<span style="letter-spacing: -.2pt;"> </span>F.3d<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">860,</span><span style="letter-spacing: -.35pt;"> </span>864<span style="letter-spacing: -.25pt;"> </span>(7th<span style="letter-spacing: -.25pt;"> </span>Cir.<span style="letter-spacing: -.35pt;"> </span>2016) (same result under Illinois law);<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span><i style="mso-bidi-font-style: normal;">Hageman<span style="letter-spacing: -.3pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Barton</i>,<span style="letter-spacing: -.35pt;"> </span>817<span style="letter-spacing: -.2pt;"> </span>F.3d<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">611,</span><span style="letter-spacing: -.4pt;"> </span>617-18<span style="letter-spacing: -.25pt;">
</span>(8th<span style="letter-spacing: -.3pt;"> </span>Cir.<span style="letter-spacing: -.35pt;"> </span>2016) (same);<span style="letter-spacing: -.3pt;"> </span><i style="mso-bidi-font-style: normal;">Smith<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Solomon<span style="letter-spacing: -.25pt;"> </span>&<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>Solomon,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">P.C.</span></i><span style="letter-spacing: -.05pt;">,</span><span style="letter-spacing: -.35pt;"> </span>714<span style="letter-spacing: -.3pt;"> </span>F.3d<span style="letter-spacing: -.3pt;"> </span>73,<span style="letter-spacing: -.35pt;"> </span>74-76<span style="letter-spacing: -.3pt;"> </span>(1st<span style="letter-spacing: -.35pt;"> </span>Cir.<span style="letter-spacing: -.35pt;"> </span>2013) (same result under Massachusetts
law);<span style="letter-spacing: -.3pt;"> </span><i style="mso-bidi-font-style: normal;">Randall<span style="letter-spacing: -.4pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Maxwell<span style="letter-spacing: -.35pt;">
</span>&<span style="letter-spacing: -.75pt;"> </span>Morgan,<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">P.C.</span></i><span style="letter-spacing: -.05pt;">,</span><span style="letter-spacing: -.35pt;"> </span>321<span style="letter-spacing: -.3pt;"> </span>F.<span style="letter-spacing: -.35pt;"> </span>Supp.<span style="letter-spacing: -.35pt;">
</span>3d<span style="letter-spacing: -.25pt;"> </span>978,<span style="letter-spacing: -.35pt;"> </span>981-984<span style="letter-spacing: -.25pt;">
</span>(D.<span style="letter-spacing: -.35pt;"> </span>Ariz.<span style="letter-spacing: -.35pt;"> </span>2018) (same result under Arizona law);<span style="letter-spacing: -.3pt;"> </span><i style="mso-bidi-font-style: normal;">Muhammad<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Reese<span style="letter-spacing: -.35pt;"> </span>Law<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span>Group</i>,<span style="letter-spacing: -.35pt;"> </span>2017<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.1pt;">WL</span><span style="letter-spacing: -.4pt;"> </span>4557194,<span style="letter-spacing: -.4pt;">
</span>at<span style="letter-spacing: -.25pt;"> </span>*7<span style="letter-spacing: -.25pt;"> </span>(S.D.<span style="letter-spacing: -.35pt;"> </span>Cal.<span style="letter-spacing: -.35pt;"> </span>Oct.<span style="letter-spacing: -.35pt;"> </span>12,<span style="letter-spacing: -.35pt;"> </span>2017) (same result under California
law).<span style="mso-spacerun: yes;"> </span>You should look to your state’s
garnishment laws for guidance.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">Overshadowing
Risks<o:p></o:p></span></u></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">The concept of “overshadowing” can be particularly
frustrating for HOA practitioners, because it is a judicially-created doctrine
that can vary from circuit to circuit.<span style="mso-spacerun: yes;">
</span>What exactly is “overshadowing” under the FDCPA?<span style="mso-spacerun: yes;"> </span>Broadly speaking, it starts with
understanding the notice requirements of section 1692g of the FDCPA, which must
be provided by collectors with their initial written communication with consumers.<span style="mso-spacerun: yes;"> </span>It is not sufficient for collectors to simply
provide the section 1692g notice.<span style="mso-spacerun: yes;">
</span>Collectors must also avoid “overshadowing” the notice by stating or doing
anything during the 30-day validation period that would tend to contradict the
notice or that would confuse a consumer regarding their section 1692g rights.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">Overshadowing can be a huge challenge for HOA attorneys who
must also comply with notice obligations required by state law.<span style="mso-spacerun: yes;"> </span>Once again, court have reached different
results when evaluating overshadowing claims in this context.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Compare
Mashiri v. Epsten Grinnell & Howell</i>, 845 F.3d 984 (9th Cir. 2017)
(notice stating “Failure to pay your assessment account in full within
thirty-five (35) days from the date of this letter will result in a lien being
recorded against your property” overshadowed section 1692g notice) with <i style="mso-bidi-font-style: normal;">Mahmoud v. De Moss Owners Association, Inc</i>.,
865 F.3d 322 (5th Cir. 2017) (no overshadowing; letter stated nonjudicial
foreclosure would occur unless payment made “on or before the expiration of
thirty (30) days from and after the date hereof”).<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;"><span style="mso-tab-count: 1;">T</span>he “overshadowing” case law is unpredictable,
and can vary widely from situation to situation and from circuit to
circuit.<span style="mso-spacerun: yes;"> </span>For example, the Ninth Circuit found
no overshadowing when an attorney made an implied threat of litigation during
the validation period.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See Terran v. Kaplan</i>, 109 F.3d 1428, 1430
(9th Cir. 1997) (attorney letter stating “we may find it necessary to recommend
to our client that they proceed with litigation” did not overshadow).<span style="mso-spacerun: yes;"> </span>By contrast, the Third Circuit in <i style="mso-bidi-font-style: normal;">Caprio v. Healthcare Revenue Recovery Grp</i>.,
709 F.3d 142 (3d Cir. 2013), held that a request for a consumer to “please call”
the collector overshadowed the section 1692g notice.<span style="mso-spacerun: yes;"> </span>Given the wide variety of potential risks, HOA
attorneys should closely review the communications they make and collection practices
they employ during the 30-day validation period.<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: Arial, Helvetica, sans-serif; line-height: 102%;">Risks
Presented By Violation Of State Laws And Compliance With State Laws<o:p></o:p></span></u></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="text-indent: 0.5in;">HOA
attorneys are obligated to be vigorous advocates for their clients, and they
must ensure that they perfect their client’s rights under the laws and
procedures of the states where they practice.</span><span style="text-indent: 0.5in;">
</span><span style="text-indent: 0.5in;">It would be reasonable for HOA attorneys to believe that they can avoid
liability under the FDCPA if they are simply sending notices that are required
by state law, but unfortunately this has not always been true.</span><span style="text-indent: 0.5in;"> </span><i style="text-indent: 0.5in;">See,
e.g.,</i><span style="text-indent: 0.5in;"> </span><i style="text-indent: 0.5in;">Salewske v. Trott & Trott P.C.</i><span style="text-indent: 0.5in;">, 2017 WL 2888998 (E.D. Mich.
Jul. 7, 2017) (FDCPA claims based on notice of foreclosure sale that was
required by state law); </span><i style="text-indent: 0.5in;">McDermott v. Marcus, Errico, Emmer & Brooks,
P.C.</i><span style="text-indent: 0.5in;">, 911 F. Supp. 2d 1, 71 (D. Mass. Nov. 20, 2012) (FDCPA claims based on
sending notice to mortgagee required by state law).</span><span style="text-indent: 0.5in;"> </span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="line-height: 102%; text-indent: 0.5in;">Consumer
attorneys will not hesitate to seize on real or imagined violations of state
procedural law and try to “make a federal case out of it” under the FDCPA. <i>See, e.g.,</i>
<i>Lowe v. Maxwell & Morgan, PC, </i>2018
WL 4693532 (D. Ariz. Sept. 27, 2018) (rejecting argument that law firm was
required to follow state law procedures for posting a bond before proceeding
with garnishment). Even where state law
has been violated, however, the mere failure to comply with state law does not
by itself always establish an FDCPA violation.
<i>See</i> </span><i style="text-indent: 0.5in;"><span style="line-height: 102%;">Wade
v. Regional Credit Ass’n</span></i><span style="line-height: 102%; text-indent: 0.5in;">, 87 F.3d 1098 (9th Cir. 1996)
(sending collection notice without maintaining license required by state law
did not violate FDCPA).</span></span></div>
<br />Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com0tag:blogger.com,1999:blog-7881335399385517573.post-22068753384210530452018-09-22T08:32:00.000-07:002018-09-22T08:32:38.606-07:00Is It “Debt Collection” If You Never Asked For Money?<br />
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Can<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>communication<span style="letter-spacing: -.4pt;"> </span>from<span style="letter-spacing: -.55pt;"> </span>a<span style="letter-spacing: -.45pt;"> </span>collector<span style="letter-spacing: -.4pt;"> </span>violate<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>Fair<span style="letter-spacing: -.4pt;"> </span>Debt<span style="letter-spacing: -.35pt;"> </span>Collection<span style="letter-spacing: 2.7pt; mso-font-width: 99%;"> </span>Practices<span style="letter-spacing: -.2pt;"> </span>Act,<span style="letter-spacing: -.35pt;"> </span>15<span style="letter-spacing: -.3pt;"> </span>U.S.C.<span style="letter-spacing: -.3pt;"> </span>§<span style="letter-spacing: -.25pt;"> </span>1692,<span style="letter-spacing: -.3pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">et.<span style="letter-spacing: -.35pt;"> </span>seq</span></i>.<span style="letter-spacing: -.3pt;"> </span>(the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">“FDCPA”)</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">if</span><span style="letter-spacing: -.3pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>never<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">asks</span><span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debtor</span><span style="letter-spacing: 2.7pt; mso-font-width: 99%;"> </span>to<span style="letter-spacing: -.25pt;"> </span>pay<span style="letter-spacing: -.4pt;"> </span>any<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">money?</span><span style="letter-spacing: 3.0pt;"> </span><span style="letter-spacing: -.05pt;">What</span><span style="letter-spacing: -.2pt;"> </span>exactly<span style="letter-spacing: -.45pt;"> </span>does<span style="letter-spacing: -.15pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>term<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">“debt</span><span style="letter-spacing: -.35pt;"> </span>collection”<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">mean</span><span style="letter-spacing: -.15pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: 2.9pt; mso-font-width: 99%;"> </span>context<span style="letter-spacing: -.35pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>FDCPA?<span style="letter-spacing: 3.0pt;"> </span>These<span style="letter-spacing: -.4pt;"> </span>seemingly<span style="letter-spacing: -.6pt;">
</span><span style="letter-spacing: -.05pt;">simple</span><span style="letter-spacing: -.4pt;"> </span>questions<span style="letter-spacing: -.3pt;"> </span>have<span style="letter-spacing: -.4pt;"> </span>divided<span style="letter-spacing: -.25pt;">
</span>the<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>circuit<span style="letter-spacing: -.3pt;"> </span>courts,<span style="letter-spacing: -.35pt;">
</span>and<span style="letter-spacing: -.3pt;"> </span>they<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.5pt;"> </span>soon<span style="letter-spacing: -.3pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>resolved<span style="letter-spacing: -.2pt;">
</span>by<span style="letter-spacing: -.5pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>United<span style="letter-spacing: -.2pt;"> </span>States<span style="letter-spacing: -.3pt;"> </span>Supreme<span style="letter-spacing: -.35pt;">
</span>Court<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>when<span style="letter-spacing: -.25pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>decides<span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>case<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: -.2pt;"> </span>arose<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">out</span><span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>nonjudicial<span style="letter-spacing: -.3pt;"> </span>foreclosure<span style="letter-spacing: -.35pt;"> </span>proceeding<span style="letter-spacing: -.3pt;"> </span>in<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>Colorado.<span style="letter-spacing: 2.85pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">See<span style="letter-spacing: -.35pt;"> </span>Obduskey<span style="letter-spacing: -.35pt;">
</span>v.<span style="letter-spacing: -.35pt;"> </span>Wells<span style="letter-spacing: -.25pt;"> </span>Fargo</span></i>,<span style="letter-spacing: -.35pt;"> </span>138<span style="letter-spacing: -.35pt;"> </span>S.<span style="letter-spacing: -.35pt;"> </span>Ct.<span style="letter-spacing: -.35pt;"> </span>2710<span style="letter-spacing: -.25pt;"> </span>(2018).<o:p></o:p></div>
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The<span style="letter-spacing: -.3pt;"> </span>FDCPA<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">has</span><span style="letter-spacing: -.1pt;"> </span>been<span style="letter-spacing: -.1pt;"> </span>with<span style="letter-spacing: -.2pt;"> </span>us<span style="letter-spacing: -.2pt;"> </span>for<span style="letter-spacing: -.25pt;"> </span>over<span style="letter-spacing: -.3pt;"> </span>forty<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">years,</span><span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.2pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>is<span style="letter-spacing: -.3pt;"> </span>likely<span style="letter-spacing: -.4pt;"> </span>one<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">most</span><span style="letter-spacing: -.35pt;"> </span>heavily-litigated<span style="letter-spacing: -.35pt;"> </span>statutes<span style="letter-spacing: -.3pt;">
</span>in<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>country.<span style="letter-spacing: 2.75pt;"> </span>It<span style="letter-spacing: -.4pt;"> </span>prohibits<span style="letter-spacing: -.3pt;">
</span>debt<span style="letter-spacing: -.4pt;"> </span>collectors<span style="letter-spacing: -.35pt;"> </span>from<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>engaging<span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>broad<span style="letter-spacing: -.25pt;"> </span>range<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>unfair<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span>misleading<span style="letter-spacing: -.25pt;"> </span>debt<span style="letter-spacing: -.3pt;"> </span>collection<span style="letter-spacing: -.25pt;"> </span>practices.<span style="letter-spacing: 2.75pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">See<span style="letter-spacing: 4.1pt; mso-font-width: 99%;"> </span></span></i>15<span style="letter-spacing: -.2pt;"> </span>U.S.C.<span style="letter-spacing: -.3pt;"> </span>§§<span style="letter-spacing: -.25pt;"> </span>1692b-1692i.<span style="letter-spacing: 2.85pt;"> </span>How<span style="letter-spacing: -.25pt;"> </span>is<span style="letter-spacing: -.2pt;"> </span>it,<span style="letter-spacing: -.3pt;"> </span>then,<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.1pt;"> </span>after<span style="letter-spacing: -.3pt;"> </span>all<span style="letter-spacing: -.2pt;"> </span>this<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.05pt;">time</span><span style="letter-spacing: -.25pt;"> </span>and<span style="letter-spacing: -.2pt;"> </span>all<span style="letter-spacing: -.2pt;"> </span>this<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>litigation,<span style="letter-spacing: -.45pt;"> </span>we<span style="letter-spacing: -.4pt;"> </span>still<span style="letter-spacing: -.4pt;"> </span>do<span style="letter-spacing: -.3pt;"> </span>not<span style="letter-spacing: -.3pt;"> </span>know<span style="letter-spacing: -.4pt;"> </span>exactly<span style="letter-spacing: -.55pt;">
</span>what<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">“debt</span><span style="letter-spacing: -.35pt;"> </span>collection”<span style="letter-spacing: -.4pt;"> </span>means?<o:p></o:p></div>
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You<span style="letter-spacing: -.3pt;"> </span>would<span style="letter-spacing: -.2pt;"> </span>think<span style="letter-spacing: -.25pt;"> </span>this<span style="letter-spacing: -.2pt;"> </span>would<span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.3pt;"> </span>easy,<span style="letter-spacing: -.35pt;"> </span>but<span style="letter-spacing: -.3pt;"> </span>like<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">most</span><span style="letter-spacing: -.25pt;"> </span>things<span style="letter-spacing: -.2pt;"> </span>relating<span style="letter-spacing: -.2pt;">
</span>to<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span>FDCPA,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">it</span><span style="letter-spacing: -.25pt;"> </span>is<span style="letter-spacing: -.35pt;"> </span>not.<span style="letter-spacing: -.35pt;"> </span>For<span style="letter-spacing: -.35pt;"> </span>starters,<span style="letter-spacing: -.4pt;"> </span>as<span style="letter-spacing: -.25pt;"> </span>courts<span style="letter-spacing: -.35pt;"> </span>have<span style="letter-spacing: -.4pt;"> </span>observed,<span style="letter-spacing: -.4pt;"> </span>although<span style="letter-spacing: -.35pt;">
</span>the<span style="letter-spacing: -.35pt;"> </span>statute<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>includes<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">number</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>definitions,<span style="letter-spacing: -.4pt;"> </span>Congress<span style="letter-spacing: -.35pt;">
</span>did<span style="letter-spacing: -.25pt;"> </span>not<span style="letter-spacing: -.3pt;"> </span>define<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>term<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">“debt</span><span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>collection”<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">anywhere</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">in</span><span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>Act.<span style="letter-spacing: 2.8pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">See<span style="letter-spacing: -.4pt;"> </span></span></i>15<span style="letter-spacing: -.35pt;"> </span>U.S.C.<span style="letter-spacing: -.35pt;"> </span>§<span style="letter-spacing: -.3pt;"> </span>1692(a)<span style="letter-spacing: -.35pt;"> </span>(referring<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>“abundant<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>evidence<span style="letter-spacing: -.5pt;"> </span>of”<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: -.05pt;">improper</span><span style="letter-spacing: -.5pt;">
</span><span style="letter-spacing: -.05pt;">“debt</span><span style="letter-spacing: -.35pt;"> </span>collection<span style="letter-spacing: -.4pt;"> </span>practices”<span style="letter-spacing: -.45pt;"> </span>and<span style="letter-spacing: -.4pt;"> </span>observing<span style="letter-spacing: -.45pt;"> </span>that<span style="letter-spacing: -.35pt;"> </span>certain<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">“debt </span>collection<span style="letter-spacing: -0.4pt;"> </span>practices”<span style="letter-spacing: -0.45pt;"> </span>can<span style="letter-spacing: -0.3pt;"> </span>cause<span style="letter-spacing: -0.5pt;"> </span>undesired<span style="letter-spacing: -0.3pt;">
</span>effects);<span style="letter-spacing: -0.4pt;"> </span>§<span style="letter-spacing: -0.4pt;"> </span>1692a<span style="letter-spacing: -0.45pt;"> </span>(defining<span style="letter-spacing: -0.4pt;"> </span>certain<span style="letter-spacing: -0.4pt;">
</span><span style="letter-spacing: -0.05pt;">terms,</span><span style="letter-spacing: 4.8pt;"> </span>but<span style="letter-spacing: -0.3pt;"> </span>not<span style="letter-spacing: -0.35pt;"> </span>defining<span style="letter-spacing: -0.35pt;">
</span><span style="letter-spacing: -0.05pt;">“debt</span><span style="letter-spacing: -0.25pt;"> </span>collection”);<span style="letter-spacing: -0.2pt;"> </span><i>see<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">also</span><span style="letter-spacing: -.25pt;"> </span>Glazer<span style="letter-spacing: -.25pt;">
</span>v.<span style="letter-spacing: -.35pt;"> </span>Chase<span style="letter-spacing: -.35pt;"> </span>Home<span style="letter-spacing: -.35pt;"> </span>Fin.<span style="letter-spacing: -.4pt;"> </span>LLC</i>,<span style="letter-spacing: -0.35pt;"> </span>704<span style="letter-spacing: 3.5pt;"> </span>F.3d<span style="letter-spacing: -0.3pt;"> </span>453,<span style="letter-spacing: -0.4pt;"> </span>460<span style="letter-spacing: -0.3pt;"> </span>(6th<span style="letter-spacing: -0.3pt;"> </span>Cir.<span style="letter-spacing: -0.4pt;"> </span>2013)<span style="letter-spacing: -0.4pt;"> </span>(“Unfortunately,<span style="letter-spacing: -0.35pt;"> </span>the<span style="letter-spacing: -0.4pt;"> </span>FDCPA<span style="letter-spacing: -0.4pt;"> </span>does<span style="letter-spacing: -0.25pt;"> </span>not<span style="letter-spacing: -0.3pt;"> </span>define<span style="letter-spacing: -0.35pt;">
</span>‘debt<span style="letter-spacing: 2.9pt;"> </span>collection,’<span style="letter-spacing: -0.45pt;"> </span>and<span style="letter-spacing: -0.3pt;"> </span>its<span style="letter-spacing: -0.35pt;"> </span>definition<span style="letter-spacing: -0.25pt;"> </span>of<span style="letter-spacing: -0.35pt;"> </span>‘debt<span style="letter-spacing: -0.3pt;"> </span>collector’<span style="letter-spacing: -0.4pt;"> </span>sheds<span style="letter-spacing: -0.35pt;"> </span>little<span style="letter-spacing: -0.35pt;"> </span>light,<span style="letter-spacing: -0.35pt;">
</span>for<span style="letter-spacing: -0.4pt;"> </span>it<span style="letter-spacing: -0.25pt;"> </span>speaks<span style="letter-spacing: -0.25pt;"> </span>in<span style="letter-spacing: 5pt;"> </span><span style="letter-spacing: -0.05pt;">terms</span><span style="letter-spacing: -0.35pt;"> </span>of<span style="letter-spacing: -0.4pt;"> </span><span style="letter-spacing: 0.05pt;">debt</span><span style="letter-spacing: -0.3pt;"> </span>collection.”)<span style="letter-spacing: -0.4pt;"> </span>(citations<span style="letter-spacing: -0.3pt;"> </span>omitted);<span style="letter-spacing: -0.3pt;"> </span><i>Gburek<span style="letter-spacing: -.4pt;"> </span>v.<span style="letter-spacing: -.4pt;"> </span>Litton<span style="letter-spacing: -.3pt;"> </span>Loan<span style="letter-spacing: -.25pt;"> </span>Serv.<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">LP</span></i><span style="letter-spacing: -0.05pt;">,</span><span style="letter-spacing: -0.4pt;"> </span>614<span style="letter-spacing: 3.7pt;"> </span>F.3d<span style="letter-spacing: -0.25pt;"> </span>380,<span style="letter-spacing: -0.35pt;"> </span>384<span style="letter-spacing: -0.25pt;"> </span>(7th<span style="letter-spacing: -0.25pt;"> </span>Cir.<span style="letter-spacing: -0.35pt;"> </span>2010)<span style="letter-spacing: -0.35pt;">
</span><span style="letter-spacing: -0.05pt;">(“Neither</span><span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: 0.05pt;">this</span><span style="letter-spacing: -0.3pt;"> </span>circuit<span style="letter-spacing: -0.2pt;">
</span>nor<span style="letter-spacing: -0.35pt;"> </span>any<span style="letter-spacing: -0.55pt;"> </span>other<span style="letter-spacing: -0.35pt;">
</span>has<span style="letter-spacing: -0.2pt;"> </span>established<span style="letter-spacing: -0.2pt;"> </span>a<span style="letter-spacing: 4.6pt;"> </span>brightline<span style="letter-spacing: -0.45pt;"> </span>rule<span style="letter-spacing: -0.45pt;"> </span>for<span style="letter-spacing: -0.45pt;"> </span>determining<span style="letter-spacing: -0.4pt;"> </span>whether<span style="letter-spacing: -0.45pt;">
</span>a<span style="letter-spacing: -0.4pt;"> </span>communication<span style="letter-spacing: -0.4pt;"> </span>from<span style="letter-spacing: -0.65pt;"> </span>a<span style="letter-spacing: -0.4pt;"> </span>debt<span style="letter-spacing: -0.45pt;"> </span>collector<span style="letter-spacing: -0.45pt;"> </span>was<span style="letter-spacing: 3.3pt;"> </span><span style="letter-spacing: -0.05pt;">made</span><span style="letter-spacing: -0.35pt;"> </span>in<span style="letter-spacing: -0.3pt;"> </span>connection<span style="letter-spacing: -0.25pt;"> </span>with<span style="letter-spacing: -0.25pt;"> </span>the<span style="letter-spacing: -0.35pt;"> </span>collection<span style="letter-spacing: -0.25pt;"> </span>of<span style="letter-spacing: -0.35pt;"> </span>any<span style="letter-spacing: -0.5pt;"> </span>debt.”).<span style="letter-spacing: 2.85pt;">
</span>To<span style="letter-spacing: -0.25pt;"> </span>date,<span style="letter-spacing: -0.35pt;"> </span>the<span style="letter-spacing: -0.35pt;"> </span>Supreme<span style="letter-spacing: -0.3pt;"> </span>Court<span style="letter-spacing: 3.3pt;"> </span>has<span style="letter-spacing: -0.25pt;"> </span>never<span style="letter-spacing: -0.4pt;"> </span>defined<span style="letter-spacing: -0.25pt;">
</span>the<span style="letter-spacing: -0.35pt;"> </span>term<span style="letter-spacing: -0.5pt;"> </span><span style="letter-spacing: -0.05pt;">“debt</span><span style="letter-spacing: -0.25pt;"> </span>collection,”<span style="letter-spacing: -0.4pt;"> </span>nor<span style="letter-spacing: -0.35pt;"> </span>has<span style="letter-spacing: -0.25pt;"> </span>that<span style="letter-spacing: -0.25pt;"> </span>Court<span style="letter-spacing: -0.3pt;"> </span>ever<span style="letter-spacing: -0.35pt;"> </span>addressed<span style="letter-spacing: 4pt;"> </span>whether<span style="letter-spacing: -0.5pt;"> </span>a<span style="letter-spacing: -0.45pt;"> </span>“debt<span style="letter-spacing: -0.35pt;"> </span>collection”<span style="letter-spacing: -0.45pt;"> </span>communication<span style="letter-spacing: -0.4pt;"> </span><span style="letter-spacing: -0.05pt;">must</span><span style="letter-spacing: -0.35pt;"> </span>include<span style="letter-spacing: -0.45pt;"> </span>an<span style="letter-spacing: -0.35pt;"> </span>explicit<span style="letter-spacing: -0.45pt;"> </span><span style="letter-spacing: -0.05pt;">demand</span><span style="letter-spacing: -0.35pt;"> </span>for<span style="letter-spacing: 3.1pt;"> </span><span style="letter-spacing: -0.05pt;">payment</span><span style="letter-spacing: -0.45pt;"> </span>of<span style="letter-spacing: -0.4pt;"> </span><span style="letter-spacing: -0.05pt;">money</span><span style="letter-spacing: -0.55pt;"> </span>from<span style="letter-spacing: -0.65pt;"> </span>the<span style="letter-spacing: -0.45pt;"> </span>debtor.</div>
</div>
<div class="WordSection2">
<div class="MsoBodyText" style="line-height: 204%; margin-top: 2.0pt;">
<o:p></o:p></div>
<div class="MsoBodyText" style="line-height: 204%; margin-right: 9.3pt; text-indent: .5in;">
The<span style="letter-spacing: -.45pt;"> </span>circuit<span style="letter-spacing: -.3pt;"> </span>courts<span style="letter-spacing: -.35pt;">
</span>have<span style="letter-spacing: -.4pt;"> </span>reached<span style="letter-spacing: -.3pt;"> </span>different<span style="letter-spacing: -.3pt;">
</span>conclusions<span style="letter-spacing: -.35pt;"> </span>on<span style="letter-spacing: -.35pt;"> </span>whether<span style="letter-spacing: -.45pt;">
</span>a<span style="letter-spacing: -.4pt;"> </span>“debt<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>collection”<span style="letter-spacing: -.45pt;">
</span><span style="letter-spacing: -.05pt;">communication</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">make</span><span style="letter-spacing: -.4pt;"> </span>a<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: -.05pt;">demand</span><span style="letter-spacing: -.3pt;"> </span>on<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">debtor</span><span style="letter-spacing: -.4pt;"> </span>for<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">money</span><span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.2pt;"> </span>order<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.2pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>subject<span style="letter-spacing: -.15pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>FDCPA.<span style="letter-spacing: 2.9pt;"> </span>Decisions<span style="letter-spacing: -.25pt;"> </span>from<span style="letter-spacing: -.6pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>Ninth<span style="letter-spacing: -.25pt;"> </span>Circuit<span style="letter-spacing: -.2pt;"> </span>and the<span style="letter-spacing: -0.35pt;"> </span>Tenth<span style="letter-spacing: -0.25pt;">
</span>Circuit<span style="letter-spacing: -0.3pt;"> </span>have<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: 0.05pt;">held</span><span style="letter-spacing: -0.3pt;"> </span>that<span style="letter-spacing: -0.3pt;"> </span>a<span style="letter-spacing: -0.3pt;"> </span>collector<span style="letter-spacing: -0.35pt;">
</span>is<span style="letter-spacing: -0.25pt;"> </span><u>not<span style="letter-spacing: -.3pt;"> </span></u>engaged<span style="letter-spacing: -0.2pt;"> </span>in<span style="letter-spacing: -0.25pt;"> </span><span style="letter-spacing: -0.05pt;">“debt</span><span style="letter-spacing: -0.25pt;"> </span>collection”<span style="letter-spacing: 4.2pt;"> </span>under<span style="letter-spacing: -0.45pt;"> </span><span style="letter-spacing: 0.05pt;">the</span><span style="letter-spacing: -0.45pt;"> </span>FDCPA<span style="letter-spacing: -0.45pt;">
</span><span style="letter-spacing: 0.05pt;">unless</span><span style="letter-spacing: -0.35pt;"> </span>the<span style="letter-spacing: -0.45pt;"> </span>challenged<span style="letter-spacing: -0.3pt;"> </span>communication<span style="letter-spacing: -0.45pt;"> </span><span style="letter-spacing: -0.05pt;">makes</span><span style="letter-spacing: -0.3pt;"> </span>a<span style="letter-spacing: -0.45pt;"> </span><span style="letter-spacing: -0.05pt;">demand</span><span style="letter-spacing: -0.35pt;">
</span>for<span style="letter-spacing: 2.4pt;"> </span><span style="letter-spacing: -0.05pt;">payment</span><span style="letter-spacing: -0.35pt;">
</span>of<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: -0.05pt;">money.</span><span style="letter-spacing: 2.85pt;"> </span><i>See,<span style="letter-spacing: -.35pt;"> </span>e.g.,<span style="letter-spacing: -.35pt;">
</span>Ho<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>ReconTrust<span style="letter-spacing: -.25pt;"> </span>Co.,<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">NA</span></i><span style="letter-spacing: -0.05pt;">,</span><span style="letter-spacing: -0.3pt;"> </span>840<span style="letter-spacing: -0.25pt;"> </span>F.3d<span style="letter-spacing: -0.25pt;"> </span>618,<span style="letter-spacing: -0.4pt;"> </span>621-623<span style="letter-spacing: 2.9pt;"> </span>(9th<span style="letter-spacing: -0.25pt;"> </span>Cir.<span style="letter-spacing: -0.35pt;"> </span>2016)<span style="letter-spacing: -0.35pt;">
</span>(mailing<span style="letter-spacing: -0.3pt;"> </span>notice<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: 0.05pt;">of</span><span style="letter-spacing: -0.35pt;"> </span>default<span style="letter-spacing: -0.35pt;">
</span>and<span style="letter-spacing: -0.3pt;"> </span>notice<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: 0.05pt;">of</span><span style="letter-spacing: -0.35pt;"> </span>sale<span style="letter-spacing: -0.35pt;"> </span>to<span style="letter-spacing: -0.25pt;"> </span>debtor,<span style="letter-spacing: -0.35pt;">
</span>which<span style="letter-spacing: 3.6pt;"> </span>threatened<span style="letter-spacing: -0.45pt;"> </span>foreclosure,<span style="letter-spacing: -0.4pt;"> </span>was<span style="letter-spacing: -0.3pt;"> </span>not<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: -0.05pt;">attempt</span><span style="letter-spacing: -0.3pt;"> </span>to<span style="letter-spacing: -0.35pt;"> </span>collect<span style="letter-spacing: -0.25pt;"> </span><span style="letter-spacing: -0.05pt;">money</span><span style="letter-spacing: -0.5pt;"> </span>from<span style="letter-spacing: -0.6pt;"> </span>debtor,<span style="letter-spacing: -0.45pt;"> </span>and<span style="letter-spacing: -0.3pt;"> </span>thus<span style="letter-spacing: 4pt;"> </span>was<span style="letter-spacing: -0.35pt;"> </span>not<span style="letter-spacing: -0.25pt;"> </span><span style="letter-spacing: -0.05pt;">“debt</span><span style="letter-spacing: -0.25pt;"> </span>collection”<span style="letter-spacing: -0.35pt;"> </span>under<span style="letter-spacing: -0.4pt;"> </span>FDCPA;<span style="letter-spacing: -0.15pt;"> </span><span style="letter-spacing: -0.05pt;">“The</span><span style="letter-spacing: -0.35pt;"> </span>notices<span style="letter-spacing: -0.25pt;">
</span>at<span style="letter-spacing: -0.25pt;"> </span>issue<span style="letter-spacing: -0.35pt;"> </span>in<span style="letter-spacing: -0.25pt;"> </span>our<span style="letter-spacing: -0.35pt;"> </span>case<span style="letter-spacing: -0.4pt;"> </span>didn’t request<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: -0.05pt;">payment</span><span style="letter-spacing: -0.3pt;"> </span>from<span style="letter-spacing: -0.55pt;"> </span>Ho.”);<span style="letter-spacing: -0.3pt;"> </span><i>Obduskey<span style="letter-spacing: -.35pt;"> </span>v.<span style="letter-spacing: -.4pt;"> </span>Wells<span style="letter-spacing: -.35pt;"> </span>Fargo</i>,<span style="letter-spacing: -0.35pt;"> </span>879<span style="letter-spacing: -0.35pt;"> </span>F.3d<span style="letter-spacing: -0.3pt;"> </span>1216,<span style="letter-spacing: -0.45pt;"> </span>1221<span style="letter-spacing: -0.3pt;"> </span>(10th<span style="letter-spacing: 3.4pt;"> </span>Cir.)<span style="letter-spacing: -0.4pt;"> </span>(following<span style="letter-spacing: -0.35pt;"> </span><i>Ho</i>;<span style="letter-spacing: -0.25pt;"> </span>“Because<span style="letter-spacing: -0.4pt;">
</span>enforcing<span style="letter-spacing: -0.3pt;"> </span>a<span style="letter-spacing: -0.35pt;"> </span>security<span style="letter-spacing: -0.5pt;">
</span>interest<span style="letter-spacing: -0.3pt;"> </span>is<span style="letter-spacing: -0.4pt;"> </span>not<span style="letter-spacing: -0.25pt;"> </span>an<span style="letter-spacing: -0.25pt;"> </span><span style="letter-spacing: -0.05pt;">attempt</span><span style="letter-spacing: -0.3pt;"> </span>to<span style="letter-spacing: 3.5pt;"> </span>collect<span style="letter-spacing: -0.2pt;"> </span><span style="letter-spacing: -0.05pt;">money</span><span style="letter-spacing: -0.45pt;"> </span>from<span style="letter-spacing: -0.5pt;"> </span>the<span style="letter-spacing: -0.3pt;"> </span>debtor,<span style="letter-spacing: -0.3pt;"> </span>and<span style="letter-spacing: -0.2pt;"> </span>the<span style="letter-spacing: -0.3pt;"> </span>consumer<span style="letter-spacing: -0.3pt;">
</span>has<span style="letter-spacing: -0.2pt;"> </span>no<span style="letter-spacing: -0.2pt;"> </span>“obligation<span style="letter-spacing: -0.25pt;"> </span>.<span style="letter-spacing: -0.35pt;"> </span>.<span style="letter-spacing: -0.3pt;"> </span>.<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.05pt;">to</span><span style="letter-spacing: -0.2pt;"> </span>pay<span style="letter-spacing: 2.9pt;"> </span><span style="letter-spacing: -0.05pt;">money,”</span><span style="letter-spacing: -0.55pt;"> </span>non-judicial<span style="letter-spacing: -0.4pt;"> </span>foreclosure<span style="letter-spacing: -0.5pt;"> </span><span style="letter-spacing: 0.05pt;">is</span><span style="letter-spacing: -0.45pt;"> </span>not<span style="letter-spacing: -0.45pt;"> </span>covered<span style="letter-spacing: -0.35pt;">
</span>under<span style="letter-spacing: -0.55pt;"> </span>FDCPA)<span style="letter-spacing: -0.5pt;"> </span><span style="letter-spacing: 0.05pt;">(citations</span> <span style="letter-spacing: 2.5pt;"> </span>omitted),<span style="letter-spacing: -0.4pt;"> </span><i>pet.<span style="letter-spacing: -.35pt;"> </span>for<span style="letter-spacing: -.2pt;"> </span>cert.<span style="letter-spacing: -.4pt;"> </span>granted</i>,<span style="letter-spacing: -0.35pt;"> </span>138<span style="letter-spacing: -0.3pt;"> </span>S.<span style="letter-spacing: -0.35pt;"> </span>Ct.<span style="letter-spacing: -0.35pt;"> </span>2710<span style="letter-spacing: -0.25pt;"> </span>(2018).</div>
</div>
<div class="WordSection3">
<div class="MsoBodyText" style="line-height: 204%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 6.0pt; margin-right: 0in; margin-top: .45pt; text-indent: .5in;">
The<span style="letter-spacing: -.4pt;"> </span>approach<span style="letter-spacing: -.2pt;">
</span>used<span style="letter-spacing: -.25pt;"> </span>by<span style="letter-spacing: -.55pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>Ninth<span style="letter-spacing: -.35pt;"> </span>Circuit<span style="letter-spacing: -.3pt;">
</span>and<span style="letter-spacing: -.25pt;"> </span>Tenth<span style="letter-spacing: -.3pt;"> </span>Circuit<span style="letter-spacing: -.4pt;">
</span><span style="letter-spacing: -.05pt;">seems</span><span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">simple</span><span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>enough:<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">“debt</span><span style="letter-spacing: -.3pt;"> </span>collection”<span style="letter-spacing: -.4pt;"> </span>equals<span style="letter-spacing: -.3pt;"> </span>asking<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>debtor<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.25pt;"> </span>pay<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">money.</span><span style="letter-spacing: 2.8pt;"> </span>Other<span style="letter-spacing: -.4pt;"> </span>circuit<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>courts,<span style="letter-spacing: -.45pt;"> </span>however,<span style="letter-spacing: -.45pt;"> </span>have<span style="letter-spacing: -.4pt;"> </span>held<span style="letter-spacing: -.45pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>collector’s<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">communication</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">amount</span><span style="letter-spacing: -.45pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“debt</span><span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>collection”<span style="letter-spacing: -.35pt;"> </span>under<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>FDCPA,<span style="letter-spacing: -.35pt;">
</span>even<span style="letter-spacing: -.2pt;"> </span>if<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>collector<span style="letter-spacing: -.35pt;"> </span>has<span style="letter-spacing: -.2pt;"> </span>not<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">made</span><span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">demand</span><span style="letter-spacing: -.35pt;">
</span>for<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.35pt;">
</span>of<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">money</span><span style="letter-spacing: -.45pt;"> </span>on<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>debtor.<span style="letter-spacing: 2.85pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">See,<span style="letter-spacing: -.35pt;"> </span>e.g.,<span style="letter-spacing: -.35pt;"> </span>McCray<span style="letter-spacing: -.35pt;"> </span>v.<span style="letter-spacing: -.3pt;"> </span>Federal<span style="letter-spacing: -.3pt;"> </span>Home<span style="letter-spacing: -.3pt;"> </span>Loan<span style="letter-spacing: -.25pt;"> </span>Mortg.<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>Corp.</span></i>,<span style="letter-spacing: -.35pt;">
</span>839<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.25pt;"> </span>354,<span style="letter-spacing: -.35pt;"> </span>360<span style="letter-spacing: -.25pt;"> </span>(4th<span style="letter-spacing: -.3pt;"> </span>Cir.<span style="letter-spacing: -.3pt;"> </span>2016)<span style="letter-spacing: -.35pt;"> </span>(“nothing<span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>[the]<span style="letter-spacing: -.4pt;"> </span>language<span style="letter-spacing: -.35pt;">
</span>[of<span style="letter-spacing: -.3pt;"> </span>the FDCPA]<span style="letter-spacing: -0.6pt;"> </span><u>requires<span style="letter-spacing: -.35pt;"> </span></u>that<span style="letter-spacing: -0.35pt;"> </span>a<span style="letter-spacing: -0.5pt;"> </span>debt<span style="letter-spacing: -0.4pt;"> </span>collector’s<span style="letter-spacing: -0.4pt;"> </span>misrepresentation<span style="letter-spacing: -0.45pt;"> </span>[or<span style="letter-spacing: -0.5pt;"> </span>other<span style="letter-spacing: -0.45pt;"> </span>violative actions]<span style="letter-spacing: -0.45pt;"> </span>be<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.05pt;">made</span><span style="letter-spacing: -0.3pt;"> </span>as<span style="letter-spacing: -0.15pt;"> </span>part<span style="letter-spacing: -0.15pt;"> </span>of<span style="letter-spacing: -0.3pt;"> </span>an<span style="letter-spacing: -0.15pt;"> </span><u>express<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">demand</span><span style="letter-spacing: -.25pt;">
</span>for<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.3pt;"> </span></u>or<span style="letter-spacing: -0.25pt;"> </span>even<span style="letter-spacing: -0.2pt;"> </span>as<span style="letter-spacing: -0.2pt;"> </span>part<span style="letter-spacing: -0.2pt;"> </span>of<span style="letter-spacing: -0.3pt;"> </span>an<span style="letter-spacing: 3.2pt;"> </span>action<span style="letter-spacing: -0.3pt;"> </span>designed<span style="letter-spacing: -0.25pt;"> </span>to<span style="letter-spacing: -0.3pt;"> </span>induce<span style="letter-spacing: -0.4pt;"> </span><span style="letter-spacing: 0.05pt;">the</span><span style="letter-spacing: -0.4pt;"> </span><span style="letter-spacing: 0.05pt;">debtor</span><span style="letter-spacing: -0.4pt;"> </span>to<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.05pt;">pay.”)</span><span style="letter-spacing: -0.4pt;"> </span>(emphasis<span style="letter-spacing: -0.3pt;"> </span>in<span style="letter-spacing: -0.3pt;"> </span>original,<span style="letter-spacing: -0.4pt;"> </span>citation<span style="letter-spacing: 3pt;"> </span>omitted);<span style="letter-spacing: -0.35pt;"> </span><i>Gburek</i>,<span style="letter-spacing: -0.4pt;"> </span>614<span style="letter-spacing: -0.4pt;"> </span>F.3d<span style="letter-spacing: -0.3pt;"> </span>at<span style="letter-spacing: -0.35pt;"> </span>386<span style="letter-spacing: -0.3pt;"> </span>(letter<span style="letter-spacing: -0.45pt;">
</span>offering<span style="letter-spacing: -0.4pt;"> </span>to<span style="letter-spacing: -0.35pt;"> </span>discuss<span style="letter-spacing: -0.3pt;">
</span>“foreclosure alternatives”<span style="letter-spacing: -0.35pt;"> </span>was<span style="letter-spacing: -0.25pt;"> </span><span style="letter-spacing: -0.05pt;">attempt</span><span style="letter-spacing: -0.25pt;">
</span>to<span style="letter-spacing: -0.25pt;"> </span>collect<span style="letter-spacing: -0.2pt;"> </span>a<span style="letter-spacing: -0.35pt;"> </span>debt:<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.05pt;">“Though</span><span style="letter-spacing: -0.25pt;"> </span>it<span style="letter-spacing: -0.25pt;"> </span>did<span style="letter-spacing: -0.3pt;"> </span>not<span style="letter-spacing: -0.25pt;"> </span>explicitly<span style="letter-spacing: -0.5pt;"> </span>ask<span style="letter-spacing: -0.25pt;"> </span>for<span style="letter-spacing: 4.8pt;"> </span><span style="letter-spacing: -0.05pt;">payment,</span><span style="letter-spacing: -0.45pt;"> </span>it<span style="letter-spacing: -0.3pt;"> </span>was<span style="letter-spacing: -0.3pt;"> </span>an<span style="letter-spacing: -0.3pt;"> </span>offer<span style="letter-spacing: -0.4pt;"> </span><span style="letter-spacing: 0.05pt;">to</span><span style="letter-spacing: -0.3pt;"> </span>discuss<span style="letter-spacing: -0.3pt;"> </span>Gburek’s<span style="letter-spacing: -0.3pt;">
</span><span style="letter-spacing: -0.05pt;">repayment</span><span style="letter-spacing: -0.3pt;"> </span>options,<span style="letter-spacing: -0.4pt;">
</span>which<span style="letter-spacing: -0.25pt;"> </span>qualifies<span style="letter-spacing: -0.25pt;"> </span>as<span style="letter-spacing: 3.1pt;"> </span>a<span style="letter-spacing: -0.4pt;"> </span>communication<span style="letter-spacing: -0.35pt;"> </span>in<span style="letter-spacing: -0.3pt;"> </span>connection<span style="letter-spacing: -0.2pt;"> </span>with<span style="letter-spacing: -0.4pt;"> </span>an<span style="letter-spacing: -0.25pt;"> </span><span style="letter-spacing: -0.05pt;">attempt</span><span style="letter-spacing: -0.3pt;"> </span>to<span style="letter-spacing: -0.35pt;"> </span>collect<span style="letter-spacing: -0.2pt;"> </span>a<span style="letter-spacing: -0.4pt;"> </span>debt.”);<span style="letter-spacing: -0.25pt;"> </span><i>Glazer</i>,<span style="letter-spacing: -0.4pt;"> </span>704<span style="letter-spacing: 2.8pt;"> </span>F.3d<span style="letter-spacing: -0.35pt;"> </span>at<span style="letter-spacing: -0.4pt;"> </span>461<span style="letter-spacing: -0.3pt;"> </span>(FDCPA<span style="letter-spacing: -0.4pt;"> </span>applied<span style="letter-spacing: -0.3pt;">
</span>to<span style="letter-spacing: -0.4pt;"> </span>judicial<span style="letter-spacing: -0.3pt;"> </span>foreclosure<span style="letter-spacing: -0.45pt;"> </span>complaint,<span style="letter-spacing: -0.4pt;"> </span>despite<span style="letter-spacing: -0.45pt;"> </span>absence<span style="letter-spacing: -0.4pt;">
</span><span style="letter-spacing: 0.05pt;">of</span><span style="letter-spacing: 3.7pt;"> </span>any<span style="letter-spacing: -0.5pt;"> </span>allegation<span style="letter-spacing: -0.35pt;"> </span>that<span style="letter-spacing: -0.2pt;"> </span>it<span style="letter-spacing: -0.2pt;"> </span><span style="letter-spacing: -0.05pt;">made</span><span style="letter-spacing: -0.35pt;"> </span>a<span style="letter-spacing: -0.35pt;"> </span>demand<span style="letter-spacing: -0.25pt;"> </span>for<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.05pt;">payment</span><span style="letter-spacing: -0.25pt;">
</span>of<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: -0.05pt;">money</span><span style="letter-spacing: -0.4pt;"> </span>on<span style="letter-spacing: -0.35pt;"> </span>debtor:<span style="letter-spacing: -0.35pt;">
</span><span style="letter-spacing: -0.05pt;">“Thus,</span><span style="letter-spacing: -0.3pt;"> </span>if <span style="letter-spacing: 3.3pt;"> </span>the<span style="letter-spacing: -0.3pt;"> </span>purpose<span style="letter-spacing: -0.3pt;">
</span><span style="letter-spacing: 0.05pt;">of</span><span style="letter-spacing: -0.3pt;"> </span>an<span style="letter-spacing: -0.15pt;"> </span>activity<span style="letter-spacing: -0.5pt;"> </span>taken<span style="letter-spacing: -0.15pt;"> </span>in<span style="letter-spacing: -0.2pt;"> </span>relation<span style="letter-spacing: -0.2pt;">
</span>to<span style="letter-spacing: -0.2pt;"> </span>a<span style="letter-spacing: -0.3pt;"> </span>debt<span style="letter-spacing: -0.2pt;"> </span>is<span style="letter-spacing: -0.2pt;"> </span>to<span style="letter-spacing: -0.2pt;"> </span>‘obtain<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.05pt;">payment’</span><span style="letter-spacing: -0.35pt;"> </span>of<span style="letter-spacing: -0.25pt;"> </span>the<span style="letter-spacing: 4.1pt;"> </span>debt,<span style="letter-spacing: -0.5pt;"> </span>the<span style="letter-spacing: -0.45pt;"> </span>activity<span style="letter-spacing: -0.6pt;"> </span>is<span style="letter-spacing: -0.4pt;"> </span>properly<span style="letter-spacing: -0.6pt;"> </span>considered<span style="letter-spacing: -0.3pt;"> </span>debt<span style="letter-spacing: -0.4pt;"> </span>collection.”);<span style="letter-spacing: -0.35pt;"> </span><i>Kaltenbach<span style="letter-spacing: -.35pt;"> </span>v. </i><i style="text-align: justify;">Richards</i><span style="text-align: justify;">,</span><span style="letter-spacing: -0.35pt; text-align: justify;"> </span><span style="text-align: justify;">464</span><span style="letter-spacing: -0.35pt; text-align: justify;"> </span><span style="text-align: justify;">F.3d</span><span style="letter-spacing: -0.3pt; text-align: justify;"> </span><span style="text-align: justify;">524,</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="text-align: justify;">526-28</span><span style="letter-spacing: -0.3pt; text-align: justify;"> </span><span style="text-align: justify;">(5th</span><span style="letter-spacing: -0.3pt; text-align: justify;"> </span><span style="text-align: justify;">Cir.</span><span style="letter-spacing: -0.35pt; text-align: justify;"> </span><span style="text-align: justify;">2006)</span><span style="letter-spacing: -0.35pt; text-align: justify;"> </span><span style="text-align: justify;">(attorney</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="text-align: justify;">who</span><span style="letter-spacing: -0.3pt; text-align: justify;"> </span><span style="text-align: justify;">filed</span><span style="letter-spacing: -0.2pt; text-align: justify;"> </span><span style="text-align: justify;">foreclosure</span><span style="letter-spacing: 4.2pt; text-align: justify;"> </span><span style="text-align: justify;">action</span><span style="letter-spacing: -0.25pt; text-align: justify;"> </span><span style="letter-spacing: -0.1pt; text-align: justify;">may</span><span style="letter-spacing: -0.45pt; text-align: justify;"> </span><span style="text-align: justify;">be</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="letter-spacing: -0.05pt; text-align: justify;">“debt</span><span style="letter-spacing: -0.25pt; text-align: justify;"> </span><span style="text-align: justify;">collector”</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="text-align: justify;">under</span><span style="letter-spacing: -0.35pt; text-align: justify;"> </span><span style="text-align: justify;">FDCPA,</span><span style="letter-spacing: -0.35pt; text-align: justify;"> </span><span style="letter-spacing: 0.05pt; text-align: justify;">despite</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="text-align: justify;">absence</span><span style="letter-spacing: -0.35pt; text-align: justify;">
</span><span style="letter-spacing: 0.05pt; text-align: justify;">of</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="text-align: justify;">any</span><span style="letter-spacing: -0.5pt; text-align: justify;"> </span><span style="text-align: justify;">allegation</span><span style="letter-spacing: 3.1pt; text-align: justify;"> </span><span style="text-align: justify;">that</span><span style="letter-spacing: -0.3pt; text-align: justify;"> </span><span style="text-align: justify;">attorney</span><span style="letter-spacing: -0.55pt; text-align: justify;">
</span><span style="letter-spacing: -0.05pt; text-align: justify;">made</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="letter-spacing: -0.05pt; text-align: justify;">demand</span><span style="letter-spacing: -0.35pt; text-align: justify;"> </span><span style="text-align: justify;">for</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="letter-spacing: -0.05pt; text-align: justify;">payment</span><span style="letter-spacing: -0.35pt; text-align: justify;">
</span><span style="text-align: justify;">of</span><span style="letter-spacing: -0.4pt; text-align: justify;"> </span><span style="letter-spacing: -0.05pt; text-align: justify;">money).</span></div>
</div>
<div class="MsoBodyText" style="line-height: 204%; margin-right: 23.3pt; text-align: justify;">
<o:p></o:p></div>
<div class="MsoBodyText" style="line-height: 204%; margin-right: 12.95pt; text-indent: .5in;">
Ok,<span style="letter-spacing: -.35pt;"> </span>with<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>courts<span style="letter-spacing: -.25pt;"> </span>going<span style="letter-spacing: -.25pt;">
</span>in<span style="letter-spacing: -.25pt;"> </span>opposite<span style="letter-spacing: -.3pt;"> </span>directions,<span style="letter-spacing: -.4pt;"> </span>how<span style="letter-spacing: -.3pt;"> </span>do<span style="letter-spacing: -.25pt;"> </span>we<span style="letter-spacing: -.35pt;"> </span>get<span style="letter-spacing: -.2pt;"> </span>an<span style="letter-spacing: -.2pt;"> </span>answer<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>to<span style="letter-spacing: -.25pt;"> </span>this<span style="letter-spacing: -.25pt;"> </span>question?<span style="letter-spacing: 3.05pt;"> </span>It<span style="letter-spacing: -.2pt;"> </span>is<span style="letter-spacing: -.25pt;"> </span>possible<span style="letter-spacing: -.3pt;">
</span>that<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>Supreme<span style="letter-spacing: -.3pt;">
</span>Court<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.45pt;"> </span>bring<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">some</span><span style="letter-spacing: -.3pt;"> </span>clarity<span style="letter-spacing: -.45pt;">
</span>in<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>the<span style="letter-spacing: -.35pt;"> </span>upcoming<span style="letter-spacing: -.25pt;">
</span>term<span style="letter-spacing: -.5pt;"> </span>when<span style="letter-spacing: -.2pt;"> </span>it<span style="letter-spacing: -.2pt;"> </span>hears<span style="letter-spacing: -.15pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">Obduskey<span style="letter-spacing: -.25pt;"> </span></span></i>case.<span style="letter-spacing: 2.9pt;"> </span>The<span style="letter-spacing: -.35pt;"> </span>Court<span style="letter-spacing: -.2pt;"> </span>is<span style="letter-spacing: -.35pt;"> </span>expected<span style="letter-spacing: -.15pt;"> </span>to<span style="letter-spacing: 2.7pt; mso-font-width: 99%;"> </span>address<span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.4pt;"> </span><i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-family: "Times New Roman";">Obduskey<span style="letter-spacing: -.35pt;"> </span></span></i>whether<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.5pt;"> </span>FDCPA<span style="letter-spacing: -.45pt;"> </span>applies<span style="letter-spacing: -.35pt;">
</span>to<span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.5pt;"> </span>collector’s<span style="letter-spacing: -.35pt;"> </span>communications<span style="letter-spacing: 2.5pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">made</span><span style="letter-spacing: -.45pt;"> </span>in<span style="letter-spacing: -.4pt;"> </span>connection<span style="letter-spacing: -.3pt;"> </span>with<span style="letter-spacing: -.35pt;"> </span>non-judicial<span style="letter-spacing: -.3pt;"> </span>foreclosure<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">proceedings.</span><span style="letter-spacing: 2.65pt;"> </span><span style="letter-spacing: -.05pt;">While</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">doing</span><span style="letter-spacing: -.35pt;"> </span>so,<span style="letter-spacing: -.4pt;"> </span>it<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>is<span style="letter-spacing: -.35pt;"> </span>possible<span style="letter-spacing: -.35pt;">
</span>the<span style="letter-spacing: -.4pt;"> </span>Court<span style="letter-spacing: -.25pt;"> </span>will<span style="letter-spacing: -.4pt;"> </span>take<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>opportunity<span style="letter-spacing: -.55pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>opine<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">more</span><span style="letter-spacing: -.4pt;"> </span>generally<span style="letter-spacing: -.55pt;">
</span>on<span style="letter-spacing: -.25pt;"> </span>whether<span style="letter-spacing: 4.7pt; mso-font-width: 99%;"> </span>communications<span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.25pt;"> </span>do<span style="letter-spacing: -.3pt;"> </span>not<span style="letter-spacing: -.3pt;"> </span>include<span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>request<span style="letter-spacing: -.25pt;"> </span>for<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.35pt;">
</span>from<span style="letter-spacing: -.55pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>debtor<span style="letter-spacing: -.35pt;">
</span>are<span style="letter-spacing: 2.9pt; mso-font-width: 99%;"> </span>subject<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>FDCPA.<span style="letter-spacing: 2.95pt;">
</span>In<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">meantime,</span><span style="letter-spacing: -.3pt;"> </span>collectors<span style="letter-spacing: -.15pt;"> </span>will<span style="letter-spacing: -.25pt;"> </span>have<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>do<span style="letter-spacing: -.2pt;"> </span>their<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">best</span><span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>adjust<span style="letter-spacing: -.3pt;"> </span>their<span style="letter-spacing: -.35pt;"> </span>communications<span style="letter-spacing: -.4pt;"> </span>based<span style="letter-spacing: -.2pt;"> </span>on<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>law<span style="letter-spacing: -.35pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>circuits<span style="letter-spacing: -.25pt;">
</span>where<span style="letter-spacing: -.35pt;"> </span>they<span style="letter-spacing: -.5pt;"> </span>are<span style="letter-spacing: 2.7pt; mso-font-width: 99%;"> </span>located.<span style="letter-spacing: 2.65pt;"> </span>Stay<span style="letter-spacing: -.5pt;"> </span>tuned<span style="letter-spacing: -.35pt;"> </span>everyone.<o:p></o:p></div>
<br />Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com1tag:blogger.com,1999:blog-7881335399385517573.post-50196884260790605472018-02-01T09:19:00.000-08:002018-02-01T09:19:24.741-08:00Emerging Trends In FDCPA Litigation Against Community Association Attorneys<div class="WordSection1">
<div class="MsoBodyText" style="line-height: 102%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 5.0pt; margin-right: 12.15pt; margin-top: 12.3pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">Attorneys<span style="letter-spacing: -0.35pt;"> </span>and<span style="letter-spacing: -0.3pt;"> </span>other<span style="letter-spacing: -0.45pt;"> </span>entities<span style="letter-spacing: -0.25pt;">
</span>that<span style="letter-spacing: -0.3pt;"> </span>regularly<span style="letter-spacing: -0.5pt;"> </span>engage<span style="letter-spacing: -0.45pt;">
</span>in<span style="letter-spacing: -0.35pt;"> </span>collection<span style="letter-spacing: -0.3pt;"> </span>work<span style="letter-spacing: -0.3pt;"> </span>for<span style="letter-spacing: 3.8pt;"> </span><span style="letter-spacing: -0.05pt;">community</span><span style="letter-spacing: -0.55pt;"> </span>associations<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.1pt;">may</span><span style="letter-spacing: -0.5pt;"> </span>be<span style="letter-spacing: -0.4pt;"> </span>subject<span style="letter-spacing: -0.35pt;"> </span>to<span style="letter-spacing: -0.35pt;"> </span>the<span style="letter-spacing: -0.4pt;"> </span>requirements<span style="letter-spacing: -0.3pt;"> </span>of<span style="letter-spacing: -0.4pt;"> </span>the<span style="letter-spacing: -0.4pt;"> </span>Fair<span style="letter-spacing: -0.4pt;"> </span>Debt<span style="letter-spacing: 3.7pt;"> </span>Collection<span style="letter-spacing: -0.25pt;"> </span>Practices<span style="letter-spacing: -0.2pt;"> </span>Act,<span style="letter-spacing: -0.3pt;"> </span>15<span style="letter-spacing: -0.35pt;"> </span>U.S.C.<span style="letter-spacing: -0.35pt;">
</span>§<span style="letter-spacing: -0.25pt;"> </span>1692<span style="letter-spacing: -0.3pt;"> </span><i>et.<span style="letter-spacing: -.35pt;"> </span>seq.,<span style="letter-spacing: -.35pt;"> </span></i>as<span style="letter-spacing: -0.3pt;"> </span>well<span style="letter-spacing: -0.25pt;"> </span>as<span style="letter-spacing: -0.25pt;"> </span>analogous<span style="letter-spacing: -0.2pt;"> </span>state<span style="letter-spacing: -0.35pt;"> </span>laws<span style="letter-spacing: 3.4pt;"> </span>governing<span style="letter-spacing: -0.4pt;"> </span>the<span style="letter-spacing: -0.4pt;"> </span>consumer<span style="letter-spacing: -0.45pt;"> </span>collection<span style="letter-spacing: -0.35pt;"> </span>process.<span style="letter-spacing: 2.65pt;"> </span>Practitioners<span style="letter-spacing: -0.35pt;"> </span>should<span style="letter-spacing: -0.45pt;">
</span><span style="letter-spacing: 0.05pt;">be</span><span style="letter-spacing: -0.45pt;"> </span>aware<span style="letter-spacing: -0.45pt;"> </span><span style="letter-spacing: 0.1pt;">of</span><span style="letter-spacing: 3.5pt;"> </span>numerous<span style="letter-spacing: -0.4pt;"> </span>FDCPA<span style="letter-spacing: -0.45pt;"> </span>decisions<span style="letter-spacing: -0.35pt;"> </span>issued<span style="letter-spacing: -0.3pt;"> </span>during<span style="letter-spacing: -0.35pt;"> </span>the<span style="letter-spacing: -0.45pt;"> </span><span style="letter-spacing: 0.05pt;">past</span><span style="letter-spacing: -0.45pt;"> </span><span style="letter-spacing: -0.05pt;">year</span><span style="letter-spacing: -0.45pt;"> </span>that<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.1pt;">may</span><span style="letter-spacing: -0.6pt;"> </span>significantly<span style="letter-spacing: 3.1pt;"> </span><span style="letter-spacing: -0.05pt;">impact</span><span style="letter-spacing: -0.3pt;"> </span>their<span style="letter-spacing: -0.4pt;"> </span>compliance<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: 0.05pt;">obligations</span><span style="letter-spacing: -0.3pt;"> </span>and<span style="letter-spacing: -0.3pt;"> </span>litigation<span style="letter-spacing: -0.35pt;"> </span>risks.<span style="letter-spacing: 2.7pt;">
</span>A<span style="letter-spacing: -0.4pt;"> </span>few<span style="letter-spacing: -0.4pt;"> </span>of<span style="letter-spacing: -0.4pt;"> </span>those<span style="letter-spacing: -0.4pt;"> </span>decisions<span style="letter-spacing: 3.4pt;"> </span>are<span style="letter-spacing: -0.6pt;"> </span>discussed<span style="letter-spacing: -0.45pt;"> </span>below.<o:p></o:p></span></div>
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<div class="MsoNormal" style="margin-top: .5pt;">
<u><span style="font-family: Arial, Helvetica, sans-serif;">Duty<span style="letter-spacing: -0.35pt;"> </span>to<span style="letter-spacing: -0.3pt;"> </span>disclose<span style="letter-spacing: -0.4pt;">
</span>accruing<span style="letter-spacing: -0.35pt;"> </span>interest,<span style="letter-spacing: -0.4pt;"> </span>fees<span style="letter-spacing: -0.25pt;"> </span>or<span style="letter-spacing: -0.4pt;"> </span>other<span style="letter-spacing: -0.4pt;"> </span><span style="letter-spacing: 0.05pt;">charges</span></span></u></div>
<div class="MsoNormal" style="margin-top: .45pt;">
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<div class="MsoBodyText" style="line-height: 102%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 5.0pt; margin-right: 12.15pt; margin-top: 0in; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">A<span style="letter-spacing: -.4pt;"> </span>significant<span style="letter-spacing: -.3pt;"> </span>recent<span style="letter-spacing: -.35pt;"> </span>trend<span style="letter-spacing: -.3pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span>case<span style="letter-spacing: -.35pt;"> </span>law<span style="letter-spacing: -.4pt;"> </span>involves<span style="letter-spacing: -.25pt;">
</span>courts<span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.35pt;"> </span>have<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>imposed<span style="letter-spacing: -.25pt;"> </span>new<span style="letter-spacing: -.35pt;"> </span>disclosure<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">obligations</span><span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.2pt;"> </span>are<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.25pt;"> </span>found<span style="letter-spacing: -.3pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">plain</span><span style="letter-spacing: -.3pt;"> </span>language<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: 2.8pt; mso-font-width: 99%;"> </span>Act.<span style="letter-spacing: 2.95pt;"> </span>One<span style="letter-spacing: -.25pt;"> </span>line<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.25pt;"> </span>cases<span style="letter-spacing: -.15pt;"> </span>creates<span style="letter-spacing: -.15pt;">
</span>a<span style="letter-spacing: -.25pt;"> </span>duty<span style="letter-spacing: -.45pt;"> </span>to<span style="letter-spacing: -.15pt;"> </span>disclose<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: .05pt;">debtor</span><span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.1pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>amount<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: 2.8pt; mso-font-width: 99%;"> </span>the<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.45pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>increasing<span style="letter-spacing: -.25pt;"> </span>due<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.25pt;"> </span>accruing<span style="letter-spacing: -.2pt;"> </span>interest,<span style="letter-spacing: -.35pt;">
</span>fees<span style="letter-spacing: -.2pt;"> </span>or<span style="letter-spacing: -.35pt;"> </span>other<span style="letter-spacing: -.35pt;"> </span>charges.<span style="letter-spacing: 2.9pt;"> </span>These<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>decisions<span style="letter-spacing: -.35pt;"> </span>effectively<span style="letter-spacing: -.55pt;"> </span>hold<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: -.35pt;"> </span>it<span style="letter-spacing: -.3pt;"> </span>is<span style="letter-spacing: -.35pt;"> </span>misleading<span style="letter-spacing: -.4pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span><u>accurately<span style="letter-spacing: -.5pt;"> </span></u>state<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>exact<span style="letter-spacing: -.25pt;"> </span>balance<span style="letter-spacing: 4.5pt; mso-font-width: 99%;"> </span>due<span style="letter-spacing: -.35pt;"> </span>as<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">date</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">communication</span><span style="letter-spacing: -.2pt;"> </span>with<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>debtor,<span style="letter-spacing: -.35pt;">
</span>if<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>collector<span style="letter-spacing: -.35pt;"> </span>knows<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>stated<span style="letter-spacing: -.2pt;"> </span>balance<span style="letter-spacing: -.35pt;"> </span>is<span style="letter-spacing: -.2pt;"> </span>increasing,<span style="letter-spacing: -.35pt;"> </span>or<span style="letter-spacing: -.3pt;"> </span>is<span style="letter-spacing: -.25pt;"> </span>likely<span style="letter-spacing: -.45pt;">
</span>to<span style="letter-spacing: -.2pt;"> </span>increase,<span style="letter-spacing: -.35pt;"> </span>before<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>debtor<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">pays</span><span style="letter-spacing: -.25pt;"> </span>it.<span style="letter-spacing: 2.9pt;"> </span>Two<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>decisions<span style="letter-spacing: -.3pt;"> </span>out<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>Second<span style="letter-spacing: -.25pt;">
</span>Circuit<span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.2pt;"> </span>have<span style="letter-spacing: -.35pt;"> </span>sparked<span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>wave<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>new<span style="letter-spacing: -.35pt;"> </span>lawsuits<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>against<span style="letter-spacing: -.3pt;"> </span>collectors<span style="letter-spacing: -.3pt;"> </span>are<span style="letter-spacing: -.3pt;"> </span><i>Avila<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Riexinger<span style="letter-spacing: -.3pt;"> </span>&<span style="letter-spacing: -.75pt;"> </span>Associates,<span style="letter-spacing: -.35pt;"> </span>LLC</i>,<span style="letter-spacing: -.35pt;">
</span>817<span style="letter-spacing: -.3pt;"> </span>F.3d<span style="letter-spacing: -.25pt;"> </span>72<span style="letter-spacing: -.3pt;"> </span>(2d<span style="letter-spacing: -.25pt;"> </span>Cir. 2016)<span style="letter-spacing: -0.35pt;"> </span>and<span style="letter-spacing: -0.25pt;"> </span><i>Carlin<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Davidson<span style="letter-spacing: -.2pt;"> </span>Fink<span style="letter-spacing: -.3pt;"> </span>LLP</i>,<span style="letter-spacing: -0.35pt;"> </span>852<span style="letter-spacing: -0.25pt;"> </span>F.3d<span style="letter-spacing: -0.25pt;"> </span>207<span style="letter-spacing: -0.2pt;"> </span>(2d<span style="letter-spacing: -0.3pt;"> </span>Cir.<span style="letter-spacing: -0.3pt;"> </span>2017).</span></div>
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<div class="MsoBodyText" style="line-height: 102%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 5.0pt; margin-right: 11.6pt; margin-top: 0in; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">In<span style="letter-spacing: -.35pt;"> </span><i>Avila</i>,<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>collector<span style="letter-spacing: -.4pt;"> </span>sent<span style="letter-spacing: -.3pt;"> </span>letters<span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>accurately<span style="letter-spacing: -.5pt;"> </span>stated<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>“current<span style="letter-spacing: -.35pt;">
</span>balance”<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>due<span style="letter-spacing: -.35pt;"> </span>as<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">date</span><span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>letters.<span style="letter-spacing: 2.95pt;"> </span>The<span style="letter-spacing: -.3pt;"> </span>debtors<span style="letter-spacing: -.15pt;"> </span>sued,<span style="letter-spacing: -.3pt;"> </span>claiming<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>letters<span style="letter-spacing: -.2pt;"> </span>were<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">“false,</span><span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>deceptive<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">or</span><span style="letter-spacing: -.4pt;"> </span>misleading”<span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.35pt;"> </span>violation<span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>section<span style="letter-spacing: -.3pt;"> </span>1692e<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>FDCPA,<span style="letter-spacing: -.45pt;">
</span>because <span style="letter-spacing: 3.8pt;"> </span>they<span style="letter-spacing: -.5pt;"> </span>suggested<span style="letter-spacing: -.25pt;">
</span>the<span style="letter-spacing: -.4pt;"> </span>balance<span style="letter-spacing: -.35pt;"> </span>was<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">“static”</span><span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">and</span><span style="letter-spacing: -.3pt;"> </span>did<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.35pt;"> </span>disclose<span style="letter-spacing: -.4pt;"> </span>that<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>account<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>balance<span style="letter-spacing: -.3pt;"> </span>might<span style="letter-spacing: -.2pt;"> </span>increase<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">due</span><span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.2pt;"> </span>interest<span style="letter-spacing: -.2pt;"> </span>and<span style="letter-spacing: -.2pt;"> </span>fees.<span style="letter-spacing: 2.95pt;"> </span><i>See<span style="letter-spacing: -.3pt;"> </span>Avila</i>,<span style="letter-spacing: -.3pt;"> </span>817<span style="letter-spacing: -.2pt;"> </span>F.3d<span style="letter-spacing: -.2pt;"> </span>at<span style="letter-spacing: -.2pt;"> </span>74.<span style="letter-spacing: 2.9pt;"> </span>The<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span>Second<span style="letter-spacing: -.35pt;"> </span>Circuit<span style="letter-spacing: -.45pt;">
</span>agreed<span style="letter-spacing: -.25pt;"> </span>with<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.45pt;"> </span>consumers,<span style="letter-spacing: -.4pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>observed<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>a<span style="letter-spacing: -.45pt;"> </span>reasonable<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>consumer<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">might</span><span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">misled</span><span style="letter-spacing: -.2pt;"> </span>about<span style="letter-spacing: -.25pt;"> </span>how<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">much</span><span style="letter-spacing: -.2pt;"> </span>had<span style="letter-spacing: -.2pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">paid</span><span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">“clear</span><span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">her</span><span style="letter-spacing: -.35pt;"> </span>account”:<o:p></o:p></span></div>
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<div class="MsoBodyText" style="line-height: 102%; margin-right: 12.15pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">“A<span style="letter-spacing: -.4pt;"> </span>reasonable<span style="letter-spacing: -.4pt;"> </span>consumer<span style="letter-spacing: -.4pt;">
</span><span style="letter-spacing: .05pt;">could</span><span style="letter-spacing: -.3pt;"> </span>read<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>notice<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">and</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">be</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">misled</span><span style="letter-spacing: -.25pt;"> </span>into<span style="letter-spacing: -.35pt;"> </span>believing<span style="letter-spacing: 2.9pt; mso-font-width: 99%;"> </span>that<span style="letter-spacing: -.2pt;"> </span>she<span style="letter-spacing: -.3pt;"> </span>could<span style="letter-spacing: -.2pt;"> </span>pay<span style="letter-spacing: -.35pt;"> </span>her<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: -.2pt;"> </span>full<span style="letter-spacing: -.3pt;"> </span>by<span style="letter-spacing: -.45pt;"> </span>paying<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>amount<span style="letter-spacing: -.3pt;"> </span>listed<span style="letter-spacing: -.15pt;">
</span>on<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>notice.<o:p></o:p></span></div>
</div>
<span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-size: 11pt; line-height: 102%;"><br clear="all" style="mso-break-type: section-break; page-break-before: always;" />
</span>
</span><div class="MsoBodyText" style="line-height: 102%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 6.0pt; margin-right: 13.85pt; margin-top: 2.0pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">In<span style="letter-spacing: -.2pt;"> </span>fact,<span style="letter-spacing: -.4pt;"> </span>however,<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">if</span><span style="letter-spacing: -.35pt;"> </span>interest<span style="letter-spacing: -.25pt;">
</span>is<span style="letter-spacing: -.3pt;"> </span>accruing<span style="letter-spacing: -.3pt;"> </span>daily,<span style="letter-spacing: -.35pt;">
</span>or<span style="letter-spacing: -.35pt;"> </span>if<span style="letter-spacing: -.35pt;"> </span>there<span style="letter-spacing: -.3pt;"> </span>are<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">undisclosed</span><span style="letter-spacing: -.2pt;"> </span>late<span style="letter-spacing: 2.9pt; mso-font-width: 99%;"> </span>fees,<span style="letter-spacing: -.4pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">consumer</span><span style="letter-spacing: -.35pt;"> </span>who<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">pays</span><span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>“current<span style="letter-spacing: -.25pt;">
</span>balance”<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">stated</span><span style="letter-spacing: -.25pt;"> </span>on<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>notice<span style="letter-spacing: -.35pt;"> </span>will<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>not<span style="letter-spacing: -.2pt;"> </span>know<span style="letter-spacing: -.35pt;"> </span>whether<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.3pt;"> </span>debt<span style="letter-spacing: -.2pt;"> </span>has<span style="letter-spacing: -.15pt;"> </span>been<span style="letter-spacing: -.1pt;"> </span>paid<span style="letter-spacing: -.3pt;"> </span>in<span style="letter-spacing: -.2pt;"> </span>full.<span style="letter-spacing: -.3pt;"> </span>.<span style="letter-spacing: -.25pt;"> </span>.<span style="letter-spacing: -.3pt;"> </span>.<span style="letter-spacing: -.3pt;"> </span>Because<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>statement<span style="letter-spacing: 2.6pt; mso-font-width: 99%;"> </span>of<span style="letter-spacing: -.4pt;"> </span>an<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.05pt;">amount</span><span style="letter-spacing: -.25pt;">
</span>due,<span style="letter-spacing: -.4pt;"> </span>without<span style="letter-spacing: -.25pt;"> </span>notice<span style="letter-spacing: -.35pt;">
</span>that<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>amount<span style="letter-spacing: -.25pt;">
</span>is<span style="letter-spacing: -.25pt;"> </span>already<span style="letter-spacing: -.5pt;"> </span>increasing<span style="letter-spacing: -.3pt;"> </span>due<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>to<span style="letter-spacing: -.35pt;"> </span>accruing<span style="letter-spacing: -.35pt;">
</span>interest<span style="letter-spacing: -.35pt;"> </span>or<span style="letter-spacing: -.4pt;"> </span>other<span style="letter-spacing: -.4pt;"> </span>charges,<span style="letter-spacing: -.4pt;"> </span>can<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">mislead</span><span style="letter-spacing: -.2pt;">
</span>the<span style="letter-spacing: -.4pt;"> </span>least<span style="letter-spacing: -.35pt;"> </span>sophisticated<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>consumer<span style="letter-spacing: -.4pt;"> </span>into<span style="letter-spacing: -.3pt;"> </span>believing<span style="letter-spacing: -.3pt;">
</span>that<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.1pt;">payment</span><span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>amount<span style="letter-spacing: -.3pt;"> </span>stated<span style="letter-spacing: -.25pt;">
</span>will<span style="letter-spacing: -.35pt;"> </span>clear<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">her</span><span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>account,<span style="letter-spacing: -.4pt;"> </span>we<span style="letter-spacing: -.4pt;"> </span>hold<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span>requires<span style="letter-spacing: -.25pt;"> </span>debt<span style="letter-spacing: -.3pt;"> </span>collectors,<span style="letter-spacing: -.4pt;"> </span>when<span style="letter-spacing: -.25pt;"> </span>they<span style="letter-spacing: -.5pt;"> </span>notify<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>consumers<span style="letter-spacing: -.35pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>their<span style="letter-spacing: -.4pt;"> </span>account<span style="letter-spacing: -.4pt;"> </span>balance,<span style="letter-spacing: -.4pt;">
</span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.35pt;"> </span>disclose<span style="letter-spacing: -.4pt;"> </span>that<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>balance<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">may</span><span style="letter-spacing: 2.7pt; mso-font-width: 99%;"> </span>increase<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">due</span><span style="letter-spacing: -.35pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>interest<span style="letter-spacing: -.3pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span>fees.”<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><i><span style="line-height: 102%;">Id</span></i><span style="line-height: 102%;">.<span style="letter-spacing: -.35pt;">
</span>at<span style="letter-spacing: -.25pt;"> </span>76.<span style="letter-spacing: -.35pt;"> </span>The<span style="letter-spacing: -.3pt;"> </span><i>Avila<span style="letter-spacing: -.25pt;"> </span></i>Court<span style="letter-spacing: -.25pt;"> </span>also<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">embraced</span><span style="letter-spacing: -.2pt;">
</span>the<span style="letter-spacing: -.35pt;"> </span>reasoning<span style="letter-spacing: -.35pt;"> </span>used<span style="letter-spacing: -.2pt;"> </span>by<span style="letter-spacing: -.55pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>Seventh<span style="letter-spacing: -.25pt;"> </span>Circuit<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>in<span style="letter-spacing: -.35pt;"> </span><i>Miller<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.4pt;"> </span>McCalla,<span style="letter-spacing: -.4pt;">
</span>Raymer,<span style="letter-spacing: -.4pt;"> </span>Padrick,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">Cobb,</span><span style="letter-spacing: -.4pt;"> </span>Nichols,<span style="letter-spacing: -.4pt;">
</span>&<span style="letter-spacing: -.8pt;"> </span>Clark,<span style="letter-spacing: -.4pt;"> </span>L.L.C.</i>,<span style="letter-spacing: -.45pt;"> </span>214<span style="letter-spacing: -.3pt;"> </span>F.3d<span style="letter-spacing: 2.4pt; mso-font-width: 99%;"> </span>872<span style="letter-spacing: -.35pt;"> </span>(7th<span style="letter-spacing: -.3pt;"> </span>Cir.2000),<span style="letter-spacing: -.35pt;"> </span>where<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span>Court<span style="letter-spacing: -.35pt;"> </span>fashioned<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“safe</span><span style="letter-spacing: -.4pt;"> </span>harbor”<span style="letter-spacing: -.4pt;">
</span>language</span><span style="line-height: 102%; position: relative; top: -5.5pt;"> </span><span style="line-height: 102%;">that<span style="letter-spacing: -0.25pt;"> </span>can<span style="letter-spacing: -0.25pt;"> </span>be<span style="letter-spacing: 3.6pt;"> </span>used<span style="letter-spacing: -0.3pt;"> </span>to<span style="letter-spacing: -0.25pt;"> </span>describe<span style="letter-spacing: -0.35pt;">
</span>the<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: -0.05pt;">“amount</span><span style="letter-spacing: -0.25pt;"> </span>of<span style="letter-spacing: -0.35pt;"> </span>the<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: 0.05pt;">debt”</span><span style="letter-spacing: -0.35pt;"> </span>under<span style="letter-spacing: -0.35pt;"> </span>section<span style="letter-spacing: -0.25pt;">
</span>1692g<span style="letter-spacing: -0.2pt;"> </span>of<span style="letter-spacing: -0.35pt;"> </span>the<span style="letter-spacing: -0.35pt;"> </span>FDCPA<span style="letter-spacing: -0.3pt;"> </span><span style="letter-spacing: 0.05pt;">in</span><span style="letter-spacing: 3pt;"> </span>circumstances<span style="letter-spacing: -0.3pt;"> </span>where<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: 0.05pt;">the</span><span style="letter-spacing: -0.35pt;"> </span>account<span style="letter-spacing: -0.3pt;"> </span>balance<span style="letter-spacing: -0.35pt;">
</span>varies<span style="letter-spacing: -0.2pt;"> </span>from<span style="letter-spacing: -0.55pt;"> </span>day<span style="letter-spacing: -0.45pt;"> </span>to<span style="letter-spacing: -0.35pt;"> </span><span style="letter-spacing: -0.05pt;">day.</span><span style="letter-spacing: 2.8pt;"> </span><i>See<span style="letter-spacing: -.35pt;"> </span>Avila</i>,<span style="letter-spacing: -0.4pt;"> </span>817<span style="letter-spacing: 3.3pt;"> </span>F.3d<span style="letter-spacing: -0.35pt;"> </span>at<span style="letter-spacing: -0.35pt;"> </span>76-77.<span style="font-size: 14pt;"><o:p></o:p></span></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><i>Avila<span style="letter-spacing: -.3pt;"> </span></i>holds<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>stating<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>“current<span style="letter-spacing: -.25pt;"> </span>balance”<span style="letter-spacing: -.4pt;">
</span>in<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>letter<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.45pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>misleading<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span>unless<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>collector<span style="letter-spacing: -.4pt;">
</span>also<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">makes</span><span style="letter-spacing: -.25pt;"> </span>clear<span style="letter-spacing: -.45pt;"> </span>that<span style="letter-spacing: -.35pt;"> </span>balance<span style="letter-spacing: -.4pt;"> </span>will<span style="letter-spacing: -.4pt;"> </span>increase:<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="letter-spacing: -.1pt;">“We</span><span style="letter-spacing: -.35pt;"> </span>hold<span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>debt<span style="letter-spacing: -.25pt;"> </span>collector<span style="letter-spacing: -.3pt;"> </span>will<span style="letter-spacing: -.25pt;"> </span>not<span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.3pt;"> </span>subject<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>liability<span style="letter-spacing: -.45pt;"> </span>under<span style="letter-spacing: -.35pt;">
</span>Section<span style="letter-spacing: 4.1pt; mso-font-width: 99%;"> </span>1692e<span style="letter-spacing: -.4pt;"> </span>for<span style="letter-spacing: -.35pt;"> </span>failing<span style="letter-spacing: -.4pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>disclose<span style="letter-spacing: -.4pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>consumer's<span style="letter-spacing: -.25pt;"> </span>balance<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">may</span><span style="letter-spacing: -.5pt;"> </span>increase<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">due</span><span style="letter-spacing: -.35pt;"> </span>to<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>interest<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span>fees<span style="letter-spacing: -.2pt;"> </span>if<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>collection<span style="letter-spacing: -.3pt;"> </span>notice<span style="letter-spacing: -.4pt;"> </span>either<span style="letter-spacing: -.4pt;"> </span>accurately<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">informs</span><span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>consumer<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>amount<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.3pt;"> </span>stated<span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>letter<span style="letter-spacing: -.35pt;"> </span>will<span style="letter-spacing: -.25pt;"> </span>increase<span style="letter-spacing: -.3pt;"> </span>over<span style="letter-spacing: 2.5pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">time,</span><span style="letter-spacing: -.35pt;"> </span>or<span style="letter-spacing: -.3pt;"> </span>clearly<span style="letter-spacing: -.45pt;"> </span>states<span style="letter-spacing: -.2pt;">
</span>that<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>holder<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.3pt;"> </span>will<span style="letter-spacing: -.25pt;"> </span>accept<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">amount</span><span style="letter-spacing: -.25pt;"> </span>set<span style="letter-spacing: -.15pt;"> </span>forth<span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: -.2pt;"> </span>full<span style="letter-spacing: -.2pt;"> </span>satisfaction<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.3pt;"> </span>if<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.2pt;">
</span>is<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.05pt;">made</span><span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">by</span><span style="letter-spacing: -.45pt;"> </span>a<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>specified<span style="letter-spacing: -.7pt;"> </span>date.”<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-size: 10pt;"> </span><i style="text-indent: 0in;">Id.<span style="letter-spacing: -.3pt;"> </span></i><span style="text-indent: 0in;">at</span><span style="letter-spacing: -0.15pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">77.</span><span style="letter-spacing: 3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">To</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">avoid</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">confusion</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.15pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">debtor,</span><span style="letter-spacing: -0.25pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><i style="text-indent: 0in;">Avila<span style="letter-spacing: -.15pt;"> </span></i><span style="text-indent: 0in;">Court</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">held</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">that</span><span style="letter-spacing: -0.1pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">use</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">of</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: 3.8pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">“safe</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">harbor”</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">language</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">from</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><i style="text-indent: 0in;">Miller<span style="letter-spacing: -.15pt;"> </span></i><span style="text-indent: 0in;">case</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">would</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">be</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">sufficient.</span><span style="letter-spacing: 2.8pt; text-indent: 0in;"> </span><i style="text-indent: 0in;">Id.<span style="letter-spacing: 2.9pt;"> </span></i><span style="text-indent: 0in;">The</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><i style="text-indent: 0in;">Avila<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span></i><span style="text-indent: 0in;">Court</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">also</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">appeared</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">express</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">preference</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">for</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">“freezing”</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">amount</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">collector</span><span style="letter-spacing: 2.8pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">will</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">accept</span><span style="letter-spacing: -0.25pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">for</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">specified</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">period</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">of</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">time,</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">stating:</span><span style="letter-spacing: 2.9pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.15pt; text-indent: 0in;">“a</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">debt</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">collector</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">who</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">is</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">willing</span><span style="letter-spacing: 4.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">accept</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">specified</span><span style="letter-spacing: -0.15pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">amount</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">in</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">full</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">satisfaction</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">of</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">debt</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">if</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">payment</span><span style="letter-spacing: -0.2pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">is</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">made</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">by</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: 3.7pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">specific</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">date</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">could</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">considerably</span><span style="letter-spacing: -0.6pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">simplify</span><span style="letter-spacing: -0.6pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">consumer's</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">understanding</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">by</span><span style="letter-spacing: -0.7pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">so</span><span style="letter-spacing: 4.1pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">stating,</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">while</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">advising</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">that</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">amount</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">due</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">would</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">increase</span><span style="letter-spacing: -0.35pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">by</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">accrual</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">of</span><span style="letter-spacing: 3.6pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">additional</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">interest</span><span style="letter-spacing: -0.2pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">or</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">fees</span><span style="letter-spacing: -0.1pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">if</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">payment</span><span style="letter-spacing: -0.25pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">is</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">not</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">received</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">by</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">that</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">date.”</span><span style="letter-spacing: 2.95pt; text-indent: 0in;"> </span><i style="text-indent: 0in;">Id</i><span style="text-indent: 0in;">.</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -.5pt;"> </span>Second<span style="letter-spacing: -.3pt;"> </span>Circuit<span style="letter-spacing: -.4pt;"> </span>subsequently<span style="letter-spacing: -.6pt;"> </span>compounded<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">pain</span><span style="letter-spacing: -.4pt;"> </span>for<span style="letter-spacing: -.45pt;"> </span>collectors<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>following<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">year</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">in</span><span style="letter-spacing: -.2pt;"> </span><i>Carlin</i>.<span style="letter-spacing: 2.85pt;"> </span>There,<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">it</span><span style="letter-spacing: -.25pt;"> </span>held<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">payoff</span><span style="letter-spacing: -.3pt;"> </span>statement<span style="letter-spacing: -.35pt;"> </span>listing<span style="letter-spacing: -.2pt;">
</span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“Total</span><span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">Amount</span><span style="letter-spacing: -.3pt;"> </span>Due”<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">was</span><span style="letter-spacing: -.25pt;"> </span>valid<span style="letter-spacing: -.3pt;"> </span>through<span style="letter-spacing: -.25pt;">
</span>a<span style="letter-spacing: -.35pt;"> </span>specific<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">date</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">did</span><span style="letter-spacing: -.3pt;"> </span>not<span style="letter-spacing: -.25pt;"> </span>adequately<span style="letter-spacing: -.55pt;"> </span>state<span style="letter-spacing: -.35pt;">
</span>the<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">amount</span><span style="letter-spacing: -.35pt;">
</span>of<span style="letter-spacing: -.45pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>debt,<span style="letter-spacing: -.45pt;"> </span>because<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">it</span><span style="letter-spacing: -.3pt;"> </span>included<span style="letter-spacing: -.4pt;">
</span>unspecified<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">“fees,</span><span style="letter-spacing: -.45pt;">
</span>costs,<span style="letter-spacing: -.4pt;"> </span>additional<span style="letter-spacing: 4.2pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">payments,</span><span style="letter-spacing: -.4pt;"> </span>and/or<span style="letter-spacing: -.35pt;"> </span>escrow<span style="letter-spacing: -.35pt;">
</span>disbursements”<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>were<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.1pt;">yet</span><span style="letter-spacing: -.2pt;"> </span>due<span style="letter-spacing: -.4pt;"> </span>as<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">time</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>statement<span style="letter-spacing: -.3pt;"> </span>issued.<span style="letter-spacing: 2.8pt;">
</span><i>See<span style="letter-spacing: -.35pt;"> </span>Carlin</i>,<span style="letter-spacing: -.4pt;"> </span>852<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.25pt;"> </span>at<span style="letter-spacing: -.3pt;"> </span>215.<span style="letter-spacing: -.35pt;"> </span>The<span style="letter-spacing: -.3pt;"> </span><i>Carlin<span style="letter-spacing: -.3pt;"> </span></i>Court<span style="letter-spacing: -.3pt;"> </span>observed:<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">“Absent<span style="letter-spacing: -.45pt;"> </span>fuller<span style="letter-spacing: -.55pt;"> </span>disclosure,<span style="letter-spacing: -.55pt;"> </span>an<span style="letter-spacing: -.4pt;"> </span>unsophisticated<span style="letter-spacing: -.4pt;"> </span>consumer<span style="letter-spacing: -.5pt;">
</span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.65pt;"> </span>not<span style="letter-spacing: -.45pt;"> </span>understand<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>how<span style="letter-spacing: -.4pt;"> </span>these<span style="letter-spacing: -.35pt;"> </span>fees<span style="letter-spacing: -.2pt;"> </span>are<span style="letter-spacing: -.35pt;"> </span>calculated,<span style="letter-spacing: -.4pt;"> </span>whether<span style="letter-spacing: -.35pt;">
</span>they<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.5pt;"> </span>be<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">disputed,</span><span style="letter-spacing: -.35pt;"> </span>or<span style="letter-spacing: -.35pt;"> </span>what<span style="letter-spacing: 2.3pt; mso-font-width: 99%;"> </span>provision<span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">note</span><span style="letter-spacing: -.35pt;"> </span>gives<span style="letter-spacing: -.2pt;"> </span>rise<span style="letter-spacing: -.35pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">them.</span><span style="letter-spacing: -.35pt;"> </span>Because<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>statement<span style="letter-spacing: -.25pt;"> </span>gives<span style="letter-spacing: -.25pt;">
</span>no<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>indication<span style="letter-spacing: -.25pt;"> </span>as<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>what<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>unaccrued<span style="letter-spacing: -.2pt;"> </span>fees<span style="letter-spacing: -.25pt;"> </span>are<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">or</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">how</span><span style="letter-spacing: -.35pt;"> </span>they<span style="letter-spacing: -.4pt;"> </span>are<span style="letter-spacing: -.35pt;"> </span>calculated,<span style="letter-spacing: -.35pt;"> </span>she<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>cannot<span style="letter-spacing: -.45pt;"> </span>deduce<span style="letter-spacing: -.45pt;">
</span>that<span style="letter-spacing: -.45pt;"> </span>information<span style="letter-spacing: -.4pt;"> </span>from<span style="letter-spacing: -.7pt;"> </span>the<span style="letter-spacing: -.5pt;"> </span>statement.”<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><i>Id</i>.<span style="letter-spacing: -.3pt;"> </span>at<span style="letter-spacing: -.2pt;"> </span>217.<span style="letter-spacing: 2.95pt;"> </span>The<span style="letter-spacing: -.3pt;"> </span>Court<span style="letter-spacing: -.15pt;"> </span>held<span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: -.25pt;"> </span>statement<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">amount</span><span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.25pt;"> </span>is<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.05pt;">“incomplete</span><span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>where,<span style="letter-spacing: -.45pt;"> </span>as<span style="letter-spacing: -.25pt;"> </span>here,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">it</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">omits</span><span style="letter-spacing: -.3pt;"> </span>information<span style="letter-spacing: -.35pt;"> </span>allowing<span style="letter-spacing: -.3pt;">
</span>the<span style="letter-spacing: -.45pt;"> </span>least<span style="letter-spacing: -.4pt;"> </span>sophisticated<span style="letter-spacing: -.3pt;"> </span>consumer<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: 2.6pt; mso-font-width: 99%;"> </span>determine<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">minimum</span><span style="letter-spacing: -.6pt;"> </span><span style="letter-spacing: -.05pt;">amount</span><span style="letter-spacing: -.25pt;"> </span>she<span style="letter-spacing: -.35pt;"> </span>owes<span style="letter-spacing: -.25pt;"> </span>at<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">time</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>notice,<span style="letter-spacing: -.3pt;"> </span>what<span style="letter-spacing: -.2pt;"> </span>she<span style="letter-spacing: -.35pt;"> </span>will<span style="letter-spacing: 2.9pt; mso-font-width: 99%;"> </span>need<span style="letter-spacing: -.2pt;"> </span>to<span style="letter-spacing: -.2pt;"> </span>pay<span style="letter-spacing: -.4pt;"> </span>to<span style="letter-spacing: -.15pt;"> </span>resolve<span style="letter-spacing: -.3pt;">
</span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.3pt;"> </span>at<span style="letter-spacing: -.1pt;"> </span>any<span style="letter-spacing: -.45pt;"> </span>given<span style="letter-spacing: -.15pt;"> </span><span style="letter-spacing: -.1pt;">moment</span><span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: -.15pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>future,<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">and</span><span style="letter-spacing: -.2pt;"> </span>an<span style="letter-spacing: 2.3pt; mso-font-width: 99%;"> </span>explanation<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>any<span style="letter-spacing: -.45pt;"> </span>fees<span style="letter-spacing: -.15pt;"> </span>and<span style="letter-spacing: -.25pt;"> </span>interest<span style="letter-spacing: -.3pt;">
</span>that<span style="letter-spacing: -.2pt;"> </span>will<span style="letter-spacing: -.25pt;"> </span>cause<span style="letter-spacing: -.35pt;">
</span>the<span style="letter-spacing: -.3pt;"> </span>balance<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.2pt;"> </span>increase.”<span style="letter-spacing: 2.9pt;"> </span><i>Id</i>.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -.35pt;"> </span><i>Avila<span style="letter-spacing: -.25pt;"> </span></i>and<span style="letter-spacing: -.3pt;">
</span><i>Carlin<span style="letter-spacing: -.25pt;"> </span></i>decisions<span style="letter-spacing: -.3pt;"> </span>are<span style="letter-spacing: -.35pt;"> </span>part<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>larger<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">and</span><span style="letter-spacing: -.25pt;"> </span>disturbing<span style="letter-spacing: -.25pt;"> </span>trend<span style="letter-spacing: -.25pt;"> </span>where<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>courts<span style="letter-spacing: -.35pt;"> </span>have<span style="letter-spacing: -.45pt;"> </span>created<span style="letter-spacing: -.3pt;">
</span>new<span style="letter-spacing: -.4pt;"> </span>FDCPA<span style="letter-spacing: -.45pt;"> </span>disclosure<span style="letter-spacing: -.45pt;"> </span>obligations<span style="letter-spacing: -.3pt;"> </span>out<span style="letter-spacing: -.45pt;"> </span>of<span style="letter-spacing: -.45pt;"> </span>whole<span style="letter-spacing: -.4pt;"> </span>cloth.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Collectors<span style="letter-spacing: -.35pt;"> </span>seeking<span style="letter-spacing: -.4pt;">
</span>to<span style="letter-spacing: -.3pt;"> </span>comply<span style="letter-spacing: -.55pt;"> </span>with<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span>cannot<span style="letter-spacing: -.3pt;"> </span>rely<span style="letter-spacing: -.5pt;"> </span>on<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>statute’s<span style="letter-spacing: -.3pt;"> </span>plain<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>language.<span style="letter-spacing: 2.65pt;"> </span><span style="letter-spacing: -.05pt;">They</span><span style="letter-spacing: -.55pt;"> </span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">attempt</span><span style="letter-spacing: -.35pt;">
</span>to<span style="letter-spacing: -.35pt;"> </span>anticipate<span style="letter-spacing: -.4pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>disclose<span style="letter-spacing: -.45pt;"> </span>additional<span style="letter-spacing: -.4pt;"> </span>information<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: 4.9pt; mso-font-width: 99%;"> </span>a<span style="letter-spacing: -.35pt;"> </span>court<span style="letter-spacing: -.25pt;">
</span><span style="letter-spacing: -.05pt;">might</span><span style="letter-spacing: -.25pt;"> </span>deem<span style="letter-spacing: -.4pt;"> </span>important<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.3pt;"> </span>debtor,<span style="letter-spacing: -.35pt;">
</span>or<span style="letter-spacing: -.3pt;"> </span>face<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">strict</span><span style="letter-spacing: -.15pt;"> </span>liability<span style="letter-spacing: -.45pt;"> </span>for<span style="letter-spacing: -.35pt;"> </span>their<span style="letter-spacing: -.3pt;"> </span>failure<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>do<span style="letter-spacing: -.25pt;"> </span>so.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><u><span style="font-size: small;">Collecting<span style="letter-spacing: -.45pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>“debt”<span style="letter-spacing: -.25pt;"> </span>versus<span style="letter-spacing: -.45pt;">
</span>foreclosing<span style="letter-spacing: -.4pt;"> </span>on<span style="letter-spacing: -.45pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>security<span style="letter-spacing: -.35pt;"> </span>interest</span></u><span style="font-weight: normal;"><o:p></o:p></span></span></h1>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b><span style="font-size: 14pt;"> </span></b><span style="letter-spacing: -0.05pt; text-indent: 0in;">When</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">an</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">entity</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">is</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">solely</span><span style="letter-spacing: -0.45pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">seeking</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">foreclose</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">on</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">security</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">interest</span><span style="letter-spacing: -0.2pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">and</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">is</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">not</span><span style="letter-spacing: 4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">seeking</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">payment</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">of</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">“debt”</span><span style="letter-spacing: -0.35pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">from</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">consumer,</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">then</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">FDCPA</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">should</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">not</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">apply.</span><span style="letter-spacing: 2.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">Determining</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">line</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">between</span><span style="letter-spacing: -0.4pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">foreclosure</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">activity</span><span style="letter-spacing: -0.7pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">and</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">debt</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">collection,</span><span style="letter-spacing: -0.6pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">however,</span><span style="letter-spacing: 4.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">can</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">be</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">elusive.</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -0.35pt;"> </span>issue<span style="letter-spacing: -0.3pt;"> </span>in<span style="letter-spacing: -0.3pt;"> </span><i>Ho<span style="letter-spacing: -.2pt;"> </span>v.<span style="letter-spacing: -.3pt;"> </span>ReconTrust<span style="letter-spacing: -.25pt;"> </span>Co.,<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">N.A.</span></i><span style="letter-spacing: -0.05pt;">,</span><span style="letter-spacing: -0.4pt;"> </span>858<span style="letter-spacing: -0.25pt;"> </span>F.3d<span style="letter-spacing: -0.25pt;"> </span>568<span style="letter-spacing: -0.3pt;"> </span>(9th<span style="letter-spacing: -0.2pt;"> </span>Cir.<span style="letter-spacing: -0.35pt;"> </span>2016), <i>amended<span style="letter-spacing: -.25pt;"> </span></i>(May<span style="letter-spacing: -.45pt;"> </span>22.<span style="letter-spacing: -.35pt;"> </span>2017),<span style="letter-spacing: -.35pt;">
</span><i>petition<span style="letter-spacing: -.3pt;"> </span>for<span style="letter-spacing: -.25pt;"> </span>cert.<span style="letter-spacing: -.35pt;"> </span>filed<span style="letter-spacing: -.2pt;"> </span></i>(U.S.<span style="letter-spacing: -.35pt;"> </span>Aug.<span style="letter-spacing: -.35pt;"> </span>21,<span style="letter-spacing: -.35pt;"> </span>2017)<span style="letter-spacing: -.35pt;">
</span>(No.<span style="letter-spacing: -.35pt;"> </span>17-<span style="text-indent: 0in;">278)</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">was</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">whether</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">notices</span><span style="letter-spacing: -0.2pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">sent</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">by</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">trustee</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">as</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">required</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">initiate</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">non-judicial</span><span style="letter-spacing: 4.1pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">foreclosure</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">under</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">California</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">law</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">violated</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">FDCPA.</span><span style="letter-spacing: 2.8pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">The</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><i style="text-indent: 0in;">Ho<span style="letter-spacing: -.3pt;"> </span></i><span style="text-indent: 0in;">Court</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">held</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">that</span><span style="letter-spacing: 3.7pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">FDCPA</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">did</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">not</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">apply,</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">because</span><span style="letter-spacing: -0.4pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">trustee</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">was</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">solely</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">attempting</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">retake</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">and</span><span style="letter-spacing: 2.9pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">resell</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">security,</span><span style="letter-spacing: -0.45pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">and</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">not</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">attempting</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">collect</span><span style="letter-spacing: -0.25pt; text-indent: 0in;">
</span><span style="letter-spacing: -0.05pt; text-indent: 0in;">money</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">from</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">property</span><span style="letter-spacing: -0.55pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">owner:</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">“Thus,<span style="letter-spacing: -.4pt;"> </span>ReconTrust<span style="letter-spacing: -.25pt;"> </span>would<span style="letter-spacing: -.3pt;"> </span>only<span style="letter-spacing: -.5pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>liable<span style="letter-spacing: -.4pt;"> </span>if<span style="letter-spacing: -.35pt;"> </span>it<span style="letter-spacing: -.3pt;"> </span>attempted<span style="letter-spacing: -.2pt;">
</span>to<span style="letter-spacing: -.3pt;"> </span>collect<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">money</span><span style="letter-spacing: -.45pt;"> </span>from<span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>Ho.<span style="letter-spacing: -.35pt;"> </span>And<span style="letter-spacing: -.2pt;"> </span>this<span style="letter-spacing: -.3pt;"> </span>it<span style="letter-spacing: -.2pt;"> </span>did<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.3pt;"> </span>do,<span style="letter-spacing: -.35pt;"> </span>directly<span style="letter-spacing: -.45pt;">
</span>or<span style="letter-spacing: -.3pt;"> </span>otherwise.<span style="letter-spacing: -.35pt;"> </span>The<span style="letter-spacing: -.3pt;"> </span>object<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.3pt;"> </span>a<span style="letter-spacing: -.3pt;"> </span>non-judicial<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>foreclosure<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">is</span><span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>retake<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.25pt;"> </span>resell<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>security,<span style="letter-spacing: -.4pt;"> </span>not<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>collect<span style="letter-spacing: -.2pt;">
</span><span style="letter-spacing: -.05pt;">money</span><span style="letter-spacing: -.45pt;"> </span>from<span style="letter-spacing: -.55pt;"> </span>the<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>borrower.<span style="letter-spacing: -.45pt;"> </span>California<span style="letter-spacing: -.45pt;"> </span>law<span style="letter-spacing: -.45pt;"> </span>does<span style="letter-spacing: -.3pt;"> </span>not<span style="letter-spacing: -.35pt;"> </span>allow<span style="letter-spacing: -.45pt;"> </span>for<span style="letter-spacing: -.45pt;"> </span>a<span style="letter-spacing: -.45pt;"> </span>deficiency<span style="letter-spacing: -.55pt;"> </span><span style="letter-spacing: -.05pt;">judgment</span><span style="letter-spacing: -.4pt;"> </span>following<span style="letter-spacing: 4.2pt; mso-font-width: 99%;"> </span>non-judicial<span style="letter-spacing: -.4pt;"> </span>foreclosure.<span style="letter-spacing: -.55pt;"> </span>This<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">means</span><span style="letter-spacing: -.45pt;"> </span>that<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.5pt;"> </span>foreclosure<span style="letter-spacing: -.5pt;"> </span>extinguishes<span style="letter-spacing: -.45pt;"> </span>the<span style="letter-spacing: 4.6pt; mso-font-width: 99%;"> </span>entire<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.2pt;"> </span>even<span style="letter-spacing: -.25pt;"> </span>if<span style="letter-spacing: -.3pt;"> </span>it<span style="letter-spacing: -.2pt;"> </span>results<span style="letter-spacing: -.15pt;"> </span>in<span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: -.25pt;"> </span>recovery<span style="letter-spacing: -.35pt;">
</span>of<span style="letter-spacing: -.3pt;"> </span>less<span style="letter-spacing: -.15pt;"> </span>than<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.25pt;"> </span>amount<span style="letter-spacing: -.2pt;">
</span>of<span style="letter-spacing: -.3pt;"> </span>the debt.”<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><i>Id.<span style="letter-spacing: -.45pt;"> </span></i>at<span style="letter-spacing: -.35pt;"> </span>571-72<span style="letter-spacing: -.3pt;"> </span>(citations<span style="letter-spacing: -.35pt;"> </span>omitted).<span style="letter-spacing: -.45pt;"> </span>The<span style="letter-spacing: -.4pt;"> </span>plaintiff<span style="letter-spacing: -.45pt;"> </span>argued<span style="letter-spacing: -.25pt;">
</span>that<span style="letter-spacing: -.45pt;"> </span>ReconTrust<span style="letter-spacing: -.35pt;"> </span>was<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>engaged<span style="letter-spacing: -.25pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">“debt</span><span style="letter-spacing: -.3pt;"> </span>collection”<span style="letter-spacing: -.35pt;"> </span>because<span style="letter-spacing: -.35pt;"> </span>its<span style="letter-spacing: -.3pt;"> </span>notices<span style="letter-spacing: -.2pt;">
</span>pressured<span style="letter-spacing: -.25pt;"> </span>her<span style="letter-spacing: -.35pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>pay<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">money.</span><span style="letter-spacing: 2.8pt;"> </span>The<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span><i>Ho<span style="letter-spacing: -.3pt;"> </span></i>Court<span style="letter-spacing: -.3pt;"> </span>rejected<span style="letter-spacing: -.3pt;"> </span>this,<span style="letter-spacing: -.4pt;"> </span>noting<span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.35pt;"> </span>all<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>ReconTrust’s<span style="letter-spacing: -.25pt;"> </span>activities<span style="letter-spacing: -.25pt;"> </span>fell<span style="letter-spacing: -.3pt;"> </span>under<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>umbrella<span style="letter-spacing: -.55pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.5pt;"> </span>enforcing<span style="letter-spacing: -.55pt;">
</span>a<span style="letter-spacing: -.5pt;"> </span>security<span style="letter-spacing: -.6pt;"> </span>interest<span style="letter-spacing: -.5pt;">
</span>under<span style="letter-spacing: -.55pt;"> </span>California’s<span style="letter-spacing: -.45pt;"> </span>non-judicial<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>foreclosure<span style="letter-spacing: -.4pt;">
</span><span style="letter-spacing: .05pt;">statute,</span><span style="letter-spacing: -.4pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span>its<span style="letter-spacing: -.4pt;"> </span>conduct<span style="letter-spacing: -.25pt;">
</span>was<span style="letter-spacing: -.3pt;"> </span>therefore<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.4pt;"> </span>subject<span style="letter-spacing: -.3pt;">
</span>to<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>FDCPA,<span style="letter-spacing: -.4pt;"> </span>even<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>if<span style="letter-spacing: -.3pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>created<span style="letter-spacing: -.15pt;"> </span>an<span style="letter-spacing: -.15pt;"> </span>incentive<span style="letter-spacing: -.3pt;"> </span>for<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">debtor</span><span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">pay:</span><o:p></o:p></span></div>
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<div class="MsoBodyText" style="line-height: 102%; margin-right: 12.15pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">“If<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">this</span><span style="letter-spacing: -.4pt;"> </span>were<span style="letter-spacing: -.4pt;"> </span>sufficient<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>transform<span style="letter-spacing: -.55pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>enforcement<span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>security<span style="letter-spacing: -.6pt;"> </span>interests<span style="letter-spacing: -.3pt;">
</span>into<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>debt<span style="letter-spacing: -.45pt;"> </span>collection,<span style="letter-spacing: -.4pt;"> </span>then<span style="letter-spacing: -.3pt;"> </span>all<span style="letter-spacing: -.3pt;"> </span>security<span style="letter-spacing: -.6pt;">
</span>enforcers<span style="letter-spacing: -.25pt;"> </span>would<span style="letter-spacing: -.35pt;"> </span>be<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">debt</span><span style="letter-spacing: -.35pt;"> </span>collectors.<span style="letter-spacing: -.4pt;"> </span>This<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>would<span style="letter-spacing: -.5pt;"> </span>render<span style="letter-spacing: -.55pt;"> </span>meaningless<span style="letter-spacing: -.45pt;"> </span>the<span style="letter-spacing: -.55pt;"> </span>FDCPA's<span style="letter-spacing: -.45pt;"> </span>carefully<span style="letter-spacing: -.65pt;"> </span>drawn<span style="letter-spacing: -.4pt;"> </span>distinction<span style="letter-spacing: -.5pt;"> </span>between<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>debt<span style="letter-spacing: -.4pt;"> </span>collectors<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>enforcers<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>security<span style="letter-spacing: -.5pt;"> </span>interests,<span style="letter-spacing: -.4pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span>expand<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">scope</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>the<span style="letter-spacing: -.4pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span>well<span style="letter-spacing: -.3pt;"> </span>past<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>boundary<span style="letter-spacing: -.45pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>clear<span style="letter-spacing: -.4pt;"> </span>congressional<span style="letter-spacing: -.35pt;"> </span>intent<span style="letter-spacing: -.3pt;"> </span>and<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">common</span><span style="letter-spacing: -.8pt;"> </span>sense.”<i> </i><i>Id</i>.<span style="letter-spacing: -0.35pt;"> </span>at<span style="letter-spacing: -0.2pt;"> </span>574.</span></div>
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<div class="MsoBodyText" style="line-height: 102%; margin-right: 9.35pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">Unlike<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>letter<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">sent</span><span style="letter-spacing: -.35pt;"> </span>by<span style="letter-spacing: -.55pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>trustee<span style="letter-spacing: -.35pt;">
</span>defendant<span style="letter-spacing: -.25pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span><i>Ho</i>,<span style="letter-spacing: -.4pt;"> </span>however,<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>letter<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">sent</span><span style="letter-spacing: 2.9pt; mso-font-width: 99%;"> </span>by<span style="letter-spacing: -.5pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>law<span style="letter-spacing: -.35pt;"> </span>firm<span style="letter-spacing: -.45pt;"> </span>defendant<span style="letter-spacing: -.25pt;"> </span>in<span style="letter-spacing: -.3pt;"> </span><i>Mashiri<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Epsten<span style="letter-spacing: -.25pt;"> </span>Grinnell<span style="letter-spacing: -.25pt;">
</span>&<span style="letter-spacing: -.75pt;"> </span>Howell</i>,<span style="letter-spacing: -.35pt;"> </span>845<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.25pt;"> </span>984<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>(9th<span style="letter-spacing: -.25pt;"> </span>Cir.<span style="letter-spacing: -.35pt;"> </span>2017)<span style="letter-spacing: -.3pt;"> </span>was<span style="letter-spacing: -.2pt;"> </span>subject<span style="letter-spacing: -.2pt;">
</span>to<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>FDCPA,<span style="letter-spacing: -.35pt;"> </span>because<span style="letter-spacing: -.3pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>was<span style="letter-spacing: -.25pt;"> </span>not<span style="letter-spacing: -.2pt;"> </span>sent<span style="letter-spacing: -.25pt;"> </span><u>solely<span style="letter-spacing: -.5pt;"> </span></u>to<span style="letter-spacing: -.3pt;"> </span>enforce<span style="letter-spacing: 3.55pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>security<span style="letter-spacing: -.6pt;"> </span>interest.<span style="letter-spacing: 2.75pt;">
</span>Rather,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span>letter<span style="letter-spacing: -.4pt;"> </span>requested<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.4pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>plaintiff’s <span style="letter-spacing: 1.2pt;"> </span>homeowners<span style="letter-spacing: -.35pt;"> </span>assessment<span style="letter-spacing: -.4pt;"> </span>fee,<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">stating:</span><span style="letter-spacing: -.45pt;">
</span><span style="letter-spacing: -.05pt;">“</span><i><span style="letter-spacing: -.05pt; mso-bidi-font-family: "Times New Roman";">Failure</span></i><i><span style="letter-spacing: -.45pt; mso-bidi-font-family: "Times New Roman";"> </span></i><i>to<span style="letter-spacing: -.4pt;"> </span>pay<span style="letter-spacing: -.45pt;"> </span></i><span style="letter-spacing: -.05pt;">your</span><span style="letter-spacing: -.45pt;"> </span>assessment<span style="letter-spacing: -.35pt;"> </span>account<span style="letter-spacing: -.4pt;">
</span>in<span style="letter-spacing: 2.3pt; mso-font-width: 99%;"> </span>full<span style="letter-spacing: -.25pt;"> </span>within<span style="letter-spacing: -.2pt;">
</span>thirty-five<span style="letter-spacing: -.3pt;"> </span>(35)<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">days</span><span style="letter-spacing: -.3pt;"> </span>from<span style="letter-spacing: -.5pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>date<span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.3pt;"> </span>this<span style="letter-spacing: -.2pt;"> </span>letter<span style="letter-spacing: -.3pt;"> </span>will<span style="letter-spacing: -.3pt;"> </span>result<span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>lien <span style="letter-spacing: 3.4pt;"> </span>being<span style="letter-spacing: -.3pt;"> </span>recorded<span style="letter-spacing: -.25pt;">
</span>against<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">your</span><span style="letter-spacing: -.35pt;"> </span>property.”<span style="letter-spacing: 2.75pt;"> </span><i>Id</i>.<span style="letter-spacing: -.35pt;"> </span>at<span style="letter-spacing: -.3pt;"> </span>989<span style="letter-spacing: -.3pt;"> </span>(emphasis<span style="letter-spacing: -.3pt;">
</span>in<span style="letter-spacing: -.3pt;"> </span>opinion).<span style="font-size: 8.0pt; line-height: 102%;"><o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -.3pt;"> </span><i>Mashiri<span style="letter-spacing: -.35pt;"> </span></i>Court<span style="letter-spacing: -.25pt;"> </span>also<span style="letter-spacing: -.25pt;"> </span>noted<span style="letter-spacing: -.2pt;"> </span>that<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>firm<span style="letter-spacing: -.45pt;"> </span>could<span style="letter-spacing: -.2pt;"> </span>not<span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.3pt;"> </span>engaged<span style="letter-spacing: -.2pt;">
</span>in<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>“enforcing”<span style="letter-spacing: -.45pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>security<span style="letter-spacing: -.55pt;"> </span>interest<span style="letter-spacing: -.3pt;">
</span>with<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>letter,<span style="letter-spacing: -.4pt;">
</span>because<span style="letter-spacing: -.4pt;"> </span>there<span style="letter-spacing: -.4pt;"> </span>was<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.1pt;">“no</span><span style="letter-spacing: -.35pt;"> </span>existing<span style="letter-spacing: 3.8pt; mso-font-width: 99%;"> </span>security<span style="letter-spacing: -.5pt;"> </span>interest<span style="letter-spacing: -.2pt;">
</span>for<span style="letter-spacing: -.35pt;"> </span>Espten<span style="letter-spacing: -.15pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>enforce<span style="letter-spacing: -.3pt;"> </span>at<span style="letter-spacing: -.15pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">time</span><span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>May<span style="letter-spacing: -.4pt;"> </span>Notice<span style="letter-spacing: -.3pt;"> </span>because<span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.3pt;"> </span>lien<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>had<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">yet</span><span style="letter-spacing: -.15pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.3pt;"> </span>recorded<span style="letter-spacing: -.2pt;">
</span>against<span style="letter-spacing: -.2pt;"> </span>Mashiri’s<span style="letter-spacing: -.25pt;"> </span>property.”<span style="letter-spacing: 2.95pt;"> </span><i>Id.<span style="letter-spacing: 2.9pt;"> </span></i>The<span style="letter-spacing: -.3pt;"> </span>letter<span style="letter-spacing: -.35pt;">
</span>was<span style="letter-spacing: -.15pt;"> </span>required<span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: 2.7pt; mso-font-width: 99%;"> </span>order<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.25pt;"> </span>perfect<span style="letter-spacing: -.1pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>association’s<span style="letter-spacing: -.25pt;"> </span>security<span style="letter-spacing: -.55pt;">
</span>interest<span style="letter-spacing: -.25pt;"> </span>and<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">permit</span><span style="letter-spacing: -.2pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>record<span style="letter-spacing: -.2pt;">
</span>the<span style="letter-spacing: -.35pt;"> </span>lien<span style="letter-spacing: -.2pt;"> </span>at<span style="letter-spacing: 4.1pt; mso-font-width: 99%;"> </span>a<span style="letter-spacing: -.3pt;"> </span>later<span style="letter-spacing: -.25pt;"> </span>date.<span style="letter-spacing: 3.0pt;"> </span><i>Id.<span style="letter-spacing: 3.0pt;"> </span></i>Thus,<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>Court<span style="letter-spacing: -.1pt;"> </span>held<span style="letter-spacing: -.2pt;"> </span>that<span style="letter-spacing: -.1pt;"> </span>because<span style="letter-spacing: -.3pt;">
</span>the<span style="letter-spacing: -.25pt;"> </span>firm<span style="letter-spacing: -.4pt;"> </span>sent<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.25pt;"> </span>letter<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">“attempting</span><span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>collect<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>debt<span style="letter-spacing: -.35pt;"> </span>–<span style="letter-spacing: -.25pt;"> </span>irrespective<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>whether<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">it</span><span style="letter-spacing: -.25pt;"> </span>also<span style="letter-spacing: -.25pt;"> </span>sought<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: 4.2pt; mso-font-width: 99%;"> </span>perfect<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>HOA's<span style="letter-spacing: -.2pt;"> </span>security<span style="letter-spacing: -.45pt;"> </span>interest<span style="letter-spacing: -.25pt;">
</span>and<span style="letter-spacing: -.25pt;"> </span>preserve<span style="letter-spacing: -.3pt;"> </span>its<span style="letter-spacing: -.25pt;"> </span>right<span style="letter-spacing: -.2pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>record<span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: -.3pt;"> </span>lien<span style="letter-spacing: -.25pt;"> </span>in<span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>future<span style="letter-spacing: -.25pt;"> </span>–<span style="letter-spacing: -.1pt;"> </span>it<span style="letter-spacing: -.1pt;"> </span>is<span style="letter-spacing: -.15pt;"> </span>subject<span style="letter-spacing: -.1pt;"> </span>to<span style="letter-spacing: -.1pt;"> </span>the<span style="letter-spacing: -.25pt;"> </span>full<span style="letter-spacing: -.2pt;"> </span>scope<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.2pt;"> </span>the<span style="letter-spacing: -.25pt;"> </span>FDCPA,<span style="letter-spacing: -.2pt;"> </span>.<span style="letter-spacing: -.25pt;"> </span>.<span style="letter-spacing: -.2pt;"> </span>.”<span style="letter-spacing: 3.05pt;"> </span><i>Id</i>.<span style="letter-spacing: -.25pt;"> </span>at<span style="letter-spacing: -.15pt;"> </span>990.<o:p></o:p></span></div>
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<div class="MsoBodyText" style="line-height: 102%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 6.0pt; margin-right: 10.7pt; margin-top: 2.0pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">As<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span><i>Ho<span style="letter-spacing: -.3pt;"> </span></i>and<span style="letter-spacing: -.3pt;"> </span><i>Mashiri<span style="letter-spacing: -.3pt;"> </span></i>decisions<span style="letter-spacing: -.3pt;"> </span>illustrate,<span style="letter-spacing: -.35pt;"> </span>it<span style="letter-spacing: -.3pt;"> </span>is<span style="letter-spacing: -.35pt;"> </span>possible<span style="letter-spacing: -.35pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">communicate</span><span style="letter-spacing: 4.2pt; mso-font-width: 99%;"> </span>with<span style="letter-spacing: -.35pt;"> </span>consumers<span style="letter-spacing: -.35pt;"> </span>solely<span style="letter-spacing: -.6pt;">
</span>in<span style="letter-spacing: -.35pt;"> </span>connection<span style="letter-spacing: -.3pt;"> </span>with<span style="letter-spacing: -.35pt;"> </span>enforcing<span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.45pt;"> </span>security<span style="letter-spacing: -.55pt;"> </span>interest,<span style="letter-spacing: -.45pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>thereby<span style="letter-spacing: 4.1pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">remain</span><span style="letter-spacing: -.25pt;"> </span>outside<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>coverage<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>FDCPA.<span style="letter-spacing: 2.85pt;"> </span>Any<span style="letter-spacing: -.5pt;"> </span>language<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">or</span><span style="letter-spacing: -.35pt;"> </span>conduct<span style="letter-spacing: -.2pt;">
</span>that<span style="letter-spacing: -.2pt;"> </span>is<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>arguably<span style="letter-spacing: -.5pt;"> </span>designed<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>seek<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.05pt;">payment</span><span style="letter-spacing: -.35pt;"> </span>on<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>account,<span style="letter-spacing: -.4pt;">
</span>however,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.55pt;"> </span>trigger<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: 3.1pt; mso-font-width: 99%;"> </span>protections<span style="letter-spacing: -.35pt;"> </span>of<span style="letter-spacing: -.45pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>Act.<o:p></o:p></span></div>
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<h1 style="line-height: 102%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 6.0pt; margin-right: 13.85pt; margin-top: 2.5pt;">
<span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-size: small;"><u>Certifying</u><span style="letter-spacing: -0.45pt; text-decoration-line: underline;"> </span><u>a</u><span style="letter-spacing: -0.5pt; text-decoration-line: underline;"> </span><u>class;</u><span style="letter-spacing: -0.55pt; text-decoration-line: underline;"> </span><u>individualized</u><span style="letter-spacing: -0.5pt; text-decoration-line: underline;"> </span><u>inquiries</u><span style="letter-spacing: -0.4pt; text-decoration-line: underline;"> </span><u>on</u><span style="letter-spacing: -0.55pt; text-decoration-line: underline;"> </span><span style="letter-spacing: 0.05pt; text-decoration-line: underline;">class</span><span style="letter-spacing: -0.45pt; text-decoration-line: underline;"> </span><span style="letter-spacing: -0.05pt; text-decoration-line: underline;">member</span><u><span style="letter-spacing: -1.05pt;"> </span><span style="letter-spacing: .05pt;">“debts”</span></u></span><span style="font-weight: normal;"><o:p></o:p></span></span></h1>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="letter-spacing: -.05pt;">Consumers</span><span style="letter-spacing: -.4pt;"> </span>have<span style="letter-spacing: -.45pt;"> </span>been<span style="letter-spacing: -.25pt;"> </span>filing<span style="letter-spacing: -.4pt;">
</span>FDCPA<span style="letter-spacing: -.45pt;"> </span>class<span style="letter-spacing: -.35pt;"> </span>actions<span style="letter-spacing: -.35pt;">
</span>against<span style="letter-spacing: -.4pt;"> </span>attorneys<span style="letter-spacing: -.35pt;"> </span>who<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>collect<span style="letter-spacing: -.4pt;"> </span>for<span style="letter-spacing: -.5pt;"> </span>homeowners<span style="letter-spacing: -.4pt;"> </span>associations<span style="letter-spacing: -.4pt;"> </span>with<span style="letter-spacing: -.45pt;"> </span>increasing<span style="letter-spacing: -.4pt;"> </span>frequency<span style="letter-spacing: -.6pt;"> </span>in<span style="letter-spacing: -.5pt;"> </span>recent<span style="letter-spacing: -.5pt;"> </span>years.<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>While<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">no</span><span style="letter-spacing: -.25pt;"> </span>class<span style="letter-spacing: -.25pt;">
</span>action<span style="letter-spacing: -.3pt;"> </span>should<span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>taken<span style="letter-spacing: -.25pt;"> </span>lightly,<span style="letter-spacing: -.35pt;">
</span>its<span style="letter-spacing: -.25pt;"> </span>worth<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">remembering</span><span style="letter-spacing: -.25pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>a<span style="letter-spacing: 2.6pt; mso-font-width: 99%;"> </span>plaintiffs<span style="letter-spacing: -.35pt;"> </span>face<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: .05pt;">significant</span><span style="letter-spacing: -.45pt;"> </span>additional<span style="letter-spacing: -.35pt;"> </span>hurdles<span style="letter-spacing: -.45pt;"> </span>when<span style="letter-spacing: -.35pt;"> </span>attempting<span style="letter-spacing: -.4pt;"> </span>to<span style="letter-spacing: -.45pt;"> </span>certify<span style="letter-spacing: -.6pt;"> </span>an<span style="letter-spacing: -.35pt;"> </span>FDCPA<span style="letter-spacing: 2.7pt; mso-font-width: 99%;"> </span>class<span style="letter-spacing: -.4pt;"> </span>action,<span style="letter-spacing: -.4pt;">
</span>beyond<span style="letter-spacing: -.3pt;"> </span>satisfying<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>requirements<span style="letter-spacing: -.35pt;"> </span>under<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">Rule</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">23</span><span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>Federal<span style="letter-spacing: 2.8pt; mso-font-width: 99%;"> </span>Rules<span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>Civil<span style="letter-spacing: -.3pt;"> </span>Procedure.<span style="letter-spacing: 2.8pt;"> </span>Courts<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.25pt;"> </span>closely<span style="letter-spacing: -.5pt;">
</span>examine<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>putative<span style="letter-spacing: -.35pt;">
</span>class<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">claims</span><span style="letter-spacing: 4.3pt; mso-font-width: 99%;"> </span>asserted<span style="letter-spacing: -.35pt;"> </span>against<span style="letter-spacing: -.25pt;">
</span>attorneys<span style="letter-spacing: -.35pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>this<span style="letter-spacing: -.3pt;"> </span>space<span style="letter-spacing: -.35pt;"> </span>will<span style="letter-spacing: -.3pt;"> </span>find<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">many</span><span style="letter-spacing: -.5pt;"> </span>reasons<span style="letter-spacing: -.3pt;">
</span>to<span style="letter-spacing: -.25pt;"> </span>deny<span style="letter-spacing: -.6pt;"> </span>motions<span style="letter-spacing: -.3pt;">
</span>for<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>class<span style="letter-spacing: -1.0pt;"> </span>certification.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">A<span style="letter-spacing: -.4pt;"> </span>consumer<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">seeking</span><span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>certify<span style="letter-spacing: -.45pt;"> </span>an<span style="letter-spacing: -.25pt;"> </span>FDCPA<span style="letter-spacing: -.35pt;"> </span>class<span style="letter-spacing: -.25pt;">
</span>action<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: -.25pt;"> </span>first<span style="letter-spacing: -.3pt;"> </span>address<span style="letter-spacing: -.25pt;">
</span>the<span style="letter-spacing: 2.1pt; mso-font-width: 99%;"> </span>threshold<span style="letter-spacing: -.3pt;"> </span>issue<span style="letter-spacing: -.4pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>whether<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span>Act<span style="letter-spacing: -.25pt;"> </span>applies<span style="letter-spacing: -.2pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>obligations<span style="letter-spacing: -.25pt;"> </span>incurred<span style="letter-spacing: -.3pt;"> </span>by<span style="letter-spacing: -.55pt;"> </span>class<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">members.</span><span style="letter-spacing: 2.95pt;"> </span>This<span style="letter-spacing: -.3pt;"> </span>often<span style="letter-spacing: -.2pt;"> </span>not<span style="letter-spacing: -.3pt;"> </span>an<span style="letter-spacing: -.15pt;"> </span>easy<span style="letter-spacing: -.45pt;"> </span>task,<span style="letter-spacing: -.35pt;"> </span>given<span style="letter-spacing: -.2pt;"> </span>how<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">common</span><span style="letter-spacing: -.2pt;"> </span>it<span style="letter-spacing: -.2pt;"> </span>is<span style="letter-spacing: -.2pt;"> </span>for<span style="letter-spacing: -.3pt;"> </span>owners<span style="letter-spacing: -.15pt;"> </span>to<span style="letter-spacing: -.2pt;"> </span>use<span style="letter-spacing: 2.8pt; mso-font-width: 99%;"> </span>their<span style="letter-spacing: -.45pt;"> </span>properties<span style="letter-spacing: -.3pt;"> </span>as<span style="letter-spacing: -.35pt;"> </span>rentals.<span style="letter-spacing: 2.7pt;"> </span>An<span style="letter-spacing: -.4pt;"> </span>obligation,<span style="letter-spacing: -.4pt;"> </span>such<span style="letter-spacing: -.3pt;"> </span>as<span style="letter-spacing: -.35pt;"> </span>unpaid<span style="letter-spacing: -.35pt;">
</span>homeowner<span style="letter-spacing: -.4pt;"> </span>assessments,<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span>is<span style="letter-spacing: -.3pt;"> </span>not<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“debt”</span><span style="letter-spacing: -.3pt;"> </span>subject<span style="letter-spacing: -.25pt;">
</span>to<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>FDCPA<span style="letter-spacing: -.35pt;"> </span>unless<span style="letter-spacing: -.3pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>was<span style="letter-spacing: -.25pt;"> </span>incurred<span style="letter-spacing: -.15pt;">
</span><span style="letter-spacing: -.05pt;">“primarily</span><span style="letter-spacing: -.45pt;"> </span>for personal,<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">family</span><span style="letter-spacing: -.5pt;"> </span>or<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">household</span><span style="letter-spacing: -.25pt;">
</span>purposes.”<span style="letter-spacing: 2.75pt;"> </span>15<span style="letter-spacing: -.3pt;"> </span>U.S.C.<span style="letter-spacing: -.4pt;"> </span>§<span style="letter-spacing: -.3pt;"> </span>1692a(5);<span style="letter-spacing: -.25pt;">
</span><i>see<span style="letter-spacing: -.35pt;"> </span>Turner<span style="letter-spacing: -.25pt;"> </span>v.</i><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><i>Cook</i>,<span style="letter-spacing: -.4pt;"> </span>362<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.3pt;"> </span>1219,<span style="letter-spacing: -.35pt;"> </span>1226-27<span style="letter-spacing: -.35pt;">
</span>(9th<span style="letter-spacing: -.3pt;"> </span>Cir.<span style="letter-spacing: -.35pt;"> </span>2004)<span style="letter-spacing: -.35pt;">
</span>(proving<span style="letter-spacing: -.3pt;"> </span>existence<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.4pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>“debt”<span style="letter-spacing: 3.7pt; mso-font-width: 99%;"> </span>under<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span>FDCPA<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">is</span><span style="letter-spacing: -.4pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>“threshold”<span style="letter-spacing: -.35pt;"> </span>issue<span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.3pt;"> </span>every<span style="letter-spacing: -.5pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span>action).<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Determining<span style="letter-spacing: -.4pt;"> </span>if<span style="letter-spacing: -.35pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>“debt”<span style="letter-spacing: -.35pt;">
</span>was<span style="letter-spacing: -.25pt;"> </span>incurred<span style="letter-spacing: -.15pt;"> </span>by<span style="letter-spacing: -.5pt;"> </span>an<span style="letter-spacing: -.25pt;"> </span>owner<span style="letter-spacing: -.35pt;">
</span>is<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>fact-intensive <span style="letter-spacing: 2.1pt;"> </span>inquiry,<span style="letter-spacing: -.45pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>cannot<span style="letter-spacing: -.4pt;"> </span>be<span style="letter-spacing: -.4pt;"> </span>completed<span style="letter-spacing: -.25pt;"> </span>simply<span style="letter-spacing: -.55pt;">
</span>be<span style="letter-spacing: -.4pt;"> </span>reading<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">CCR’s</span><span style="letter-spacing: -.35pt;"> </span>or<span style="letter-spacing: -.4pt;"> </span>other<span style="letter-spacing: -.4pt;"> </span>documents<span style="letter-spacing: 2.8pt; mso-font-width: 99%;"> </span>relating<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>purchase<span style="letter-spacing: -.3pt;">
</span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>property.<span style="letter-spacing: 2.9pt;"> </span>It<span style="letter-spacing: -.3pt;"> </span>requires<span style="letter-spacing: -.2pt;"> </span>an<span style="letter-spacing: -.2pt;"> </span>examination<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span><b>“the<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>transaction<span style="letter-spacing: -.4pt;">
</span>as<span style="letter-spacing: -.3pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">whole</span></b><span style="letter-spacing: .05pt;">,</span><span style="letter-spacing: -.4pt;"> </span>paying<span style="letter-spacing: -.3pt;"> </span>particular<span style="letter-spacing: -.4pt;"> </span>attention<span style="letter-spacing: -.4pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>purpose<span style="letter-spacing: -.4pt;"> </span>for<span style="letter-spacing: -.4pt;"> </span>which<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>credit<span style="letter-spacing: -.35pt;"> </span>was<span style="letter-spacing: -.35pt;"> </span>extended<span style="letter-spacing: -.3pt;">
</span>in<span style="letter-spacing: -.3pt;"> </span>order<span style="letter-spacing: -.45pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span>determine<span style="letter-spacing: -.4pt;"> </span>whether<span style="letter-spacing: -.45pt;">
</span>[the]<span style="letter-spacing: -.45pt;"> </span>transaction<span style="letter-spacing: -.4pt;"> </span>was<span style="letter-spacing: -.35pt;"> </span>primarily<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>consumer<span style="letter-spacing: -.55pt;"> </span><span style="letter-spacing: .05pt;">or</span><span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">commercial</span><span style="letter-spacing: -.4pt;"> </span>in<span style="letter-spacing: -.45pt;"> </span>nature.”<i>
See<span style="letter-spacing: -.3pt;"> </span>Bloom<span style="letter-spacing: -.3pt;"> </span>v.<span style="letter-spacing: -.3pt;"> </span>I.C.<span style="letter-spacing: -.3pt;"> </span>System,<span style="letter-spacing: -.3pt;">
</span>Inc</i>.,<span style="letter-spacing: -.35pt;"> </span>972<span style="letter-spacing: -.2pt;"> </span>F.2d<span style="letter-spacing: -.2pt;"> </span>1067,<span style="letter-spacing: -.35pt;"> </span>1068<span style="letter-spacing: -.15pt;"> </span>(9th<span style="letter-spacing: -.2pt;"> </span>Cir.<span style="letter-spacing: -.3pt;"> </span>1992)<span style="letter-spacing: 2.4pt; mso-font-width: 99%;"> </span>(emphasis<span style="letter-spacing: -.4pt;"> </span>added,<span style="letter-spacing: -.5pt;"> </span>citation<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.4pt;"> </span>quotation<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">marks</span><span style="letter-spacing: -.45pt;"> </span>omitted)<span style="letter-spacing: -.45pt;">
</span>(personal<span style="letter-spacing: -.35pt;"> </span>loan<span style="letter-spacing: -.35pt;"> </span>from<span style="letter-spacing: -.65pt;"> </span>friend<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>used<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>start<span style="letter-spacing: -.2pt;"> </span>software<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: .05pt;">business</span><span style="letter-spacing: -.2pt;"> </span>not<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“debt”</span><span style="letter-spacing: -.3pt;"> </span>under<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>Act:<span style="letter-spacing: 3.0pt;"> </span><span style="letter-spacing: -.05pt;">“The</span><span style="letter-spacing: -.35pt;"> </span>[FDCPA] characterizes debts in terms of
end uses . . . [n]either the lender’s motives nor the fashion in which the loan
is memorialized are dispositive of the inquiry”).<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">forms</span><span style="letter-spacing: -.35pt;"> </span>used<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span>document<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.45pt;"> </span>transaction
are<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.25pt;"> </span>determinative,<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.25pt;"> </span>they<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>evaluated<span style="letter-spacing: -.25pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>light<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“the</span><span style="letter-spacing: -.3pt;"> </span><b>substance<span style="letter-spacing: -.25pt;"> </span></b>of<span style="letter-spacing: -.35pt;">
</span>the<span style="letter-spacing: 3.5pt; mso-font-width: 99%;"> </span>transaction<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span><b>the<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">borrower's</span><span style="letter-spacing: -.4pt;"> </span>purpose<span style="letter-spacing: -.4pt;">
</span></b>in<span style="letter-spacing: -.3pt;"> </span>obtaining”<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>property.<span style="letter-spacing: 2.7pt;"> </span><i>See<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">Slenk</span><span style="letter-spacing: -.4pt;"> </span>v.<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>Transworld<span style="letter-spacing: -.35pt;"> </span>Sys.,<span style="letter-spacing: -.4pt;"> </span>Inc.</i>,<span style="letter-spacing: -.4pt;">
</span>236<span style="letter-spacing: -.25pt;"> </span>F.3d<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">1072,</span><span style="letter-spacing: -.4pt;"> </span>1075<span style="letter-spacing: -.3pt;"> </span>(9th<span style="letter-spacing: -.35pt;"> </span>Cir.<span style="letter-spacing: -.4pt;"> </span>2001)<span style="letter-spacing: -.4pt;"> </span>(emphasis<span style="letter-spacing: -.35pt;">
</span>added). This<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.1pt;">may</span><span style="letter-spacing: -.45pt;"> </span>require<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.35pt;"> </span>only<span style="letter-spacing: -.55pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>review<span style="letter-spacing: -.35pt;">
</span>of<span style="letter-spacing: -.35pt;"> </span>documents<span style="letter-spacing: -.3pt;"> </span>relating<span style="letter-spacing: -.2pt;">
</span>to<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>transaction,<span style="letter-spacing: -.35pt;"> </span>but<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>also<span style="letter-spacing: -.3pt;"> </span>an<span style="letter-spacing: -.25pt;"> </span>evaluation<span style="letter-spacing: -.25pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>debtor’s<span style="letter-spacing: -.3pt;">
</span><b><u>conduct<span style="letter-spacing: -.25pt;"> </span></u></b>before<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>after<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">obligation</span><span style="letter-spacing: -.25pt;"> </span>was<span style="letter-spacing: 2.5pt; mso-font-width: 99%;"> </span>incurred.<span style="font-size: 8.0pt; line-height: 102%;"><o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">All<span style="letter-spacing: -.3pt;"> </span>relevant<span style="letter-spacing: -.3pt;"> </span>facts<span style="letter-spacing: -.35pt;"> </span>relating<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>purpose<span style="letter-spacing: -.35pt;">
</span>for<span style="letter-spacing: -.4pt;"> </span>purchasing<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>property<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: 4.2pt; mso-font-width: 99%;"> </span>be<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“viewed</span><span style="letter-spacing: -.2pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>aggregate”<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>entire<span style="letter-spacing: -.3pt;">
</span>transaction<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: -.25pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>viewed<span style="letter-spacing: -.2pt;">
</span><span style="letter-spacing: -.1pt;">“as</span><span style="letter-spacing: -.2pt;"> </span>a<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>whole”<span style="letter-spacing: -.4pt;"> </span>–<span style="letter-spacing: -.2pt;"> </span>including<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>owners’<span style="letter-spacing: -.4pt;"> </span>conduct<span style="letter-spacing: -.25pt;">
</span>before<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">and</span><span style="letter-spacing: -.3pt;"> </span>after<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">their</span><span style="letter-spacing: -.35pt;"> </span>purchase.<span style="letter-spacing: 2.8pt;"> </span><i>See,<span style="letter-spacing: -.35pt;"> </span>e.g.,<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>Beeks<span style="letter-spacing: -.15pt;"> </span>v.<span style="letter-spacing: -.3pt;"> </span>ALS<span style="letter-spacing: -.25pt;"> </span>Lien<span style="letter-spacing: -.2pt;"> </span>Servs</i>.,<span style="letter-spacing: -.3pt;"> </span>2014<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.1pt;">WL</span><span style="letter-spacing: -.3pt;"> </span>2014<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.1pt;">WL</span><span style="letter-spacing: -.4pt;"> </span>7785745,<span style="letter-spacing: -.3pt;">
</span>at<span style="letter-spacing: -.15pt;"> </span>*6<span style="letter-spacing: -.25pt;"> </span>(C.D.<span style="letter-spacing: -.3pt;"> </span>Cal.<span style="letter-spacing: -.3pt;"> </span>Feb.<span style="letter-spacing: -.35pt;"> </span>18,<span style="letter-spacing: 2.5pt; mso-font-width: 99%;"> </span>2014)<span style="letter-spacing: -.5pt;"> </span>(applying<span style="letter-spacing: -.35pt;">
</span><i>Slenk</i>;<span style="letter-spacing: -.4pt;"> </span>fact<span style="letter-spacing: -.35pt;"> </span>issue<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.45pt;"> </span>whether<span style="letter-spacing: -.45pt;"> </span>homeowner<span style="letter-spacing: -.5pt;"> </span>assessments<span style="letter-spacing: -.35pt;"> </span>qualified<span style="letter-spacing: -.35pt;"> </span>as<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>“debts”<span style="letter-spacing: -.5pt;"> </span>when<span style="letter-spacing: -.3pt;"> </span>“evidence<span style="letter-spacing: -.45pt;">
</span>relating<span style="letter-spacing: -.35pt;"> </span>to<span style="letter-spacing: -.4pt;"> </span>plaintiff’s<span style="letter-spacing: -.45pt;"> </span>intent”<span style="letter-spacing: -.45pt;"> </span>was<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“not</span><span style="letter-spacing: -.35pt;"> </span>completely<span style="letter-spacing: -.6pt;"> </span>clear”<span style="letter-spacing: 2.4pt; mso-font-width: 99%;"> </span>because<span style="letter-spacing: -.4pt;"> </span>record<span style="letter-spacing: -.25pt;">
</span>did<span style="letter-spacing: -.25pt;"> </span>not<span style="letter-spacing: -.3pt;"> </span>show<span style="letter-spacing: -.35pt;"> </span>if<span style="letter-spacing: -.35pt;"> </span>plaintiff<span style="letter-spacing: -.35pt;"> </span>resided<span style="letter-spacing: -.3pt;"> </span>in,<span style="letter-spacing: -.35pt;"> </span>or<span style="letter-spacing: -.35pt;"> </span>rented,<span style="letter-spacing: -.35pt;"> </span>condo<span style="letter-spacing: -.35pt;">
</span>during<span style="letter-spacing: -.3pt;"> </span>entire<span style="letter-spacing: 4.5pt; mso-font-width: 99%;"> </span>seven<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">years</span><span style="letter-spacing: -.2pt;"> </span>she<span style="letter-spacing: -.35pt;"> </span>owned<span style="letter-spacing: -.25pt;"> </span>it).<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Courts<span style="letter-spacing: -.35pt;"> </span>around<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>country<span style="letter-spacing: -.55pt;"> </span>have<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">held</span><span style="letter-spacing: -.4pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>assessments<span style="letter-spacing: -.3pt;"> </span>and<span style="letter-spacing: -.45pt;"> </span>loan<span style="letter-spacing: -.3pt;"> </span>obligations<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>incurred<span style="letter-spacing: -.2pt;"> </span>with<span style="letter-spacing: -.35pt;"> </span>respect<span style="letter-spacing: -.25pt;">
</span>to<span style="letter-spacing: -.25pt;"> </span>rental<span style="letter-spacing: -.2pt;"> </span>properties<span style="letter-spacing: -.25pt;"> </span>are<span style="letter-spacing: -.35pt;"> </span><u><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.25pt;"> </span></u>“debts”<span style="letter-spacing: -.35pt;"> </span>under<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span>FDCPA.<span style="letter-spacing: 2.9pt;"> </span><i>See,<span style="letter-spacing: 2.5pt; mso-font-width: 99%;"> </span>e.g.,<span style="letter-spacing: -.35pt;"> </span>Otomo<span style="letter-spacing: -.25pt;"> </span>v.<span style="letter-spacing: -.35pt;"> </span>Nevada<span style="letter-spacing: -.3pt;"> </span>Assoc.<span style="letter-spacing: -.35pt;">
</span>Servs.,<span style="letter-spacing: -.35pt;"> </span>Inc.,<span style="letter-spacing: -.3pt;"> </span></i>2013<span style="letter-spacing: -.2pt;"> </span><span style="letter-spacing: -.1pt;">WL</span><span style="letter-spacing: -.35pt;"> </span>1249598,<span style="letter-spacing: -.35pt;">
</span>at<span style="letter-spacing: -.25pt;"> </span>*8<span style="letter-spacing: -.25pt;"> </span>(D.<span style="letter-spacing: -.35pt;"> </span>Nev.<span style="letter-spacing: -.35pt;"> </span>Mar.<span style="letter-spacing: 2.8pt; mso-font-width: 99%;"> </span>25,<span style="letter-spacing: -.45pt;"> </span>2013)<span style="letter-spacing: -.4pt;"> </span>(denying<span style="letter-spacing: -.35pt;">
</span>certification<span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.45pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">class</span><span style="letter-spacing: -.3pt;"> </span>relating<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span>collection<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">of </span>assessments<span style="letter-spacing: -.4pt;"> </span>where<span style="letter-spacing: -.5pt;"> </span>determination<span style="letter-spacing: -.4pt;"> </span>of<span style="letter-spacing: -.5pt;"> </span>whether<span style="letter-spacing: -.45pt;"> </span>property<span style="letter-spacing: -.65pt;">
</span>was<span style="letter-spacing: -.4pt;"> </span>used<span style="letter-spacing: -.35pt;"> </span>for<span style="letter-spacing: -.45pt;"> </span>business<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>purposes<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">“would</span><span style="letter-spacing: -.35pt;"> </span>require<span style="letter-spacing: -.45pt;">
</span>individual<span style="letter-spacing: -.35pt;"> </span>investigation<span style="letter-spacing: -.45pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span>determine<span style="letter-spacing: -.45pt;"> </span>the<span style="letter-spacing: -.45pt;"> </span>nature<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.45pt;"> </span>the<span style="letter-spacing: 4.5pt; mso-font-width: 99%;"> </span>transaction.<span style="letter-spacing: -.55pt;"> </span>.<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: -.05pt;">.”); <i>Kitamura v. AOAO of Lihue Townhouse, </i>2013
WL 139058, at *5 (D. Hawaii Mar. 29, 2013) (FDCPA did not apply where property used
for rental purposes); <i>Aniel v. Litton Loan
Servicing, LP</i>, 2011 WL 635258, at *4 (N.D. Cal. Feb. 11, 2011) (“Since the debt
at issue was incurred in connection with a rental property, as opposed to a personal,
family or household purpose, the FDCPA has no application here.”); <i>Sparlin v. Select Portfolio Servicing, Inc</i>.,
2012 WL 527486, at *10 (D. Ariz. Feb. 17, 2012) (dismissing FDCPA claims without
leave to amend where unpaid obligation was a loan taken for rental property); <i>Johnson </i></span><i style="text-indent: 0in;"><span style="letter-spacing: -.05pt;">v.
Wells Fargo Home Mortgage, Inc.</span></i><span style="letter-spacing: -0.05pt; text-indent: 0in;">,
2007 WL 3226153, at *9 (D. Nev. Oct. 29, 2007) (unpaid loans obtained to acquire
rental properties not “debts” under the FDCPA); <i>Hunter v. Washington Mutual Bank</i>, 2012 WL 715270, at *4 (E.D. Tenn.
March 1, 2012) (FDCPA did not apply to loan for purchase of rental property, even
though plaintiff and wife lived in the property for years); <i>Samuel v. Ocwen Loan Servicing, LLC</i>, 2015
WL 11256663, *6 (D. Ga. Feb. 12, 2015).</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">How,<span style="letter-spacing: -.35pt;"> </span>then,<span style="letter-spacing: -.35pt;"> </span>does<span style="letter-spacing: -.25pt;"> </span>all<span style="letter-spacing: -.25pt;"> </span>this<span style="letter-spacing: -.3pt;"> </span>relate<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.25pt;"> </span>certifying<span style="letter-spacing: -.25pt;"> </span>an<span style="letter-spacing: -.2pt;"> </span>FDCPA<span style="letter-spacing: -.35pt;"> </span>class<span style="letter-spacing: -.25pt;">
</span>action<span style="letter-spacing: -.25pt;"> </span>against<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: 2.9pt; mso-font-width: 99%;"> </span>firm<span style="letter-spacing: -.6pt;"> </span>that<span style="letter-spacing: -.25pt;"> </span>collects<span style="letter-spacing: -.3pt;">
</span>delinquent<span style="letter-spacing: -.3pt;"> </span>assessments?<span style="letter-spacing: 2.85pt;"> </span>To<span style="letter-spacing: -.35pt;"> </span>certify<span style="letter-spacing: -.5pt;"> </span>a<span style="letter-spacing: -.4pt;"> </span>class,<span style="letter-spacing: -.4pt;"> </span>under<span style="letter-spacing: -.4pt;"> </span>Rule<span style="letter-spacing: -.35pt;"> </span>23(b)(3)<span style="letter-spacing: 4.2pt; mso-font-width: 99%;"> </span>of<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>Federal<span style="letter-spacing: -.25pt;">
</span>Rules<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>Civil<span style="letter-spacing: -.25pt;">
</span>Procedure,<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>plaintiff<span style="letter-spacing: -.35pt;"> </span>has<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>burden<span style="letter-spacing: -.2pt;">
</span>of<span style="letter-spacing: -.35pt;"> </span>showing<span style="letter-spacing: 4.1pt; mso-font-width: 99%;"> </span>that<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.1pt;">“common</span><span style="letter-spacing: -.4pt;"> </span>questions<span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: -.4pt;"> </span>predominate<span style="letter-spacing: -.5pt;"> </span>over<span style="letter-spacing: -.5pt;"> </span><span style="letter-spacing: .05pt;">any</span><span style="letter-spacing: -.6pt;"> </span>questions<span style="letter-spacing: -.35pt;">
</span>affecting<span style="letter-spacing: -.4pt;"> </span>only<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span>individual<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">members”</span><span style="letter-spacing: -.45pt;"> </span>and<span style="letter-spacing: -.4pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">“class</span><span style="letter-spacing: -.35pt;"> </span>resolution<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: -.05pt;">must</span><span style="letter-spacing: -.3pt;"> </span>be<span style="letter-spacing: -.45pt;"> </span>superior<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.3pt;"> </span>other<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">available</span><span style="letter-spacing: 3.8pt; mso-font-width: 99%;"> </span>methods<span style="letter-spacing: -.25pt;"> </span>for<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>fair<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.25pt;"> </span>efficient<span style="letter-spacing: -.3pt;"> </span>adjudication<span style="letter-spacing: -.2pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>controversy.”<span style="letter-spacing: 2.8pt;"> </span>Fed.<span style="letter-spacing: -.35pt;"> </span>R.<span style="letter-spacing: -.35pt;"> </span>Civ. <span style="text-indent: 0in;">Proc.</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">23(b)(3).</span><span style="letter-spacing: 2.9pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">This</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">means</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">if</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">members</span><span style="letter-spacing: -0.25pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">of</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">class</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">cannot</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">be</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">identified</span><span style="letter-spacing: -0.15pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">and</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">their</span><span style="letter-spacing: 3.6pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">claims</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">cannot</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">be</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">adjudicated</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">without</span><span style="letter-spacing: -0.35pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">engaging</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">in</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">individual</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">inquiries</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">into</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">their</span><span style="letter-spacing: 4.8pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">particular</span><span style="letter-spacing: -0.6pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">circumstances,</span><span style="letter-spacing: -0.6pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">class</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">certification</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">is</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">not</span><span style="letter-spacing: -0.6pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">appropriate.</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">For<span style="letter-spacing: -.4pt;"> </span>these<span style="letter-spacing: -.35pt;"> </span>very<span style="letter-spacing: -.4pt;"> </span>reasons,<span style="letter-spacing: -.4pt;">
</span>the<span style="letter-spacing: -.35pt;"> </span>Court<span style="letter-spacing: -.25pt;"> </span>denied<span style="letter-spacing: -.25pt;">
</span>class<span style="letter-spacing: -.35pt;"> </span>certification<span style="letter-spacing: -.3pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span><i>Lowe<span style="letter-spacing: -.4pt;"> </span>v.</i><i>Maxwell<span style="letter-spacing: -.25pt;"> </span>&<span style="letter-spacing: -.8pt;"> </span>Morgan<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.05pt;">PC</span></i><span style="letter-spacing: -.05pt;">,</span><span style="letter-spacing: -.3pt;"> 322 </span>F.R.D.
393 (D.<span style="letter-spacing: -.35pt;"> </span>Ariz.<span style="letter-spacing: -.35pt;"> </span>2017),<span style="letter-spacing: 3.0pt; mso-font-width: 99%;"> </span>a<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">putative</span><span style="letter-spacing: -.35pt;"> </span>FDCPA<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">class</span><span style="letter-spacing: -.25pt;"> </span>action<span style="letter-spacing: -.25pt;"> </span>filed<span style="letter-spacing: -.2pt;"> </span>against<span style="letter-spacing: -.25pt;"> </span>a<span style="letter-spacing: -.35pt;"> </span>law<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: -.05pt;">firm.</span><span style="letter-spacing: 2.85pt;"> </span>The<span style="letter-spacing: -.3pt;"> </span>Court<span style="letter-spacing: -.2pt;"> </span>observed<span style="letter-spacing: -.25pt;">
</span>that<span style="letter-spacing: 2.3pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.1pt;">“common</span><span style="letter-spacing: -.4pt;"> </span>issues<span style="letter-spacing: -.35pt;"> </span>do<span style="letter-spacing: -.45pt;"> </span>not<span style="letter-spacing: -.45pt;"> </span>predominate<span style="letter-spacing: -.5pt;"> </span>over<span style="letter-spacing: -.45pt;"> </span>individualized<span style="letter-spacing: -.35pt;"> </span>inquiries”<span style="letter-spacing: -.5pt;"> </span>because<span style="letter-spacing: -.5pt;"> </span>the<span style="letter-spacing: 4.5pt; mso-font-width: 99%;"> </span>Court<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: -.05pt;">“will</span><span style="letter-spacing: -.35pt;"> </span>need<span style="letter-spacing: -.25pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span>conduct<span style="letter-spacing: -.3pt;">
</span>individualized<span style="letter-spacing: -.3pt;"> </span>investigations<span style="letter-spacing: -.35pt;"> </span>in<span style="letter-spacing: -.4pt;"> </span>order<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">to</span><span style="letter-spacing: -.35pt;"> </span>determine<span style="letter-spacing: 4.1pt; mso-font-width: 99%;"> </span>whether<span style="letter-spacing: -.35pt;"> </span>each<span style="letter-spacing: -.15pt;"> </span>putative<span style="letter-spacing: -.35pt;">
</span>class<span style="letter-spacing: -.25pt;"> </span><span style="letter-spacing: -.1pt;">member</span><span style="letter-spacing: -.35pt;"> </span>has<span style="letter-spacing: -.2pt;"> </span>incurred<span style="letter-spacing: -.2pt;">
</span>a<span style="letter-spacing: -.35pt;"> </span>qualifying<span style="letter-spacing: -.2pt;"> </span>debt.”<span style="letter-spacing: 2.85pt;">
</span>The<span style="letter-spacing: -.5pt;"> </span>Court<span style="letter-spacing: -.5pt;"> </span>stated:<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="text-indent: 0in;">“Although</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">homeowners'</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">association</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">fees</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">can</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">be</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">qualifying</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">debts</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">if</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">incurred</span><span style="letter-spacing: 3.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">by</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">someone</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">who</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">uses</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">property</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">for</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">personal,</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">family,</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">or</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">household</span><span style="letter-spacing: 3.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">purposes,</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">those</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">same</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">fees</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">would</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">not</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">qualify</span><span style="letter-spacing: -0.5pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">if</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">incurred</span><span style="letter-spacing: -0.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">by</span><span style="letter-spacing: -0.55pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">a</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">landlord</span><span style="letter-spacing: 3.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">utilizing</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">property</span><span style="letter-spacing: -0.5pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">for</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">commercial</span><span style="letter-spacing: -0.25pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">purposes</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">.</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">.</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">.</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">The</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">Court</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">therefore</span><span style="letter-spacing: 4.2pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">would</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">need</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">examine</span><span style="letter-spacing: -0.5pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">circumstances</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">surrounding</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">each</span><span style="letter-spacing: -0.3pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">putative</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">class</span><span style="letter-spacing: 2.9pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">member's</span><span style="letter-spacing: -0.35pt; text-indent: 0in;"> </span><span style="letter-spacing: -0.05pt; text-indent: 0in;">home</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">purchase</span><span style="letter-spacing: -0.4pt; text-indent: 0in;">
</span><span style="text-indent: 0in;">to</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">determine</span><span style="letter-spacing: -0.4pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="letter-spacing: 0.05pt; text-indent: 0in;">purpose</span><span style="letter-spacing: -0.45pt; text-indent: 0in;">
</span><span style="letter-spacing: 0.05pt; text-indent: 0in;">of</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">the</span><span style="letter-spacing: -0.45pt; text-indent: 0in;"> </span><span style="text-indent: 0in;">transaction.”</span></span></div>
<div class="MsoBodyText" style="line-height: 102%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 6.0pt; margin-right: 13.85pt; margin-top: 2.0pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-top: .35pt;">
<br /></div>
<div class="MsoBodyText" style="line-height: 102%; margin-right: 13.85pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -.4pt;"> </span>Court<span style="letter-spacing: -.3pt;"> </span>rejected<span style="letter-spacing: -.25pt;">
</span>the<span style="letter-spacing: -.4pt;"> </span>plaintiff’s<span style="letter-spacing: -.3pt;"> </span>argument<span style="letter-spacing: -.4pt;">
</span>that<span style="letter-spacing: -.35pt;"> </span>class<span style="letter-spacing: 2.8pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">members</span><span style="letter-spacing: -.3pt;"> </span>could<span style="letter-spacing: -.35pt;"> </span>be<span style="letter-spacing: -.4pt;"> </span>easily<span style="letter-spacing: -.6pt;"> </span>identified<span style="letter-spacing: -.3pt;"> </span>by<span style="letter-spacing: -.55pt;"> </span><span style="letter-spacing: -.05pt;">simply</span><span style="letter-spacing: -.5pt;"> </span>examining<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>affidavits<span style="letter-spacing: -.4pt;"> </span>of<span style="letter-spacing: -.4pt;"> </span>value<span style="font-size: 8.0pt; line-height: 102%; mso-text-raise: 5.5pt; position: relative; top: -5.5pt;">7<span style="letter-spacing: 4.1pt; mso-font-width: 99%;"> </span></span>relating<span style="letter-spacing: -.35pt;"> </span>to<span style="letter-spacing: -.35pt;"> </span>each<span style="letter-spacing: -.25pt;"> </span>property,<span style="letter-spacing: -.45pt;"> </span>noting<span style="letter-spacing: -.3pt;"> </span>that<span style="letter-spacing: -.3pt;"> </span>reviewing<span style="letter-spacing: -.35pt;">
</span>documents<span style="letter-spacing: -.4pt;"> </span>alone<span style="letter-spacing: -.4pt;"> </span>would<span style="letter-spacing: -.35pt;"> </span>not<span style="letter-spacing: 3.2pt; mso-font-width: 99%;"> </span>uncover<span style="letter-spacing: -.35pt;"> </span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.35pt;"> </span>“substance”<span style="letter-spacing: -.3pt;"> </span><span style="letter-spacing: .05pt;">of</span><span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>transaction.<span style="letter-spacing: 2.9pt;"> </span>In<span style="letter-spacing: -.25pt;"> </span>addition,<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.3pt;"> </span>defendant<span style="letter-spacing: 3.6pt; mso-font-width: 99%;"> </span>had<span style="letter-spacing: -.4pt;"> </span>identified<span style="letter-spacing: -.25pt;"> </span>several<span style="letter-spacing: -.25pt;"> </span>instances<span style="letter-spacing: -.25pt;"> </span>where<span style="letter-spacing: -.45pt;">
</span><span style="letter-spacing: .05pt;">the</span><span style="letter-spacing: -.4pt;"> </span>affidavits<span style="letter-spacing: -.3pt;"> </span>of<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: .05pt;">value</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">did</span><span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">not</span><span style="letter-spacing: -.3pt;"> </span>accurately<span style="letter-spacing: 3.3pt; mso-font-width: 99%;"> </span>reflect<span style="letter-spacing: -.25pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>owner’s<span style="letter-spacing: -.4pt;">
</span>intent<span style="letter-spacing: -.4pt;"> </span>when<span style="letter-spacing: -.2pt;"> </span>purchasing<span style="letter-spacing: -.3pt;"> </span>the<span style="letter-spacing: -.4pt;"> </span>property.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoBodyText" style="line-height: 102%; margin-right: 10.7pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -.5pt;"> </span>Court<span style="letter-spacing: -.35pt;"> </span>also<span style="letter-spacing: -.4pt;"> </span>agreed<span style="letter-spacing: -.25pt;"> </span>with<span style="letter-spacing: -.4pt;"> </span>defendant<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: -.35pt;"> </span>numerous<span style="letter-spacing: -.35pt;"> </span>other<span style="letter-spacing: -.45pt;">
</span>individualized<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>inquiries<span style="letter-spacing: -.35pt;"> </span>that<span style="letter-spacing: -.25pt;"> </span>would<span style="letter-spacing: -.3pt;"> </span>be<span style="letter-spacing: -.35pt;"> </span>required<span style="letter-spacing: -.3pt;"> </span>to<span style="letter-spacing: -.3pt;"> </span>determine<span style="letter-spacing: -.4pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>validity<span style="letter-spacing: -.55pt;"> </span>of<span style="letter-spacing: -.35pt;"> </span>each<span style="letter-spacing: -.25pt;"> </span>putative<span style="letter-spacing: -.4pt;">
</span>class<span style="letter-spacing: 4.0pt; mso-font-width: 99%;"> </span><span style="letter-spacing: -.05pt;">member’s</span><span style="letter-spacing: -.35pt;">
</span><span style="letter-spacing: -.05pt;">claim.</span><i><span style="letter-spacing: 2.75pt; mso-bidi-font-family: "Times New Roman";"> </span></i>Thus,<span style="letter-spacing: -.45pt;"> </span><span style="letter-spacing: -.05pt;">commonality</span><span style="letter-spacing: -.55pt;"> </span>and<span style="letter-spacing: -.3pt;"> </span>superiority<span style="letter-spacing: -.5pt;"> </span>under<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">Rule</span><span style="letter-spacing: -.4pt;"> </span>23(b)(3)<span style="letter-spacing: -.4pt;"> </span>were<span style="letter-spacing: 3.4pt; mso-font-width: 99%;"> </span>not<span style="letter-spacing: -.35pt;"> </span>present,<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>the<span style="letter-spacing: -.35pt;"> </span>motion<span style="letter-spacing: -.35pt;">
</span>for<span style="letter-spacing: -.35pt;"> </span>class<span style="letter-spacing: -.35pt;"> </span>certification<span style="letter-spacing: -.3pt;"> </span>was<span style="letter-spacing: -.3pt;"> </span>denied.<span style="font-size: 8.0pt; line-height: 102%;"><o:p></o:p></span></span></div>
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<br /></div>
<div class="MsoBodyText" style="line-height: 102%; margin-right: 13.85pt; text-indent: 0in;">
<span style="font-family: Arial, Helvetica, sans-serif;">The<span style="letter-spacing: -.35pt;"> </span><i>Lowe<span style="letter-spacing: -.35pt;"> </span></i>decision<span style="letter-spacing: -.35pt;"> </span>and<span style="letter-spacing: -.35pt;"> </span>cases<span style="letter-spacing: -.25pt;"> </span>like<span style="letter-spacing: -.35pt;"> </span>it<span style="letter-spacing: -.25pt;"> </span>should<span style="letter-spacing: -.3pt;">
</span>be<span style="letter-spacing: -.35pt;"> </span>very<span style="letter-spacing: -.4pt;"> </span>persuasive<span style="letter-spacing: -.35pt;"> </span>in<span style="letter-spacing: -.25pt;"> </span>defeating<span style="letter-spacing: 3.9pt; mso-font-width: 99%;"> </span>putative<span style="letter-spacing: -.45pt;"> </span>FDCPA<span style="letter-spacing: -.4pt;"> </span><span style="letter-spacing: .05pt;">class</span><span style="letter-spacing: -.35pt;"> </span>actions<span style="letter-spacing: -.35pt;"> </span>filed<span style="letter-spacing: -.3pt;"> </span>against<span style="letter-spacing: -.3pt;"> </span>attorneys<span style="letter-spacing: -.35pt;">
</span>and<span style="letter-spacing: -.45pt;"> </span>other<span style="letter-spacing: -.4pt;"> </span>entities<span style="letter-spacing: -.3pt;">
</span>that<span style="letter-spacing: -.3pt;"> </span>collect assessments<span style="letter-spacing: -.75pt;"> </span>for<span style="letter-spacing: -.75pt;"> </span><span style="letter-spacing: -.05pt;">community</span><span style="letter-spacing: -.9pt;">
</span>associations.</span><br /><o:p></o:p></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com2tag:blogger.com,1999:blog-7881335399385517573.post-91432607538952147392017-09-26T09:32:00.000-07:002017-09-26T09:32:00.297-07:00Is A Bank A “Debt Collector” Under California’s Rosenthal Act? Maybe Not.<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Can a bank
be sued for acting as a “debt collector” under the California Rosenthal Act? You are probably tempted to answer “yes” it
can, because you know the Act defines a “debt collector” to include an entity
that is collecting on behalf of itself or on behalf of third parties. But a closer look at the activities performed
by employees of the bank in question may reveal that it is not, in fact,
collecting on its own behalf. Instead,
all collection activities may be handled through separate, though related,
servicing companies, or by third parties.
A consumer may have no basis for suing the bank under the Rosenthal Act,
and elimination of the bank from the action could significantly reduce the
available damages and decrease business interruption for bank officers.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> First, a quick review of some key
provisions of the Rosenthal Act. Unlike
the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, <i>et. seq.</i>, (“FDCPA”), which, generally speaking, only applies to
third party debt collectors, the Rosenthal Act broadly defines a “debt
collector” to include persons or entities that collect on behalf of themselves
or others. <i>See</i> Cal. Civ. Code § 1788.2(c) (“The term ‘debt collector’ means
any person who, in the ordinary course of business, regularly,<b> on behalf of himself or herself or others</b>,
engages in debt collection. . . .”) (emphasis added). The Act defines “debt collection” as “any act
or practice in connection with the collection of consumer debts.” <i>Id</i>.
§ 1788.2(b). The Rosenthal Act also
incorporates by reference certain sections of the FDCPA, and makes any
violation of those FDCPA provisions into a violation of California state
law. <i>Id</i>.
§ 1788.17. Courts have held that
consumers may pursue class actions under the Rosenthal Act, and the statutory
damages in such cases are capped at the lesser of $500,000 or one percent of
the net worth of the defendant. <i>See, e.g., Gonzales v. Arrow Financial
Services, LLC</i>, 660 F.3d 1055, 1065 (9th Cir. 2011).<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Thus, if the employees of a bank
actually handle collection activity on behalf of the bank, it may be a “debt
collector” subject to the Rosenthal Act.
But if the bank relies on employees of a related servicing company or
other third parties to collect, then is the bank actually engaged in “debt
collection” as defined by the Act?
Probably not.<o:p></o:p></span></div>
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<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> If the bank does not have employees
who engage in collection efforts, such as making collection phone calls or
sending collection letters, there is a strong argument the bank is not a “debt
collector” under the Rosenthal Act. In
an analogous context, courts have regularly held that a debt buyer who simply
purchases and owns unpaid accounts, and then utilizes other entities to
actually collect them, is not a “debt collector” under the FDCPA. <i>See,
e.g., <a href="https://www.blogger.com/null" name="CTOA~CIT~82 f. supp12~0"></a>Gold v. Midland Credit Mgmt., Inc</i>.,
82 F. Supp. 3d 1064, 1072-73 (N.D. Cal. 2015) (summary judgment granted on
FDCPA and Rosenthal Act claims for debt buyer that retained affiliate company
to collect debts); <a href="https://www.blogger.com/null" name="CTOA~CIT~53 f. supp13~0"></a><i>Kasalo v. Trident Asset Mgmt., LLC</i>, 53 F. Supp. 3d 1072, 1077 (N.D.
Ill. 2014) (“[a]n entity that acquires a consumer's debt hoping to collect it
but that does not have any interaction with the consumer itself does not
necessarily undertake activities that fall within this purview.”); <a href="https://www.blogger.com/null" name="CTOA~CIT~392 f. supp. 2d14~0"></a><i>Scally
v. Hilco Receivables, LLC</i>, 392 F. Supp. 2d 1036, 1037 (N.D. Ill. 2005)
(“Hilco did not act directly to collect Scally’s debt: Hilco never contacted
Scally to collect the debt nor did Hilco mail the allegedly offending
collection letter. Rather, Hilco
outsourced the activity of debt collection to co-defendant MRS, which mailed the
letter that is the basis of Scally’s complaint.”).<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Why does any of this matter, you may
ask? Well, it may matter a lot,
depending on the claims asserted in the litigation, the identity of the
parties, and the procedural posture of the case. If the only claim asserted against the bank
arises under the Rosenthal Act, it may be subject to a dispositive motion,
thereby sparing the bank and its officers of the cost and distraction
associated with litigation. Employees of
the servicing companies who actually do the collection work will likely make
better witnesses to support other defenses to a Rosenthal Act claim. Eliminating the bank as a defendant could
also impact the damage exposure in the case.
For example, in a Rosenthal Act class action, statutory damages are
capped at the lesser of $500,000 or one percent of the net worth of the debt
collector. The dismissal of a bank from
the case could significantly reduce the exposure to statutory damages. Depending on the procedural posture of your
case, there may be other strategic considerations bearing on when and how this
defense is best raised.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> What’s the bottom line? Do not assume that a bank or other financial
institution is a “debt collector” under the Rosenthal Act until you closely
analyze the functions performed by employees of the bank, as opposed to
activities performed by employees of related servicing entities or third
parties. If you determine the bank is
not a “debt collector” under the Act, think strategically about when and how to
break the news to your adversary. <o:p></o:p></span></div>
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<o:p></o:p></div>
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<o:p></o:p></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com2tag:blogger.com,1999:blog-7881335399385517573.post-24376335603309792742017-05-11T09:28:00.000-07:002017-05-11T09:28:08.463-07:00Searching For The Meaning Of “Meaningful Involvement”<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Grappling
with the meaning of the so-called “meaningful involvement” doctrine is one of
the most elusive and frustrating compliance challenges for collection attorneys
and their clients. What exactly must a
collection attorney do to ensure they are “meaningfully involved” in a file
before sending a collection letter to a consumer? When, if ever, should collection law firms
include disclaimers on their collection letters, indicating that no attorney of
the firm has reviewed the particular circumstances of the debtor’s file? What steps must an attorney take to be
“meaningfully involved” when filing a collection lawsuit? What role, if any, should a creditor client
play in setting standards for the attorneys who collect on its behalf?<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Finding the right answers to these
questions is difficult, and the stakes can be extremely high. Courts across the country, and regulators
like the Consumer Financial Protection Bureau (“CFPB”), have insisted that
collection attorneys be “meaningfully involved” in reviewing the accounts they
handle for their creditor clients, and that creditors are responsible for
ensuring their attorneys are complying with the consumer protection laws. In the past two years, the CFPB has imposed
consent orders on large collection law firms and debt buyers, in part because
the Bureau has taken issue with the level of attorney involvement in the
collection process. Consumer attorneys,
meanwhile, routinely assert “meaningful involvement” claims in FDCPA lawsuits
filed against collection attorneys and their clients.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Adding to the confusion, some court
decisions, and a recent CFPB consent order, have recognized that in some
circumstances, collection attorneys may include “disclaimers” in their
collection communications to indicate that no attorney has yet been
meaningfully involved in reviewing the particular circumstances of the
consumer’s account. How can these
authorities be reconciled? If the
requirement for “meaningful involvement” is truly meaningful, can it safely be
disclaimed away? <o:p></o:p></span></div>
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<b><span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">The Origins Of Meaningful Involvement</span></b><span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> First, a brief history lesson is in
order. What exactly is the “meaningful
involvement” doctrine anyway? If you
have read the Fair Debt Collection Practices Act, 15 U.S.C. § 1692,<i> et seq.</i> (“FDCPA”), from beginning to
end, you are probably still looking for the phrase “meaningful
involvement.” You can stop looking,
because it is not in the Act. Section
1692e(3) of the FDCPA contains a simple prohibition: collectors may not make any “false
representation or implication that any individual is an attorney or that any
communication is from an attorney.” 15
U.S.C. § 1692e(3). The meaningful
involvement doctrine was created by judicial decisions that have slowly
stretched the plain language of this section beyond recognition. <o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Courts have expanded section 1692e(3)
to imply a broader mandate that collection attorneys be “meaningfully involved”
in the review of a consumer’s file before a collection letter is sent. <i>See,
e.g.,</i> <i>Clomon v. Jackson</i>, 988 F.2d
1314, 1320-21 (2d Cir. 1993); <i>Avila v.</i>
<i>Rubin</i>, 84 F.3d 222, 228-29 (7th Cir.
1996). This “meaningful involvement”
doctrine has slowly morphed into a theory used by consumer attorneys, and later
by regulators, to second-guess not only the collection letters mailed by
attorneys, but also the methods used by collection attorneys when preparing and
filing state court lawsuits. The
doctrine has now become a vehicle for courts and juries to decide on an <i>ad hoc</i> basis what collection attorneys
must do when representing their clients.<o:p></o:p></span></div>
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<b><span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">Defining Meaningful Involvement <o:p></o:p></span></b></div>
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<b><span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><br /></span></b></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Given that courts and regulators have
insisted collection attorneys must be “meaningfully involved” when sending
letters and filing lawsuits, it is reasonable to assume there is a universal
set of requirements attorneys can follow in order to be compliant. Wrong.
There are many examples of what is <u>not</u> “meaningful involvement,”
but no court or regulator has set out any definitive standards or procedures an
attorney can follow in order to ensure compliance.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> For example, in <i>Clomon</i> the defendant, an attorney, was a part-time general counsel
of a collection agency. The agency (<u>not</u>
the attorney) mailed letters to “approximately one million debtors each year”
using a computerized mass-mailing system, with a letterhead referencing the
defendant – “P.D. Jackson, Attorney at Law, General Counsel, NCB Collection
Services” – and defendant attorney’s mechanically-reproduced “signature.” <i>Clomon</i>,
988 F.2d at 1316-17. The attorney never
reviewed the letters, and never decided whether or when the agency should mail
them. <i>See id</i>. The text of the
letters falsely suggested defendant had personally reviewed Clomon’s case and
had advised his client litigation was a real possibility. <i>See id.</i>
at 1317. <o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Similarly, in <i>Avila, </i>a collection agency – not an attorney – mailed letters on an
attorney’s letterhead “‘signed’ with a mechanically reproduced facsimile” of
the attorney’s signature. <i>Avila, </i>84 F.3d at 225. The agency mailed nearly 270,000 similar
letters each year – roughly 1062 each working day. <i>See id.</i> The attorney, Rubin, had not personally
prepared, signed, or reviewed any of these letters. <i>See id</i>. All of the letters threatened suit, but the
Seventh Circuit observed it was “unclear (but we think doubtful) whether [Rubin
& Associates] litigate anywhere,” <i>id</i>.
at 224, and noted that “Rubin is not personally or directly involved in
deciding when or to whom a dunning letter should be sent,” <i>id</i>. at 228.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> The attorney-defendant in <i>Nielsen v. Dickerson</i>, 307 F.3d 623, 635
(7th Cir. 2002), was completely uninvolved in the letter process. The Court held that the <u>creditor</u>
client – Household Bank – had violated the FDCPA, because the bank was the
“true source” of the letters sent using the attorney’s name. <i>See id.</i>
at 639. The defendant attorney “did not
make the decision to send a letter to a debtor; Household did.” <i>Id</i>.
at 635. The attorney had no “involvement
with the file of any debtor slated to receive his form letter and played no
meaningful role in the decision to send a debtor such a letter.” <i>Id</i>.
<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Without even trying to establish a
standard for complying with the “meaningful involvement” doctrine, cases like <i>Clomon</i>, <i>Avila</i>, and <i>Nielsen</i> held
that the FDCPA was violated. One court
that at least tried to establish a “test” of sorts was <i>Bock v. Pressler & Pressler, LLP</i>, 30 F. Supp. 3d 283 (D. N.J.
2014). There, the court held a law firm
violated the FDCPA by making an “implied representation that an attorney was
meaningfully involved in the preparation of the complaint.” <i>Id</i>.
at 303. Even though none of the claims
made against the debtor in the underlying state court complaint were alleged to
be false, the district court nonetheless found an FDCPA violation, because the
attorney who reviewed the complaint did not spend enough time doing so. <i>See id.
</i>at 305-06. The court held that a
collection complaint is “inherently” false and misleading, unless, at the time
of signing it, the attorney “1) drafted, or carefully reviewed, the complaint;
and 2) conducted an inquiry, reasonable under the circumstances, sufficient to
form a good faith belief that the claims and legal contentions in the complaint
are supported by fact and warranted by law.”
<i>Id.</i> at 304. Although the <i>Bock</i> court at least attempted to establish a standard governing the
“meaningful involvement” doctrine, the court provided zero guidance for what an
attorney would need to do in order to meet the standard it had articulated.<o:p></o:p></span></div>
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<b><span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">Disclaiming Meaningful Involvement</span></b><span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Can a collection attorney avoid
liability under the “meaningful involvement” doctrine by including a disclaimer
in the collection letter, informing the consumer that no attorney of the firm
has conducted any meaningful review of the file? The answer is unclear.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> In <i>Greco
v. Trauner, Cohen & Thomas</i>, 412 F.3d 360 (2d Cir. 2005), the letter was
on the law firm letterhead, but was not signed by any attorney. On the front of the letter, in addition to
the language required by section 1692g of the FDCPA, the following statement
was included: “At this point in time, no attorney with this firm has personally
reviewed the particular circumstances of your account. However, if you fail to contact this office,
our client may consider additional remedies to recover the balance due.” <i>Id</i>.
at 361. The Court rejected plaintiff’s
claim that the letter violated the FDCPA, noting that an attorney can send a
collection letter to a consumer “without being meaningfully involved as an
attorney within the collection process, so long as that letter includes <i>disclaimers</i> that should make clear even
to the ‘least sophisticated consumer’ that the law firm or attorney sending the
letter is not, at the time of the letter’s transmission, acting as an
attorney.” <i>Id.</i> at 364. The Court held
that “the defendant’s letter included a clear disclaimer explaining the limited
extent of their involvement in the collection of Greco’s debt.” <i>Id.</i>
at 365; <i>see also Jones v. Dufek</i>, 830
F.3d 523 (D.C. Cir. 2016) (no FDCPA violation where law firm used <i>Greco</i> disclaimer on front of letter
stating: “Please be advised that we are acting in our capacity as a debt
collector and at this time, no attorney with our law firm has personally
reviewed the particular circumstances of your account.”).<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Portions of the CFPB’s recent consent
order with the Works & Lentz law firm suggest that the Bureau approves of
the use of a <i>Greco</i>-type disclaimer in
some circumstances. In the Findings and
Conclusions recited in the Order, the CFPB alleged that the firm had violated
the FDCPA by, among other things, sending letters to consumers that “did not
include any disclaimer to alert Consumers that no attorney had review their
account prior to the initial demand being mailed.” <i>See</i>
In the Matter of: Works & Lentz, Inc., <i>et
al.</i>, Administrative Proceeding File No. 2017-CFPB-0003 (“Order”) para.
12-14, 18-23. The Consent Order mandates
that in the future, whenever the firm sends a letter to a consumer and no
attorney has been “meaningfully involved in reviewing the Consumer’s account”
and no attorney has “made a professional assessment of the delinquency,” the
letter must “a. Clearly and prominently disclose that no attorney has reviewed
the Consumer account at issue; b. State in the signature block that the letter
is from the Collection Department; and c. Omit the name of any attorney and the
phrase “Attorney at Law” from the signature block of any Demand Letter.” <i>Id</i>.
at para. 44. At best, then, the Order
suggests an attorney can send a collection letter without being “meaningfully
involved” in an account, but it provides no definitive guidance for how
attorneys can discharge their “meaningful involvement” obligations. Nowhere in the Order does the CFPB explain
what is required for an attorney to be “meaningfully involved in reviewing the
Consumer’s account” or what an attorney must do in order to make “a
professional assessment of the delinquency” on an account. <o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Including a disclaimer of attorney
involvement in a collection letter does not always insulate an attorney from
liability under the FDCPA. For example,
in <i>Gonzalez v. Mitchell N. Kay</i>, 577
F.3d 600 (5th Cir. 2009), the letter was sent on law firm letterhead but was
not signed. The front of the letter
included the section 1692g notice, and directed the reader to “Please see
reverse side for important information.”
<i>Id</i>. at 602. On the back of the letter was a notice
stating: “At this point in time, no attorney with this firm has personally
reviewed the particular circumstances of your account.” <i>Id</i>. The court noted that the debtor “would not
learn that the letter was from a debt collector unless the consumer </span><span style="font-size: 14pt; line-height: 200%;">turned the
letter over to read the “legalese” on the back. The disclaimer on the back of
the letter completely contradicted the message on the front of the letter-that
the creditor had retained the Kay Law Firm and its lawyers to collect the </span><span style="font-size: 14pt;">debt.”</span><span style="font-size: 14pt;"> </span><i style="font-size: 14pt;">Id</i><span style="font-size: 14pt;">.
at 607.</span><span style="font-size: 14pt;"> </span><span style="font-size: 14pt;">The Court therefore reversed the
district court’s holding that the plaintiff had failed to state a claim for
relief under the FDCPA.</span></div>
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Similarly, in <i>Lesher v. The Law Offices Of Mitchell N. Kay</i>, 650 F.3d 993 (3d Cir.
2011), the Court held that settlement letters sent on a law firm’s letterhead
with the <i>Greco</i> disclaimer on the
reverse side of the letter violated the FDCPA.
According to the Court, “the least sophisticated debtor, upon receiving
these letters, may reasonably believe that an attorney has reviewed his file and
has determined that he is a candidate for legal action.” <i>Id</i>.
at 1003. The letters “raise[d] the
specter of potential legal action,” and were therefore false and misleading
because the firm was not acting in a “legal capacity” when it sent the letters. <i>Id</i>.<o:p></o:p></span></div>
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<br />
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<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Where does all of this leave us? The answer is a clear as mud. The “meaningful involvement” doctrine does
not appear in any statute, rule, or regulation.
What exactly does it require of attorneys who seek to comply with
it? When can attorneys disclaim it? What, if anything, should clients insist upon
from their collection attorneys? This
judicially-created doctrine has been around for the twenty-four years, and has
been widely embraced by many courts and by regulators. Despite this, collection attorneys are still
at a loss as to what they must do to comply with these unwritten requirements,
and it remains unclear whether a “disclaimer” of attorney involvement will
always be accepted. Collection attorneys
and their clients must continue to do their best to piece together all
available authority on how to comply with this amorphous doctrine. </span><o:p></o:p></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com3tag:blogger.com,1999:blog-7881335399385517573.post-40566581371693548182017-01-22T14:30:00.002-08:002017-01-22T14:30:24.412-08:00For 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)<br />
<br />
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-size: 12.0pt; line-height: 115%;">Demystifying the
FDCPA Class Action For HOA Attorneys<o:p></o:p></span></u></b></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Conducting
Class Action Triage<o:p></o:p></span></u></b></div>
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<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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? <o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Rule 23
Requirements<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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. <i>General Tel. Co. Of Southwest v. Falcon</i>,
457 U.S. 147, 161 (1982). <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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.” <i>Falcon</i>, 457 U.S. at 160; <i>see
also</i> </span><!--[if supportFields]><span lang=EN-CA style='font-size:12.0pt;
mso-ansi-language:EN-CA'><span style='mso-element:field-begin'></span><span
style='mso-spacerun:yes'> </span>SEQ CHAPTER \h \r 1</span><![endif]--><!--[if supportFields]><span
style='font-size:12.0pt'><span style='mso-element:field-end'></span></span><![endif]--><span style="font-size: 12.0pt;"><i>Powers v. Credit Mgmt. Servs., Inc.</i>, 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).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<!--[if supportFields]><span
lang=EN-CA style='font-size:12.0pt;mso-ansi-language:EN-CA'><span
style='mso-element:field-begin'></span><span
style='mso-spacerun:yes'> </span>SEQ CHAPTER \h \r 1</span><![endif]--><!--[if supportFields]><span
lang=EN-CA style='font-size:12.0pt;mso-ansi-language:EN-CA'><span
style='mso-element:field-end'></span></span><![endif]--><span style="font-size: 12.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Numerosity<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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.” <i>Gomez
v. Rossi Concrete, Inc</i>., 270 F.R.D. 579, 588 (S.D. Cal. 2010); <i>see also Ikonen v. Hartz Mountain Corp</i>.,
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”).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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. <i>Vega v.
T-Mobile USA, Inc.,</i> 564 F.3d 1256, 1267-68 (11th Cir. 2009) (district
court’s “inference of numerosity” without supporting evidence “was an exercise
in sheer speculation”); <i>Smith v. City of
Oakland</i>, 2008 WL 2439691, *1 (N.D. Cal. June 16, 2008) (numerosity argument
was “unsupported by anything other than ‘mere speculation’”); <i>Thorne v. ARM, Inc</i>., 2012 WL 3090039
(S.D. Fla. June 28, 2012) (no proof of numerous class members with section
1692d(6) claims).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Commonality<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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.” <i>Wal-Mart
Stores, Inc. v. Dukes</i>, 131 S. Ct. 2541, 2551 (2011); </span><!--[if supportFields]><i
style='mso-bidi-font-style:normal'><span lang=EN-CA style='font-size:12.0pt;
mso-ansi-language:EN-CA'><span style='mso-element:field-begin'></span><span
style='mso-spacerun:yes'> </span>SEQ CHAPTER \h \r 1</span></i><![endif]--><!--[if supportFields]><i
style='mso-bidi-font-style:normal'><span style='font-size:12.0pt'><span
style='mso-element:field-end'></span></span></i><![endif]--><i><span style="font-size: 12.0pt;">Powers v. Credit Mgmt. Servs., Inc., </span></i><span style="font-size: 12.0pt;">776 F.3d 567, 571-73 (8th Cir. 2015)<i> </i>(reversing certification of FDCPA class
where, <i>inter alia</i>, to resolve
plaintiff’s theory of liability, every state-court collection lawsuit needed to
be reviewed).<i><o:p></o:p></i></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Typicality/Adequacy<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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. <i>See, e.g.,</i> <i>Beck v. Maximus,
Inc.,</i> 457 F.3d 291 (3d Cir. 2006) (remanding FDCPA class action to
determine if BFE defense rendered class rep atypical and inadequate); <i>Savino v. Computer Credit, Inc.,</i> 164
F.3d 81 (2d Cir. 1998) (denying certification in FDCPA case; class rep
testified inconsistently on whether he received letter at issue); <i>Dotson v. Portfolio Recovery Associates</i>,
2009 WL 1559813 (E.D. Pa. June 3, 2009) (denying certification of FDCPA class
action; unique defenses re: plaintiff’s credibility and cognitive disabilities).</span><span style="font-size: 12pt; text-indent: 0.5in;"> </span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Predominance<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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); <i>see also</i> <i>Vinole v. Countrywide Home Loans, Inc.,</i>
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”); <i>Zinser v.
Accufix Research Institute, Inc.,</i> 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).”).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;">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. <i>See, e.g.,</i> <i>Lee v. Javitch, Block
& Rathbone</i>, 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.”); <i>Corder v. Ford Motor Co</i>., 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. . . .”); <i>OnStar Contract Litig</i>., 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”).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify; text-indent: .5in;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Letter
claims<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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. <i>See, e.g.,</i> <i>Janetos v. Fulton,
Friedman & Gullace,</i> 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); <i>Avila v. Riexinger & Assoc., LLC</i>, 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); <i>Roundtree v. Bush Ross,
P.A.,</i> 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); <i>Hanson v. JQD, LLC</i>,
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); </span><i><span lang="EN-CA" style="font-size: 12.0pt; mso-ansi-language: EN-CA;">McCarter v. Kovitz Shifrin Nesbit</span></i><span lang="EN-CA" style="font-size: 12.0pt; mso-ansi-language: EN-CA;">, </span><!--[if supportFields]><span
lang=EN-CA style='font-size:12.0pt;mso-ansi-language:EN-CA'><span
style='mso-element:field-begin'></span><span
style='mso-spacerun:yes'> </span>SEQ CHAPTER \h \r 1</span><![endif]--><!--[if supportFields]><span
style='font-size:12.0pt'><span style='mso-element:field-end'></span></span><![endif]--><span style="font-size: 12.0pt;">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).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Collection
Complaint claims<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"> 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. <i>See, e.g.,</i> <i>Marquez v. Weinstein, Pinson & Riley, P.S.,</i> _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); <i>Tourgeman v.
Collins Fin. Servs., Inc.,</i> 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); <i>McCollough v. Johnson, et al</i>., 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).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;">Third
Party Disclosure Claims<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><u><span style="font-size: 12.0pt;"><br /></span></u></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">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.</span><span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">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.</span><span style="font-size: 12pt;"> </span><span style="font-size: 12pt;">All of your third party practices should be
evaluated to guard against such claims.</span><span style="font-size: 12pt;"> </span><i style="font-size: 12pt;">See, e.g.,</i><span style="font-size: 12pt;"> </span><i style="font-size: 12pt;">Evon v. Law Offices of Sidney Mickell,</i><span style="font-size: 12pt;"> 688 F.3d 1015 (9th Cir.
2012) (sending collection letters to work address “care of” the employer
violated 1692c(b)); </span><i style="font-size: 12pt;">Halbertstam v. Global
Credit and Collection Corp</i><span style="font-size: 12pt;">., 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).</span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12pt;"> 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.</span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-size: 12.0pt;"><br /></span></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com1tag:blogger.com,1999:blog-7881335399385517573.post-28588166190137833862016-08-22T11:15:00.000-07:002016-08-22T11:15:56.279-07:00The “Least Sophisticated Debtor” Is Getting More Sophisticated, And Has An Improved Memory Too<div class="WordSection1">
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
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. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
Courts have gradually demanded more
of the “least sophisticated debtor” and have rejected suits based on
hypertechincal misstatements and strained interpretations of the Act.<a href="file:///C:/Users/Tomio/Desktop/The%20Least%20Sophisticated%20Debtor%20Is%20Getting%20More%20Sophisticated.doc#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "times new roman" , "serif"; font-size: 12.0pt;">[i]</span></span><!--[endif]--></span></a>
<span style="background: white; mso-highlight: white;"> </span>Even when a collector’s statement is
false or misleading, it must also be “material” or it does not violate the
FDCPA.<a href="file:///C:/Users/Tomio/Desktop/The%20Least%20Sophisticated%20Debtor%20Is%20Getting%20More%20Sophisticated.doc#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "times new roman" , "serif"; font-size: 12.0pt;">[ii]</span></span><!--[endif]--></span></a> 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.<a href="file:///C:/Users/Tomio/Desktop/The%20Least%20Sophisticated%20Debtor%20Is%20Getting%20More%20Sophisticated.doc#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "times new roman" , "serif"; font-size: 12.0pt;">[iii]</span></span><!--[endif]--></span></a> <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
A striking example of this trend is
the Ninth Circuit’s decision in <i>Davis v.
Hollins Law Firm</i>, _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. <i>Id</i>. 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.” <i>Id</i>. at *3. Although the trial court felt this was only a
“<i>de minimus</i>” violation of section
1692e(11), it entered judgment in favor of Davis. <i>Id</i>. On appeal, the Ninth Circuit reversed. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
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.” <i>Id</i>.
at *1. The Court applies “an objective
standard” to decide whether the “least sophisticated debtor” would be misled by
the communication. <i>Id.</i> 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.” <i>Id</i>. (citations, quotation marks
omitted). <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
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.” <i>Id</i>. at *1. (citations, quotation marks
omitted). <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
In addition, a collector’s statement
must be “material” in order to be actionable under the FDCPA. <i>Id</i>.
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.” <i>Id</i>.
<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
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.” <i>Id</i>.
at *4. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
The decision in <i>Davis</i> 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.
<o:p></o:p></div>
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<br /></div>
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<br /></div>
</div>
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<div>
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<div id="edn1">
<div class="MsoEndnoteText">
<a href="file:///C:/Users/Tomio/Desktop/The%20Least%20Sophisticated%20Debtor%20Is%20Getting%20More%20Sophisticated.doc#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "times new roman" , "serif"; font-size: 10.0pt;">[i]</span></span><!--[endif]--></span></a> <i><span style="font-size: 11.0pt;">See, e.g,
Wahl v. Midland Credit Mgmt., Inc</span></i><span style="font-size: 11.0pt;">.,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); <i>Campuzano-Burgos
v. Midland Credit Mgmt., Inc.</i>, 550 F.3d 294, 299 (3d Cir. 2008) (“Even the
least sophisticated debtor is bound to read collection notices in their
entirety.”);<i> Greco v. Trauner, Cohen
& Thomas, L.L.P</i>., 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).</span><o:p></o:p></div>
<div class="MsoEndnoteText">
<br /></div>
</div>
<div id="edn2">
<div class="MsoEndnoteText">
<a href="file:///C:/Users/Tomio/Desktop/The%20Least%20Sophisticated%20Debtor%20Is%20Getting%20More%20Sophisticated.doc#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "times new roman" , "serif"; font-size: 10.0pt;">[ii]</span></span><!--[endif]--></span></a> <i><span style="font-size: 11.0pt;">See,
e.g., Donohue v. Quick Collect, Inc.</span></i><span style="font-size: 11.0pt;">, 592 F.3d 1027, 1034 (9th Cir. 2010); <i>Hahn v. Triumph Partnerships LLC</i>, 557
F.3d 755 (7th Cir. 2009) (letter that accurately stated total amount due did
not violate §§ 1692e or e(2)); <i>Wahl</i>,
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.”); <i>Miller v. Javitch, Block &
Rathbone</i>, 561 F.3d 588, 596 (6th Cir. 2009).</span><o:p></o:p></div>
<div class="MsoEndnoteText">
<br /></div>
</div>
<div id="edn3">
<div class="MsoEndnoteText">
<a href="file:///C:/Users/Tomio/Desktop/The%20Least%20Sophisticated%20Debtor%20Is%20Getting%20More%20Sophisticated.doc#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "times new roman" , "serif"; font-size: 10.0pt;">[iii]</span></span><!--[endif]--></span></a> <i><span style="font-size: 11.0pt;">See Wahl</span></i><span style="font-size: 11.0pt;">, 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].”); <i>McNair v. Maxwell
& Morgan, P.C.</i>, 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); <i>Goodrick
v. Cavalry Portfolio Services, LLC</i>, 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.”).<o:p></o:p></span></div>
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<br /></div>
</div>
</div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com1tag:blogger.com,1999:blog-7881335399385517573.post-36735029396072368012016-05-21T09:44:00.000-07:002016-05-21T09:44:24.003-07:00Consent Order Compliance: Navigating The CFPB’s Unofficial “Rules” Governing Debt Collection<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> 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 <a href="http://www.consumerfinance.gov/about-us/newsroom/prepared-remarks-of-cfpb-director-richard-cordray-at-the-consumer-bankers-association/">speech
given on March 9, 2016 to the Consumer Bankers Association</a>, however, the
CFPB Director, Richard Cordray, stated it would be “<a href="http://www.consumerfinance.gov/about-us/newsroom/prepared-remarks-of-cfpb-director-richard-cordray-at-the-consumer-bankers-association/">compliance
malpractice</a>” for other companies not to take “careful bearings” from the
consent orders when assessing how to comply with the consumer protection laws. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> What
unwritten “rules” can we glean from the string of consent orders that began in
July 2015, with an order between the CFPB and <a href="http://files.consumerfinance.gov/f/201507_cfpb_consent-order-chase-bank-usa-na-and-chase-bankcard-services-inc.pdf">Chase
Bank USA, N.A</a>., continued in September 2015, with orders against <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf">Encore
Capital Group</a> and <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf">Portfolio
Recovery Associates</a>, and culminated in orders with <a href="http://files.consumerfinance.gov/f/201512_cfpb_proposed-stipulated-final-judgment-and-order-hanna-frederick-j-hanna.pdf">Frederick
J. Hanna & Associates</a>, <a href="http://files.consumerfinance.gov/f/201602_cfpb_consent-order-citibank-na-department-stores-national-bank-and-citifinancial-servicing-llc.pdf">Citibank,
N.A.,</a> and <a href="http://files.consumerfinance.gov/f/documents/201604_cfpb_consent-order-pressler-pressler-llp-sheldon-h-pressler-and-gerard-j-felt.pdf">Pressler
& Pressler</a> 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> <u>Data
Integrity, Debt Substantiation and Dispute Handling</u> – 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:<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> • 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> To
address these concerns, the CFPB consent orders imposed the following “rules”
relating to data integrity, debt substantiation and dispute handling:<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> • 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” <u>and</u> 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> <u>Affidavit
And Litigation Practices</u> – 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:<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> To
address these concerns, the consent orders imposed the following “rules”
relating to affidavit and litigation practices:
<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">• 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;"> <u>Navigating
the unwritten “rules” from consent orders</u> – 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:<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">What is your criteria for
identifying disputes and are you giving disputed accounts any heightened
scrutiny or other special handling?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Are you training your staff
to correctly identify disputed accounts and to promptly report them?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Has the seller disclaimed
the accuracy of the data sold?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Has the seller restricted
the availability of media?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Has the seller failed to
provide media when asked?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Has the media supplied by
the seller conflicted with the electronic data the seller supplied?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Are there certain portfolios
that contain a high percentage of problem accounts? <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Do you possess OALD
reflecting the claimed amount, as well as OALD reflecting a purchase, payment,
or actual use by the consumer?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Has the affiant reviewed
OALD?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">What have you done to
confirm the affiant has personal knowledge of the facts attested to? <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Have you confirmed the
affiant reviewed the affidavit and that it was executed in the presence of a
notary? <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Have you confirmed the
attachments relate to the consumer’s account?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Has a record been created of
the steps that were taken to verify the accuracy of the affidavits submitted to
the court? <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">What is the proper role of
attorneys, non-attorneys, and computers in preparing the complaint?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">Should there be a maximum
number of accounts, complaints, or letters that an attorney can review and
approve in one day?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">What information and
documents have been provided to support the factual allegations of the
complaint?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">What documents have been
reviewed to confirm the information supplied supports the factual allegations
made in the complaint?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">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?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-pagination: none;">
<span style="font-size: 14.0pt; mso-bidi-font-size: 10.0pt;">What has been done to
document attorney involvement?<o:p></o:p></span></div>
<br />
<div class="MsoNormal">
<br /></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com2tag:blogger.com,1999:blog-7881335399385517573.post-81654999947341118652015-12-15T09:30:00.000-08:002015-12-15T09:43:44.490-08:00Is The CFPB’s Collection Litigation Strategy Consumer Friendly?<div class="MsoNormal">
<span style="font-size: 13.0pt;"> </span><span style="font-size: 13pt;">Collection attorneys who are
nervous about the risks involved in handling consumer accounts can relax.</span><span style="font-size: 13pt;"> </span><span style="font-size: 13pt;">The CFPB has devised an ideal litigation strategy
for you to follow.</span><span style="font-size: 13pt;"> </span><span style="font-size: 13pt;">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.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 13.0pt;"> 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 13.0pt;"> 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 13.0pt;"> 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. <i>See, e.g.</i>, <a href="http://files.consumerfinance.gov/f/201309_cfpb_agency-brief_12-cv-04057.pdf" target="_blank">CFPB Amicus Brief in Delgado v. Capital Management Services, LP, filed August 14, 2013.</a> 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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 13.0pt;"> 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. <i>See</i><span style="color: blue;"> <a href="http://files.consumerfinance.gov/f/201405_cfpb_supervisory-highlights-spring-2014.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">CFPB Spring 2014 Supervisory Highlights,
p. 14</span></a></span>. 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. <i>Id.</i>
This anti-dismissal mantra was repeated at page 19 of the <a href="http://files.consumerfinance.gov/f/201503_cfpb-fair-debt-collection-practices-act.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">CFPB 2015 Annual Report To Congress On
The FDCPA</span></a>. Given this,
whenever an attorney dismisses a consumer lawsuit, he may be putting himself or
his client at risk. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 13.0pt;"> 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. <i>See</i><span style="color: blue;"> <span style="color: blue;"><span style="color: blue;"><a href="http://files.consumerfinance.gov/f/201407_cfpb_complaint_hanna.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">CFPB v. Frederick J. Hanna &
Associates Complaint</span></a>,</span> ¶¶ 20, 23</span>. </span> 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.<i> Id. ¶ 24. </i> According to the CFPB, the firm “routinely”
dismissed cases, and did so at a higher rate when the consumer retained an
attorney. <i>Id</i>. ¶ 22.
The CFPB says these alleged practices violated the FDCPA and the
Consumer Financial Protection Act. <i>Id</i>. ¶¶ 28-45.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 13.0pt;"> 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. <i>See</i><span style="color: blue;"> <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Encore/CFPB September 2015 Consent Order,
¶¶ 32-35</span></a>; <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">PRA/CFPB September 2015 Consent Order, ¶¶ 29-32</span></a></span><span style="color: blue;">.</span> Encore was accused of using “scattershot
litigation” tactics, including filing suit without verifying that account-level
documentation existed to support the claims.
<i>See</i> <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Encore Consent Order, ¶ 51</span></a>. 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. <i>See</i><span style="color: blue;"> <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Encore Consent Order, ¶¶ 48-53</span></a></span>;
<a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">PRA Consent Order, ¶ 67-70</span></a>. Both companies allegedly threatened to sue,
or actually filed suit, on claims where the statute of limitations had
expired. <i>See </i><a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Encore Consent Order, ¶¶ 65-69</span></a>;
<a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">PRA Consent
Order, ¶¶ 56-59</span></a>.
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. <i>See</i>
<a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Encore Consent Order, ¶ 129</span></a>;
<span style="color: blue;"><a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">P</span><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">RA Consent Order, ¶ 116</span></a>.
</span><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 13.0pt;"> 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.<o:p></o:p></span></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com3tag:blogger.com,1999:blog-7881335399385517573.post-66556681678032491182015-11-10T08:29:00.000-08:002015-11-10T08:29:22.520-08:00Will You Know A “Dispute” When You See It?<div class="MsoNormal">
<span style="line-height: 200%;"> </span><span style="font-size: 14pt; line-height: 200%;">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 <i>Jacobellis v. Ohio</i>, 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?</span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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:<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “I don’t remember this account.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “I think I paid that one off.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “The balance doesn’t sound right
because I think my credit limit was only $500.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “I don’t
recognize the name of your firm or your client.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “Do you have any proof that I owe
this?”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “I’m not going to talk to you until you
send me documents.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -.5in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “My ex-husband
agreed to pay this as part of our divorce.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “I think my insurance company was
supposed to cover this.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “I hired a debt consolidator who agreed
to pay all my debts.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “The television that I bought with the
card never worked.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; margin-left: 1.0in; mso-pagination: none; text-indent: -1.0in;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> • “Stop calling me about this account.”<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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.
<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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. <i>See</i>
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. <i>Id</i>. § 1692g(b). <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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. <i>Id</i>.
§ 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. <i>Id</i>. § 1692g(b). <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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.” <i>Id</i>. §
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. <i>Id</i>. § 1692h. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> Congress was more clear about disputes
when it wrote the Fair Credit Reporting Act, 15 U.S.C. § 1681, <i>et seq.</i> (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 (<i>e.g.</i>, identity theft, fraud);
2) the terms of the account (<i>e.g.</i>,
the balance, payment amount); 3) the consumer's performance or other conduct
concerning an account (<i>e.g.</i>, current
payment status, date, or amount of a payment), or 4) other information in a
consumer report that bears on the consumer's creditworthiness. <i>See</i>
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. <i>See</i>
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. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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. <i>See</i> <a href="http://files.consumerfinance.gov/f/201503_cfpb-fair-debt-collection-practices-act.pdf">Fair
Debt Collection Practices Act, CFPB Annual Report 2015</a>. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> The CFPB has also imposed new
requirements for handling disputed debts in recent enforcement
proceedings. The September 2015 consent
orders with <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf">Encore
Capital Group, Inc.</a> and <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf">Portfolio
Recovery Associates, LLC</a> 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. <i>See</i> <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf">Encore
Order</a>, ¶ 129, <a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf">PRA
Order</a>, ¶ 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. <i>See</i>
<a href="http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf">Encore
Order</a>, ¶ 134. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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 <a href="http://files.consumerfinance.gov/f/201311_cfpb_anpr_debtcollection.pdf">Advanced
Notice Of Proposed Rulemaking</a> 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. <i>See</i>
<a href="http://files.consumerfinance.gov/f/201311_cfpb_anpr_debtcollection.pdf">ANPR,
Questions Nos. 2, 5, 20, 31-53</a>. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<span style="font-size: 14.0pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"> 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. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<br /></div>
<br />
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Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com2tag:blogger.com,1999:blog-7881335399385517573.post-56953132150894617212015-03-23T09:57:00.000-07:002015-03-23T09:57:03.101-07:00Is Your Envelope “Benign” Under The FDCPA?<div class="WordSection1">
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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 <u>nothing</u> 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. <o:p></o:p></div>
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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?<o:p></o:p></div>
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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 <u>only</u> “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 <u>not</u>
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.<i> See,
e.g., Keasey v. Judgment Enforcement Law Firm, PLLC</i>, 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);<i> Rutyna v. Collection
Accounts Terminal, Inc</i>., 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.”); <i>but see Simmons v. Med-I-Claims</i>, 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)).<o:p></o:p></div>
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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 <i>Strand v. Diversified Collection Servs.,
Inc.</i>, 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.’” <i>Id</i>. at 317. The Court stated: “We first observe Ms.
Strand invites us to read § 1692f(8)<a href="http://www.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000546&cite=15USCAS1692F&originatingDoc=I353cc3eb8bb011d99dcc8cc3e68b51e9&refType=RB&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.DocLink)#co_pp_2345"></a>
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.’” <i>Id</i>. at 318. The <i>Strand</i> 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. <i>Id</i>. 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.” <i>Id.</i> <o:p></o:p></div>
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Consistent
with <i>Strand</i>, other courts have
recognized the “benign language” exception to section 1692f(8). <i>See,
e.g., Goswami v. American Collections Enter., Inc</i>., 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.”);<i> Johnson v. NCB Collection Servs., </i>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.”); <i>Lindbergh v. Transworld Sys.,
Inc.</i>, 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); <i>Masuda
v. Thomas Richards & Co.</i>, 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.”).<o:p></o:p></div>
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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 <i>Douglass v. Convergent Outsourcing</i>, 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.” <i>Id.</i> 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.” <i>Id</i>. The <i>Douglass</i> 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.” <i>Id</i>. at 303-04; <i>see also Peter v. GC Servs. L.P.</i>, 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.”); <i>Kryluk v. Northland Group, Inc</i>., 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); <i>Voris v. Resurgent Capital Servs., LP</i>,
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.”). <o:p></o:p></div>
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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. <o:p></o:p></div>
</div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com4tag:blogger.com,1999:blog-7881335399385517573.post-13545079043733223072014-11-11T10:13:00.000-08:002014-11-11T10:13:08.142-08:00Avoiding Overshadowing Claims<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
Section 1692g of the FDCPA says collectors
must provide notice to consumers within five days of the initial communication
regarding the debt, stating the amount of the debt, the name of the current
creditor, and explaining the consumer’s right to dispute the debt and to obtain
verification. You might assume that a collector can comply with that section by
simply copying the language from the statute into their initial notice to
consumers. Simple enough to include this
language and move on, right? Not
exactly. <o:p></o:p></div>
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Although collectors are not required
to quote from the text of section 1692g verbatim, that is probably a good first
step. Even if the letter tracks the
language of the statute word for word, however, a collector may still draw an
“overshadowing” claim if he says something, or does something, during the
thirty-day validation period that may confuse the consumer about their section
1692g rights. To avoid overshadowing
claims, collectors must assess not only the wording, typeface and layout of
their initial letters, but also all of their consumer interactions during the
30-day validation period. <o:p></o:p></div>
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It is not always easy to predict the
language or conduct that might give rise to an overshadowing claim. The First Circuit recently observed:
“Overshadowing is rarely a black-or-white proposition: there are many shades of
gray. It is impossible to catalogue the
manifold ways, some subtle and some not, in which a debt collector may attempt
to circumnavigate section 1692g.” <i>Pollard v. Law Office of Mandy L. Spaulding</i>,
766 F.3d 98, 106 (1st Cir. 2014) (citation omitted).</div>
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<b><u>The section 1692g requirements</u></b><o:p></o:p></div>
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To answer the question “what is
overshadowing?” we look first to what Congress said the validation notice must
contain. Section 1692g requires that
within five days of the “initial communication with a consumer in connection
with the collection of any debt” a collector must send the consumer a written
notice containing, <i>inter alia</i>, the amount of the debt, and the name of the
creditor to whom the debt is owed. <i>See</i> 15 U.S.C. § 1692g(a)(1), (2). The notice must contain “a statement that
unless the consumer, within thirty days after receipt of the notice, disputes
the validity of the debt, or any portion thereof, the debt will be assumed to
be valid by the debt collector; . . .”. <i>Id.</i> § 1692g(a)(3). In addition, the notice must include “a
statement that if the consumer notifies the debt collector in writing within
the thirty-day period that the debt, or any portion thereof, is disputed, the
debt collector will obtain verification of the debt or a copy of a judgment
against the consumer and a copy of such verification or judgment will be mailed
to the consumer by the debt collector; . . .” <i>Id.</i> § 1692g(a)(4). Finally,
the notice must contain “a statement that, upon the consumer's written request
within the thirty-day period, the debt collector will provide the consumer with
the name and address of the original creditor, if different from the current
creditor.” <i>Id</i>. § 1692g(a)(5). <o:p></o:p></div>
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The statute gives certain limited
protections to a consumer who disputes the debt during the 30-day period. If the consumer verbally disputes the debt,
the collector need not respond, but the collector is no longer entitled to
assume the debt is valid. <i>Id</i>. at § 1692g(a)(3). If a written dispute is sent by the consumer,
the collector must cease further collection efforts until it provides the
consumer with verification of the debt, a copy of a judgment, or, if it has
been requested, the name and address of the original creditor. <i>Id</i>.
at § 1692g(a)(4), (5). The statute also
provides: “Any collection activities and communication during the 30-day period
may not overshadow or be inconsistent with the disclosure of the consumer's
right to dispute the debt or request the name and address of the original
creditor.” <i>Id</i>. at § 1692g(b).<o:p></o:p></div>
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<b><u>Obscuring the validation notice</u></b><o:p></o:p></div>
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The consumer must receive notice of
his section 1692g rights in a manner that it not confusing. As the First Circuit observed, “confusion can
occur in a myriad of ways, such as when a letter visually buries the required
validation notice, contains logical inconsistencies, fails to explain an
apparent inconsistency, or presents some combination of these (or similar)
vices. In the last analysis, a
collection letter is confusing if, after reading it, the unsophisticated
consumer would be left unsure of her right to dispute the debt and request
information concerning the original creditor. <a href="http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=0000506&FindType=Y&ReferencePositionType=S&SerialNum=1996035295&ReferencePosition=35"></a><a href="http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=0000506&FindType=Y&ReferencePositionType=S&SerialNum=1996035295&ReferencePosition=35"></a>The
emphasis, then, is on practical effect.”
<i>Pollard</i>, 766 F.3d at 104
(citations omitted); <i>see also Swanson v.
Southern Oregon Credit Servs, Inc.</i>, 869 F.2d 1222, 1225 (9th Cir. 1989)
(“The statute is not satisfied merely by inclusion of the required debt
validation notice; the notice Congress
required must be conveyed effectively to the debtor. It must be large enough to be easily read
and sufficiently prominent to be noticed – even by the least sophisticated
debtor. <a href="http://www.westlaw.com/Find/Default.wl?rs=++++1.0&vr=2.0&DB=350&FindType=Y&ReferencePositionType=S&SerialNum=1982122610&ReferencePosition=778"></a><a href="http://www.westlaw.com/Find/Default.wl?rs=++++1.0&vr=2.0&DB=350&FindType=Y&ReferencePositionType=S&SerialNum=1982122610&ReferencePosition=778"></a> Furthermore, to be effective, the notice must
not be overshadowed or contradicted by other messages or notices appearing in
the initial communication from the collection agency.”) (citations omitted). <o:p></o:p></div>
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Even if the letter contains the full
validation notice, it will violate section 1692g if the language of the notice
is obscured by other text in the letter.
<i>See Swanson</i>, 869 F.2d at 1225
(notice was “dwarfed” by bold faced type, several times larger than notice,
stating: “IF THIS ACCOUNT IS PAID WITHIN THE NEXT 10 DAYS IT WILL NOT BE
RECORDED IN OUR MASTER FILE AS AN UNPAID COLLECTION ITEM. A GOOD CREDIT
RATING--IS YOUR MOST VALUABLE ASSET.”); <i>compare
Terran v. Kaplan</i>, 109 F.3d 1428, 1434 (9th Cir. 1997) (no overshadowing:
“The text of the letter is uniformly presented in ordinary, same-size
font. No emphasis is placed on any
particular statement, with the exception of the creditor's name and the name of
the person to contact at Kaplan's office, both of which appear in uppercase
letters.”). Even when a letter has a
friendly tone, its content may overshadow the validation notice if it contains
language that obscures the debtor’s section 1692g rights. <i>See,
e.g., Caprio v. Heathcare Revenue Recovery Group, LLC</i>, 709 F.3d 142, 151
(3d Cir. 2013) (letter stating “if you feel you do not owe this amount, please
call us toll free” overshadowed notice; consumer may believe that a phone call
was sufficient to trigger duty to verify debt); <i>Abramov v. I.C. Systems, Inc.</i>, _ F.Supp.3d_, 2014 WL 5147549 at *5
(E.D.N.Y Oct. 14, 2014) (directing consumer to dispute debt “in writing” if
identity theft is suspected may overshadow right to verbally dispute debt); <i>Oberther v. Midland Credit Management, Inc</i>.,
_F.Supp.3d_, 2014 WL 4548871, at *6 (D. Mass. Sept. 15, 2014) (letter that gave
only two options to stop referral of account to attorney – mail payment, or
call to settle - without mentioning that submitting a dispute would also do so,
overshadowed validation notice).<o:p></o:p></div>
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<b><u>Demanding immediate payment</u></b><o:p></o:p></div>
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A collector is free to make a demand
for immediate payment during the 30-day validation period. Doing so, however, can be risky. For example, in <i>Savino</i>, although a collector’s “request for immediate payment did
not, standing alone, violate the FDCPA”, the letter violated the section 1692g
by failing to also explain that the demand for immediate payment did not
override the right to seek validation. <i>See Savino v. Computer Credit, Inc.</i>, 164
F.3d 81, 86 (2d Cir. 1998) (notice stating “[t]he hospital insists on immediate
payment or a valid reason for your failure to make payment” violated section
1692g); <i>see also Russell v. Equifax</i>,
74 F.3d 30, 34 (2d Cir. 1996) (the phrase “if you pay it within the next 10
days we will not post this collection to your file” overshadowed the validation
notice). <o:p></o:p></div>
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Requesting “immediate” payment was
held permissible in <i>Wilson v. Quadramed
Corp</i>., 225 F.3d 350 (3d Cir. 2000), where the Court found that language
stating the account had been placed with agency for “immediate collection” and
that the agency would “afford [the debtor] the opportunity to pay this bill
immediately and avoid further action against you” was not confusing. <i>Id</i>.
at 356. The debtor was properly
“presented with two options: (1) an opportunity to pay the debt immediately and
avoid further action, or (2) notify Quadramed within thirty days after
receiving the collection letter that he disputes the validity of the debt. As written, the letter does not emphasize one
option over the other, or suggest that Wilson forego the second option in favor
of immediate payment.” <i>Id</i>.
Similarly, in <i>Renick v. Dun &
Bradstreet</i>, 290 F.3d 1055 (9th Cir. 2002), the Court held that a letter
asking the debtor to “send payment today” and stating that “PROMPT PAYMENT IS
REQUESTED” did not overshadow the validation notice. <i>Id.</i>
at 1057. In the same vein, the Court in <i>Peter v. GC Services, LP</i>, 310 F.3d 344
(5th Cir. 2002), held that the phrase “FULL COLLECTION ACTIVITY WILL CONTINUE
UNTIL THIS ACCOUNT IS PAID IN FULL” did not overshadow the notice. <i>Id</i>.
at 349. Likewise, in <i>Taylor v. Cavalry Investment, LLC</i>, 365
F.3d 572 (7th Cir. 2004), the Court held that the phase “Act now to satisfy
this debt” was “in the nature of puffing” and did not overshadow the language
explaining the debtor’s right to seek validation during the 30-day period. <i>Id.</i>
at 575; <i>see also Gruber v. Creditor
Protection Serv., Inc.</i>, 742 F.3d 271, 275 (7th Cir. 2014) (language stating
“We believe you want to pay your just debt” was puffing and did not overshadow
the validation notice). In <i>Terran</i>, the Court held that the phrase
“Unless an immediate telephone call is made to J SCOTT, a collection assistant
of our office at (602) 258-8433, we may find it necessary to recommend to our
client that they proceed with legal action” did not overshadow the validation
notice, because it did not require “payment” immediately and merely requested a
phone call. <i>Terran</i>, 109 F.3d<i> </i>at 1434.<o:p></o:p></div>
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<b><u>Threatening suit or filing suit</u></b><o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
A collector can file suit, and may
refer to a potential lawsuit, within the 30-day validation period. Again, doing so can be very risky. In <i>Avila
v. Rubin</i>, 84 F.3d 222 (7th Cir. 1996), after reciting the validation notice,
the letter promptly overshadowed it by stating “if the above does not apply to
you, we shall expect payment or arrangement for payment to be made within ten
(10) days” in order to avoid “additional proceedings by our firm” including a
potential “civil suit” by the creditor. <i>Id.</i> at 226. The letter in <i>Bartlett v. Heibl</i>, 128 F.3d 497 (7th Cir. 1997) overshadowed by
validation notice by stating “if you wish to resolve this matter before legal
action is taken you must do one of two things within a week of the date of this
letter”: pay the debt or call the creditor to “make suitable arrangements for
payment.” <i>Id</i>. at 499. The Court held
that the language regarding a potential suit was confusing when read together
with the validation notice: “He might well wonder what good it would do him to
dispute the debt if he can't stave off a lawsuit.” <i>Id</i>.
at 501. Although the First Circuit
agreed in <i>Pollard</i> that the validation
period was “not a grace period” it held that the letter overshadowed the
notice, because it suggested “that a lawsuit is going to proceed without delay
whether the consumer disputes the debt or not.”
<i>Pollard</i>, 766 F.3d at 105. The Second Circuit held in <i>Ellis v. Solomon And Solomon, P.C.</i>, 591
F.3d 130 (2d Cir. 2010) that serving a consumer with a summons and complaint
during the 30-day validation period overshadowed the validation notice, because
the collector did not provide “an explanation” clarifying that the lawsuit had
no effect on the information contained in the notice. <i>Id.</i>
at 136. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<o:p> </o:p><span style="line-height: 200%;"> </span><span style="line-height: 200%;">By contrast, in </span><i style="line-height: 200%;">Zemekis v. Global Credit and Collection Corp</i><span style="line-height: 200%;">., 679 F.3d 632 (7 th
Cir. 2012), language stating that the debtor’s account “now meets ... [the]
guidelines for legal action” and that “Capital One Bank (USA), N.A. may be
forced to take legal action” did not overshadow the notice, because “The letter
warns only that Capital One Bank had the right to pursue legal action. . . . </span><a href="http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1997203761&ReferencePosition=501" style="line-height: 200%;"></a><a href="http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=506&FindType=Y&ReferencePositionType=S&SerialNum=1997203761&ReferencePosition=501" style="line-height: 200%;"></a><a href="http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000546&DocName=15USCAS1692G&FindType=L&ReferencePositionType=T&ReferencePosition=SP_a83b000018c76" style="line-height: 200%;"></a><span style="line-height: 200%;">As
written, the letter alerted Zemeckis only to the possible repercussions she
faced for failing to pay.”</span><span style="line-height: 200%;"> </span><i style="line-height: 200%;">Id</i><span style="line-height: 200%;">. at 636-37.</span><span style="line-height: 200%;"> </span><span style="line-height: 200%;">In </span><i style="line-height: 200%;">FHML
v. Lamar</i><span style="line-height: 200%;">, 503 F.3d 504 (6th. Cir. 2007), the collector did not overshadow
the validation notice when it served a collection complaint that included the
validation language in the text of the pleading.</span><span style="line-height: 200%;"> </span><span style="line-height: 200%;">The consumer was properly advised that under
state law, she had to respond to the complaint in twenty days, but she had
thirty days to dispute the debt under the FDCPA.</span><span style="line-height: 200%;"> </span><i style="line-height: 200%;">Id</i><span style="line-height: 200%;">.
at 511;</span><i style="line-height: 200%;"> see also Lansing v. Wilford,
Geske & Cook, P.A.</i><span style="line-height: 200%;">, 2013 WL 5587956, at *4 (D. Minn. Oct. 10,
2013)(foreclosure complaint would not overshadow where validation letter
stated:</span><span style="line-height: 200%;"> </span><span style="line-height: 200%;">“[a]ny future actions taken by
our office to begin a foreclosure proceeding do not terminate or limit the
thirty-day period to dispute the validity of the debt, or any portion thereof,
or your ability to request verification of the debt or the name of the original
creditor, as described above.”).</span><span style="line-height: 200%;"> </span></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<b><u>Mentioning negative credit reporting</u></b> <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
Informing debtors of the potential
negative consequences of their failure to pay does not necessarily overshadow
the validation notice. In <i>Durkin v. Equifax</i>, 406 F.3d 410 (7th
Cir. 2005), a letter stating “CONTINUED REFUSAL TO HONOR THIS RETURNED CHECK
WILL RESULT IN YOUR CREDIT FILE BEING IMPACTED WITH A NEGATIVE REFERENCE WHICH
MAY IMPACT FUTURE CREDIT GRANTING DECISIONS” did not overshadow the validation
notice. <i>Id</i>. at 425. The Court
observed: “these letters do not indicate that the time for disputing the debt
has passed. Nor do they misrepresent or
cloud the amount of time remaining to dispute the debt. The letters encourage debtors to pay their
debts by informing them of the possible negative consequences of failing to pay.<a href="file:///A:/TBN%20Marketing%20notes/Publications/Avoiding%20Overshadowing%20Claims/Avoiding%20Overshadowing%20Claims.doc#Document1zzB00772006520486"></a><a href="https://www.blogger.com/null" name="Document1zzF00772006520486"></a> The letters simply do not contain any overt
misinformation, apparent contradiction, or noticeable lack of clarity concerning
the validation period or the debtor's rights under § 1692g.” <i>Id</i>.
at 417-18. The Fifth Circuit followed
this same reasoning in <i>McMurray v.
ProCollect, Inc.</i>, 687 F.3d 665 (5th Cir. 2012), where the letter warned the
consumer: “It is important that you pay
your debt as failure to timely validate the referenced amount due will cause us
to report your account to the credit reporting agencies. The negative mark can remain on your credit
for up to seven (7) years, and may among other things significantly affect your
ability to: (1) OBTAIN CREDIT; (2) OBTAIN EMPLOYMENT; (3) PURCHASE HOME OR CAR;
OR (4) QUALIFY FOR APARTMENT RENTAL.” <i>Id</i>. at 667. In rejecting the overshadowing claim, the
Fifth Circuit stated: “The supposed threat falls in the category of letters
that encourage debtors to pay their debts by informing them of the possible
negative consequences of failing to pay, words that do not overshadow the
required notice language. . . The letter in this case essentially provided such
warnings and nothing more. Thus, the
notice language in ProCollect's letter is not overshadowed by the letter's
bad-credit warnings.” <i>Id.</i> at 671 (citations and quotation
marks omitted).</div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<b style="line-height: 200%;"><u>Conclusion</u></b></div>
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
<o:p></o:p></div>
<br />
<div class="MsoNormal" style="line-height: 200%; mso-pagination: none;">
To avoid overshadowing claims, the
best place to start is with the text of your validation letter. Make sure that it tracks the language of the
statute, and that it does not contain any other language that might arguably
obscure or contradict the debtor’s validation rights. Collectors should also assess any other
communications or conduct that occurs within the 30-day validation period to
determine if it presents any overshadowing risks. <o:p></o:p></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com1tag:blogger.com,1999:blog-7881335399385517573.post-60489835818444718192014-05-27T08:36:00.001-07:002014-05-28T09:01:44.180-07:00Why The CFPB's Position On Time-Barred Debt Is Bad For Consumers<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> Does a
consumer need to be “protected” from repaying his own debts? Can a consumer be “harmed” if he voluntarily
makes a payment on a debt that he admittedly owes? The CFPB apparently believes that sometimes
the answer is “yes.” <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> The CFPB and
the FTC have forcefully argued that debt collectors should make an affirmative
disclosure to consumers when they are seeking to collect debts that cannot be
judicially enforced, and that the failure to make this disclosure may violate
the FDCPA. This is necessary, according
to the CFPB and FTC, because consumers are usually unfamiliar with the statute
of limitations that apply to their debts, and a collector’s failure to disclose
that the debt is no longer judicially enforceable could have “adverse
consequences” to a consumer. In other
words, the consumer might actually pay the debt he owes, unless the collector
“protects” him by affirmatively advising him that the collector cannot sue to
collect it. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> The CFPB
wants seriously delinquent consumers to know their debts are no longer
judicially enforceable so they can make an informed decision to not repay
them. But does this make for good
“consumer protection” policy? Not
really. If the CFPB discourages
delinquent consumers from paying debts they admittedly owe, this raises the
cost of credit for all consumers, and it may eliminate the availability of
credit to low and moderate income consumers who need it the most. And if consumers stop paying on seriously
delinquent accounts, this will force creditors and collectors to file even more
lawsuits, so the creditor can be sure to collect before the limitations period
has run. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> But wait a
minute, you say, why would the CFPB take this position? I thought it was important for consumers to
repay their debts. And I thought that debt collection was critically important
to the economy, because it helps to keep the cost of credit lower, and helps
keep credit widely available for all consumers. When people repay the debts
they owe, this makes credit more available and more affordable, and <u>all</u>
consumers benefit, right? <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> You are
right on all these points. Indeed, the
FTC and CFPB have repeatedly told us that you are right. For example, in the February 2009 report
issued by the FTC entitled <a href="http://www.ftc.gov/sites/default/files/documents/reports/collecting-consumer-debts-challenges-change-federal-trade-commission-workshop-report/dcwr.pdf"><span style="color: blue;">“Collecting Consumer Debts: The
Challenges Of Change</span></a>” the
FTC reminded us: “<b>Consumer credit is a critical component of today’s economy</b>.
Credit allows consumers to purchase goods and services for which they are
unable or unwilling to pay the entire cost at the time of purchase. By
extending credit, however, creditors take the risk that consumers will not
repay all or part of the amount they owe.<b> If consumers do not pay their
debts, creditors may become less willing to lend money to consumers, or may
increase the cost of borrowing money</b>.”
<i>See</i> Executive Summary, pp.
ii-iii.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> The FTC was
even more forceful on this point in its report in July 2010 entitled “<a href="http://www.ftc.gov/sites/default/files/documents/public_events/life-debt/debtcollectionreport_0.pdf"><span style="color: blue;">Repairing A Broken System: Protecting
Consumers In Debt Collection Litigation And Arbitration</span></a>”
where it stated: “<b>Credit benefits
consumers by allowing them to obtain goods and services without paying the
entire cost at the time of purchase</b>. . . . Because consumers sometimes fail
to pay their creditors,<b> debt collection plays a vitally important role in
the consumer credit system</b>. Debt collection benefits individual creditors,
of course, who are repaid money they are owed. <b>More importantly, however, by
providing compensation to creditors when consumers do not repay their debts,
the debt collection system helps keep credit prices low and helps ensure that
consumer credit remains widely available</b>.” <i>See</i>
Executive Summary, p. i.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> These same
points were echoed by the CFPB on March 20, 2013 in its <span style="color: blue;"><a href="http://files.consumerfinance.gov/f/201303_cfpb_March_FDCPA_Report1.pdf">Annual Report To Congress on the Fair
Debt Collection Practices Act</a>,</span> where it stated: <b>“Consumer
debt collection is critical to the functioning of the consumer credit market</b>.
By collecting delinquent debt, collectors reduce creditors’ losses from
non-repayment and <b>thereby help to keep consumer credit available and
potentially more affordable to consumers</b>.
<b>Available and affordable credit is vital to millions of consumers </b>because
it makes it possible for them to purchase goods and services that they could
not afford if they had to pay the entire cost at the time of purchase.” </span><i style="line-height: 200%;"><span style="font-size: 12.0pt; line-height: 200%;">See</span></i><span style="font-size: 12pt; line-height: 200%;"> CFPB’s Report To Congress, p. 9.</span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> Thus, CFPB
and FTC have publicly stated that when delinquent consumers repay the debts
they actually owe, <u>all</u> consumers benefit. And of course the economic benefit that comes
from repayment of a debt does not magically evaporate when the statute of
limitations on the debt expires. Why,
then, has the CFPB so adamantly insisted that consumers must be advised by
collectors when the statute of limitations has expired. What exactly is the “consumer protection”
goal that is being met here? The answer
is not clear.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> Through its
Amicus Program, the CFPB has been an active supporter of consumer class action
attorneys who have sued collectors alleging that an offer to “settle” a
time-barred debt is a misleading and deceptive practice that violates the
FDCPA. For example, <span style="color: blue;"><a href="http://files.consumerfinance.gov/f/201309_cfpb_agency-brief_12-cv-04057.pdf">the CFPB filed an amicus brief</a>
</span>in support of the consumer in the Seventh Circuit Court of Appeals in <i>Delgado
v. Capital Management Services, LP</i>, No. 13-2030, where the CFPB argued that
“actual or threatened litigation is not a necessary predicate for an FDCPA
violation in the context of time-barred debt . . . Depending on the
circumstances, a time-limited settlement offer could plausibly mislead an
unsophisticated consumer to believe a debt is enforceable in court even if the
offer is unaccompanied by any clearly implied threat of litigation.” <i>See</i> CFPB’s Delgado Brief at p.2. The
CFPB acknowledged in its brief that: “[i]n most states, the expiration of the
statute of limitations on a debt does not extinguish the debt.” Despite the fact that time-barred debts are
not extinguished, however, the CFPB argued that “<b>The running of the statute
[] works to the benefit of consumers who owe debts that become stale</b>.” <i>Id</i>.
at p. 12-13. In other words, the seriously delinquent consumer will “benefit”
if the statute of limitations runs, because the creditor can no longer sue that
consumer to collect it. But do the rest
of us consumers also “benefit” if that consumer does not repay the money they
owe? Not so much.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> In another
case that is now pending before the Sixth Circuit Court of Appeals, <i>Buchanan
v. Northland Group Inc</i>., No. 13-2523,<span style="color: blue;"> <a href="http://files.consumerfinance.gov/f/201403_cfpb_amicus-brief_buchanan-v-northland-group-inc.pdf">the CFPB filed another amicus brief</a></span>
in support of the FDCPA class action attorneys who lost that case at the
district court level. There, the CFPB
reiterated the FTC’s position that “consumers do not expect” that a partial
payment “<b>will have the serious, adverse consequence of starting a new
statute of limitations</b>” and that collectors may violate the FDCPA if they
fail to disclose “clearly and prominently to consumers prior to requesting or
accepting such payments that (1) the collector cannot sue to collect the debt
and (2) </span><span style="font-size: 12pt; line-height: 200%;">providing a partial payment would revive the collector’s
ability to sue to collect the balance.”</span><span style="font-size: 12pt; line-height: 200%;">
</span><i style="font-size: 12pt; line-height: 200%;">See</i><span style="font-size: 12pt; line-height: 200%;"> CFPB’s Buchanan Brief at pages
17-18.</span><span style="font-size: 12pt; line-height: 200%;"> </span><span style="font-size: 12pt; line-height: 200%;">Again, the “serious, adverse
consequence” to the delinquent consumer in this example is that they actually may
have to pay a debt that they owe.</span><span style="font-size: 12pt; line-height: 200%;"> </span><span style="font-size: 12pt; line-height: 200%;">But if
these consumers refuse to pay because they are advised that the statute of
limitations has run, what about the “adverse consequences” to the rest of us,
the paying consumers, who the CFPB is also supposed to protect?</span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> Surely the
courts will continue to recognize that there is nothing wrong with offering to
settle a time-barred debt, so long as the collector does not threaten sue,
right? Nope. In a setback for paying consumers everywhere,
the Seventh Circuit recently adopted the position urged by the CFPB in <i><a href="http://scholar.google.com/scholar_case?case=2301997639762173810&q=mcmahon+v.+lvnv&hl=en&as_sdt=2006"><span style="color: blue;">McMahon v. LVNV Funding</span></a></i>,
744 F.3d 1010 (7th Cir. 2014), which held that a letter offering to “settle” a
debt violated section 1692e and 1692f of the FDCPA, because the limitations
period had expired. Relying in part on
the “well-reasoned position put forth by the FTC and CFPB” in their amicus
brief (the <i>Delgado</i> case was combined with <i>McMahon</i> on appeal), the
Court held that the running of the limitations period a “central fact” about
the “legal status” of a debt, and therefore will be important for a consumer to
know if the limitations period has run.
“The proposition that a debt collector violates the FDCPA when it
misleads an unsophisticated consumer to believe a time-barred debt is legally
enforceable, regardless of whether litigation is threatened, is straightforward
under the statute. Section 1692e(2)(A) specifically prohibits the false
representation of the character or legal status of any debt. Whether a debt is
legally enforceable is a central fact about the character and legal status of
that debt. A misrepresentation about
that fact thus violates the FDCPA. Matters
may be even worse if the debt collector adds a threat of litigation, see 15
U.S.C. § 1692e(5), but such a threat is not a necessary element of a claim.” <i>Id</i>.
at 1020.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> In light of <i>McMahon</i>
and in view of the CFPB’s position on the subject, can collectors safely
collect on time-barred accounts? It will
not be easy, since any offer to “settle” those accounts could lead to a class
action lawsuit alleging that the collector implied the account is legally
enforceable. If creditors know they are
unlikely to collect on their accounts once the limitations period has expired,
the only sensible approach is to sue every consumer before the statute
expires. Is increased litigation the
best way to protect consumers? Or should
creditors simply stop collecting all their accounts once the limitations period
expires and then raise the cost of credit for the rest of us? <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> One basic
economic point that has been made by the CFPB and the FTC in their reports cannot
be disputed: the repayment of legitimate debts is good for consumers. This issue was discussed at length at the <a href="http://video.narca.org/videos/2013/fall/symposium/Panel_3.html"><span style="color: blue;">2013 NARCA Legal Symposium</span></a>
by a panel of economists and regulators, who pointed out the cruel irony of how
low and moderate income consumers are the more likely to be harmed by the
increasing cost of credit, and restricted availability of credit, which results
when consumer debts are not repaid. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 200%;">
<br /></div>
<br />
<div class="MsoNormal" style="line-height: 200%;">
<span style="font-size: 12.0pt; line-height: 200%;"> All
consumers deserve the CFPB’s protection, not just the seriously delinquent
ones. The CFPB should consider the
unintended consequences of its position, which will encourage seriously
delinquent consumers to avoid payment of time-barred debts, and will increase
the cost and reduce the availability of credit for the rest of us. <o:p></o:p></span></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com5tag:blogger.com,1999:blog-7881335399385517573.post-76002033981100861392014-05-06T07:26:00.003-07:002014-05-06T07:26:55.028-07:00Is The CFBP's Position On Credit Reporting Statements Consistent With The Case Law?
<br />
<div style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none;">
The CFPB does
not want debt collectors to tell consumers that paying their debts might help
them to improve their credit score.<span style="mso-spacerun: yes;"> </span>Nor
does the CFPB want collectors to encourage consumers to pay by informing them
that their failure to do so might harm their credit.<span style="mso-spacerun: yes;"> </span>The Bureau made this point crystal clear in
the <a href="http://files.consumerfinance.gov/f/201307_cfpb_bulletin_collections-consumer-credit.pdf"><span style="color: blue;">Bulletin</span></a>
that it issued in July 2013 entitled “<a href="http://files.consumerfinance.gov/f/201307_cfpb_bulletin_collections-consumer-credit.pdf"><span style="color: blue;">Representations
Regarding Effect of Debt Payments on Credit Reports and Scores</span></a>” where it
claimed that making such statements might amount to a deceptive act or practice
in violation of the FDCPA and the Dodd-Frank Act.<span style="mso-spacerun: yes;"> </span>But is the CFPB’s position on this point
consistent with case law on this subject?<span style="mso-spacerun: yes;">
</span>Not really.<span style="mso-spacerun: yes;"> </span>It turns out that
courts from around the country have repeatedly recognized that collectors can,
and perhaps should, seek to encourage consumers to pay their debts by informing
of them of the potential impact on their credit.</div>
<br />
<div style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>Before diving in to the discussion,
consider some context on credit reporting provided to us by Congress. As part
of the Fair Credit Reporting Act, Congress mandates that certain furnishers of
information <u>must</u> provide consumers with a “clear and conspicuous”
written notice that negative information is being reported about them to the
consumer reporting agencies.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See</i> 15 U.S.C. §§ 1681s-2(a)(7)(A)(i),
1681s-2(a)(7)(C)(ii).<span style="mso-spacerun: yes;"> </span>In fact, the CFPB
is responsible for formulating a model disclosure that furnishers can use to
provide the notice of negative credit reporting.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>.
at § 1681s-2(a)(7)(D). Thus, Congress has already determined that it is
important for consumers to be informed about negative information that is being
furnished about them, and the CFPB is in charge of crafting a model notice so
furnishers can get the word out to consumers.</div>
<br />
<div style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in 7.0in;">
<span style="mso-tab-count: 1;"> </span>In its <a href="http://files.consumerfinance.gov/f/201307_cfpb_bulletin_collections-consumer-credit.pdf"><span style="color: blue;">Bulletin
issued in July 2013</span></a>, the CFPB took the position that creditors, debt buyers
and third-party collectors often make representations to consumers about
credit-related issues in order to persuade them to pay.<span style="mso-spacerun: yes;"> </span>These include statements suggesting that
paying their debts might improve their credit report, their credit score, or
their creditworthiness, or that payments may increase the likelihood that the
consumer will receive credit or more favorable credit terms.<span style="mso-spacerun: yes;"> </span>The Bureau pointed out that consumers often
“view credit reporting as an important determinant of their future access to
credit and other opportunities” and that representations made by collectors
about credit “may be deceptive under the FDCPA, the Dodd-Frank Act, or
both.”<span style="mso-spacerun: yes;"> </span>According to the CFPB, “in light
of the numerous factors that influence an individual consumer’s credit score”
payments made to a collector or creditor “may not improve the credit score of
the consumer to whom the representation is being made.”<span style="mso-spacerun: yes;"> </span>In addition, given the “variety of sources of
information to assess the creditworthiness of prospective borrowers,” the
Bureau asserted that “debt collectors may well deceive consumers if they make
representations about the nature or extent of improved creditworthiness that
result from paying debts in collection.”<span style="mso-spacerun: yes;">
</span>For these reasons, the CFPB outlined its expectation that “debt
collectors should take steps to ensure that any claims that they make about the
effect of paying debts in collection on consumers’ credit reports, credit
scores, and creditworthiness are not deceptive” and the Bureau made it clear
that it would be looking at these issues closely in connection with its
supervision activities and enforcement investigations.</div>
<br />
<div style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in 7.0in;">
<span style="mso-tab-count: 1;"> </span>The CFPB’s position, however,
appears to be directly at odds with decisions issued over the past few decades
by courts from around the country.<span style="mso-spacerun: yes;">
</span>Courts at both the circuit court level and the district court level have
repeatedly recognized that when consumers pay their debts, this is likely to
improve their credit.<span style="mso-spacerun: yes;"> </span>The courts have
also held that collectors can, and probably should, remind consumers of this
fact in order to encourage them to pay.<span style="mso-spacerun: yes;">
</span></div>
<br />
<div style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in 7.0in;">
<span style="mso-tab-count: 1;"> </span>For example, the Ninth Circuit
recognized that a collector could “properly” notify a consumer that nonpayment
of a debt “could adversely affect her credit reputation” in <i style="mso-bidi-font-style: normal;">Wade v. Regional Credit Ass’n</i>., 87 F.3d
1098 (9th Cir. 1996).<span style="mso-spacerun: yes;"> </span>There, the
collector sent a letter stating “if not paid TODAY, it may STOP YOU FROM
OBTAINING credit TOMORROW.<span style="mso-spacerun: yes;"> </span>PROTECT YOUR
CREDIT REPUTATION.<span style="mso-spacerun: yes;"> </span>SEND PAYMENT TODAY .
. . DO NOT DISREGARD THIS NOTICE.<span style="mso-spacerun: yes;"> </span>YOUR
CREDIT REPUTATION MAY BE ADVERSELY EFFECTED.”<span style="mso-spacerun: yes;">
</span><i style="mso-bidi-font-style: normal;">Id</i>. at 1099.<span style="mso-spacerun: yes;"> </span>The Ninth Circuit rejected the consumer’s
claim that the letter violated sections 1692e, 1692e(5) and 1692e(10) of the
FDCPA, noting that: “The body of the notice was informational, notifying Wade
that failure to pay could adversely affect her credit reputation… .The least
sophisticated debtor would construe the notice as a prudential reminder, not as
a threat to take action. . .The notice told Wade correctly that she had an
unpaid debt, and properly informed her that failure to pay might adversely
affect her credit reputation.” <i style="mso-bidi-font-style: normal;">Id</i>. at
1100.</div>
<br />
<div style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in 7.0in;">
<span style="mso-tab-count: 1;"> </span>Similarly, the Seventh Circuit
observed that it was entirely proper for the collector to “encourage debtors to
pay their debts by informing them of the possible negative consequences of
failing to pay” in <i style="mso-bidi-font-style: normal;">Durkin v. Equifax
Check Services, Inc</i>., 406 F.3d 410, 418 (7th Cir. 2005).<span style="mso-spacerun: yes;"> </span>There, the collector’s letter told the
consumer that “CONTINUED REFUSAL TO HONOR THIS RETURNED CHECK WILL RESULT IN
YOUR CREDIT FILE BEING IMPACTED WITH A NEGATIVE REFERENCE WHICH MAY IMPACT
FUTURE CREDIT GRANTING DECISIONS.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>. at 425.<span style="mso-spacerun: yes;"> </span>The Court rejected the consumer’s FDCPA
claim, stating that such language would not only “promote payment of valid
debts” it also “promotes disclosing genuine claims of invalid debts . . . .
Undeniably, one way to encourage someone with a true dispute to come forward
and resolve that dispute is to inform him of the possible negative consequences
of his continued inaction.<span style="mso-spacerun: yes;"> </span>Promoting
final resolution of such matters, either way, is inherently beneficial.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>.
at 418, n. 7. </div>
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<span style="mso-tab-count: 1;"> </span>More recently, the Fifth Circuit
embraced the reasoning of <i style="mso-bidi-font-style: normal;">Durkin</i> in
the case of <i style="mso-bidi-font-style: normal;">McMurray v. ProCollect, Inc.</i>,
687 F.3d 665 (5th Cir. 2012).<span style="mso-spacerun: yes;"> </span>There, the
collector’s letter warned the consumer of the negative consequence of
nonpayment as follows: “ It is important that you pay your debt as failure to
timely validate the referenced amount due will cause us to report your account
to the credit reporting agencies.<span style="mso-spacerun: yes;"> </span>The
negative mark can remain on your credit for up to seven (7) years, and may
among other things significantly affect your ability to: (1) OBTAIN CREDIT; (2)
OBTAIN EMPLOYMENT; (3) PURCHASE HOME OR CAR; OR (4) QUALIFY FOR APARTMENT
RENTAL.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>. at 667.<span style="mso-spacerun: yes;"> </span>The Fifth
Circuit rejected the consumer’s argument that this language amounted to a
“threat” that overshadowed the validation notice in violation of section 1692g
of the FDCPA: “The supposed threat falls in the category of letters that
encourage debtors to pay their debts by informing them of the possible negative
consequences of failing to pay, words that do not overshadow the required
notice language. . . The letter in this case essentially provided such warnings
and nothing more.<span style="mso-spacerun: yes;"> </span>Thus, the notice
language in ProCollect's letter is not overshadowed by the letter's bad-credit
warnings.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id.</i> at 671 (citations and quotation marks omitted). </div>
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<span style="mso-tab-count: 1;"> </span>During the past three decades,
district courts from around the country have repeatedly held that collectors
may properly inform consumers about adverse credit consequences resulting from
their failure to pay.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See, e.g., Wright v. Credit Bureau of
Georgia, </i>555 F. Supp. 1005 (N.D. Ga. 1983) (“If the defendants' letters
contain any threat to a consumer's credit rating, the threat is at most a
statement that the results of the defendants' collection efforts may some day
affect the debtor's credit rating.<span style="mso-spacerun: yes;"> </span>Thus
the letters convey no specific threat greater than the well-known fact, recognized
by all consumers, regardless of the degree of their sophistication, that a
failure to pay one's bills will affect his ability to obtain credit in the
future. Such a threat does not violate the FDCPA.”); <i style="mso-bidi-font-style: normal;">White v. Financial Credit Corp.</i>, 2001 WL 1665386, at *5 (N.D. Ill.
Dec. 27, 2001) (letter offering to “amend your credit report” did not violate
section 1692e of the FDCPA); <i style="mso-bidi-font-style: normal;">Hogan v. MKM
Acquisitions, LLC</i>, 241 F. Supp. 2d 896 (N.D. Ill. 2003)(letter offering to
“improve” the consumer’s credit rating did not violate the FDCPA:<span style="mso-spacerun: yes;"> </span>“Even an unsophisticated debtor should
realize that the fewer delinquent notices on one's credit report, the better
one's credit rating will be.”); <i style="mso-bidi-font-style: normal;">Jones v.
CBE Group, Inc</i>., 215 F.R.D. 558, 566 (D. Minn. 2003) (“Adverse credit reporting
is one the debt collector's most important inducements to prompt payment.<span style="mso-spacerun: yes;"> </span>But the opportunity to avoid a negative
credit report is also a significant benefit to debtors.”); <i style="mso-bidi-font-style: normal;">Hapin v. Arrow Financial Services</i>, 428 F. Supp. 2d 1057 (N.D. Cal.
2006) (letter “correctly informed” debtors that “paying their obligations might
‘help regain [their] financial future’” and did not violate FDCPA); <i style="mso-bidi-font-style: normal;">Kimmel v. Cavalry Portfolio Services, LLC</i>,
2011 WL 3204841 (E.D. Pa. July 28, 2011) (letter stating that payment would
help debtor get back on the road to financial recovery did not violate
FDCPA:<span style="mso-spacerun: yes;"> </span>“…Defendant's comments about
improving Plaintiff's financial situation merely underscored the fact that if
Plaintiff accepted Defendant's settlement offer, the debt associated with his
Bank of America account would be eliminated. There is nothing deceptive about
this statement.”); <i style="mso-bidi-font-style: normal;">Hartley v. Suburban
Radiologic</i>, 295 F.R.D. 357 (D. Minn. 2013) (letter stating that the
alternatives available to the collector<span style="mso-spacerun: yes;">
</span>“should you not clear this obligation may include damage to your credit
rating” was an “an accurate statement of the possible outcomes of failing to
respond” to the letter); <i style="mso-bidi-font-style: normal;">Erickson v.
Performant Recovery, Inc</i>., 2013 WL 3223367 (D. Minn. June 25, 2013)
(statement that debtor’s credit “was so ruined by this debt that” the debtor
“couldn't even buy an apple” not actionable under the FDCPA: “Simply expressing
an opinion about someone's credit score as a consequence of unpaid debts is not
material to the collection of the debt.”). </div>
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<span style="mso-tab-count: 1;"> </span>Would the CFPB approve of the use of
the letters that each of these courts has found to be lawful?<span style="mso-spacerun: yes;"> </span>It is hard to say.<span style="mso-spacerun: yes;"> </span>We know that Congress believes it is
important for consumers to know when negative information has been reported
about them to the consumer reporting agencies.<span style="mso-spacerun: yes;">
</span>It is difficult to reconcile the CFPB’s stern warnings in its July 2013
Bulletin with the reasoning employed by the courts that have held that debt
collectors can and should inform consumers that their failure to pay their debts
could impact their credit.<span style="mso-spacerun: yes;"> </span></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com2tag:blogger.com,1999:blog-7881335399385517573.post-14136219483553372782014-03-02T16:57:00.000-08:002014-03-02T16:57:05.262-08:00Can Recent Enforcement Actions Provide Guidance On The CFPB’s Position On UDAAPs?<br />
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<span style="mso-tab-count: 1;"> </span>The Dodd-Frank Act gave the Consumer
Financial Protection Bureau (“CFPB”) sweeping authority to prohibit the use of
“unfair, deceptive or abusive” acts or practices (“UDAAPs”) in connection with
the collection of consumer debts.<span style="mso-spacerun: yes;"> </span>These
terms are broadly defined to provide the CFPB with maximum flexibility when
carrying out its consumer protection mission.<span style="mso-spacerun: yes;">
</span>But how can a collector know exactly what the CFPB will consider to be
an “unfair” or “deceptive” or “abusive” collection practice?<span style="mso-spacerun: yes;"> </span>The CFPB has provided some guidance on
UDAAPs in the <a href="http://files.consumerfinance.gov/f/201307_cfpb_bulletin_unfair-deceptive-abusive-practices.pdf"><span style="color: blue;">bulletin
it released in July 2013</span></a> and in the <a href="http://files.consumerfinance.gov/f/201210_cfpb_supervision-and-examination-manual-v2.pdf"><span style="color: blue;">Examination
Manual</span></a> that it published in 2012.<span style="mso-spacerun: yes;">
</span>Beyond this, debt buyers and other collectors can read the UDAAP tea
leaves by examining the recent enforcement activity of the CFPB and other
regulators. </div>
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<span style="mso-tab-count: 1;"> </span>First, we should start with the
UDAAP definitions.<span style="mso-spacerun: yes;"> </span>An act or practice
will be considered “unfair” if the CFPB finds that it “causes or is likely to
cause substantial injury to consumers which is not reasonably avoidable by
consumers” and “such substantial injury is not outweighed by countervailing
benefits to consumers or to competition.”<span style="mso-spacerun: yes;">
</span><i style="mso-bidi-font-style: normal;">See </i>12 U.S.C. §
5531(c)(1).<span style="mso-spacerun: yes;"> </span>To determine if an act or
practice is “unfair” the CFPB “may consider established public policies” but
they “may not serve as a primary basis for such determination.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>.
at § 5531(c)(2). </div>
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<span style="mso-tab-count: 1;"> </span>An act or practice will be
considered “abusive” if the CFPB finds that it “materially interferes with the
ability of a consumer to understand a term or condition of a consumer financial
product or service” or it “takes unreasonable advantage of a lack of understanding
on the part of the consumer of the material risks, costs, or conditions of the
product or service” or “the inability of the consumer to protect the interests
of the consumer in selecting or using a consumer financial product or service”
or “the reasonable reliance by the consumer on a covered person to act in the
interests of the consumer.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>. at § 5531(d). </div>
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<span style="mso-tab-count: 1;"> </span>An act or practice will be deemed
“deceptive” if the CFPB find that it “(1) misleads or is likely to mislead the
consumer; (2) the consumer’s interpretation is reasonable under the
circumstances; and (3) the misleading act or practice is material.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See</i>
CFPB Bulletin 2013-07, July 10, 2013, Prohibition of Unfair, Deceptive, or
Abusive Acts or Practices In The Collection Of Consumer Debts, at p. 3.<span style="mso-spacerun: yes;"> </span>The CFBP will consider “the totality of the
circumstances” when determining if an act or practice has actually misled or is
likely to mislead a consumer, and it will look at implied representations as
well as omissions.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>.<span style="mso-spacerun: yes;"> </span>The standard for
“deceptive” used by the CFPB under the Dodd-Frank Act will be “informed by the
standards for the same terms under Section 5 of the FTC Act.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>.
at n.16.<span style="mso-spacerun: yes;"> </span>If a representation conveys
more than one reasonable meaning to consumers, one of which is false, then it
may be misleading.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>. at p. 4. “Material” information is that which is “likely
important to consumers” and that “is likely to affect a consumer’s choice of,
or conduct regarding, the product or service.” <i style="mso-bidi-font-style: normal;">Id.</i><span style="mso-spacerun: yes;"> </span></div>
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<span style="mso-tab-count: 1;"> </span>With definitions this broad, it can
be difficult for collectors to anticipate what conduct might be considered to
be a UDAAP.<span style="mso-spacerun: yes;"> </span>One method for identifying
areas of potential concern, however, is to analyze the recent enforcement
actions by the CFPB and other regulators filed against debt buyers and original
creditors.<span style="mso-spacerun: yes;"> </span></div>
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<span style="mso-tab-count: 1;"> </span>The most comprehensive enforcement
action against a debt buyer in recent years was brought by the FTC, not the
CFPB.<span style="mso-spacerun: yes;"> </span>On January 30, 2012, the FTC
entered into a <a href="http://www.ftc.gov/sites/default/files/documents/cases/2012/01/120131assetconsent.pdf"><span style="color: blue;">Consent
Decree with Asset Acceptance, LLC</span></a> (“Asset”) relating to its allegedly
false, deceptive and misleading debt collection and credit reporting
practices.<span style="mso-spacerun: yes;"> </span></div>
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<span style="mso-tab-count: 1;"> </span>A major focus of the Asset Consent
Decree was the concern over the accuracy and reliability of the data underlying
Asset’s accounts.<span style="mso-spacerun: yes;"> </span>Asset agreed that it
would not to make any material representation that a consumer owed any debt
unless it had a reasonable basis for making the representation.<span style="mso-spacerun: yes;"> </span>Asset agreed that it could reasonably rely on
the information provided by original creditors, unless there was a “reasonable
indication” – after taking into account the reliability and source of the
information – that the information is incomplete, inaccurate, unreliable or that
it does not substantiate the claim.<span style="mso-spacerun: yes;">
</span>Should Asset discover that the information regarding a specific
portfolio of accounts may be unreliable or inaccurate or missing material
information, it agreed to terminate collection efforts on the entire portfolio
until it conducts a reasonable investigation.<span style="mso-spacerun: yes;">
</span>Factors that may call into question the accuracy of a portfolio of
accounts include a disproportionately high rate of consumer disputes, lack of
availability of documentation, a disproportionately high rate of missing data
relating to the accounts in the portfolio, or any other information learned
about the credit originator or its methods of doing business that calls into
question the accuracy or completeness of the account data. </div>
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<span style="mso-tab-count: 1;"> </span>Consumer complaints were also a
major focus of the Asset Consent Decree.<span style="mso-spacerun: yes;">
</span>If a consumer, at any time, questions, disputes or challenges the
accuracy or completeness of the information that Asset is relying on, Asset
agreed either to close the account permanently and request deletion of the
tradeline, or to report the account as disputed and conduct a complete and
reasonable investigation into the dispute.<span style="mso-spacerun: yes;">
</span></div>
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<span style="mso-tab-count: 1;"> </span>The Asset Consent Decree also
reflects the FTC’s hostility to collecting time-barred debts.<span style="mso-spacerun: yes;"> </span>If Asset knows or should know the debt has
passed the applicable statute of limitations for litigation, it agreed to
provide the consumer with a new notice stating:<span style="mso-spacerun: yes;">
</span>“The law limits how long you can be sued on a debt.<span style="mso-spacerun: yes;"> </span>Because of the age of your debt, we will not
sue you for it.<span style="mso-spacerun: yes;"> </span>If you do not pay the
debt, we may continue to report it to the credit reporting agencies as
unpaid.”<span style="mso-spacerun: yes;"> </span>If the obsolescence period for
reporting the debt to consumer reporting agencies has also expired, Asset will
provide a notice stating:<span style="mso-spacerun: yes;"> </span>“The law
limits how long you can be sued on a debt.<span style="mso-spacerun: yes;">
</span>Because of the age of your debt, we will not sue you for it, and we will
not report it to any credit reporting agency.”<span style="mso-spacerun: yes;">
</span>In addition to these notices, Asset agreed to provide consumers with a
lengthy new notice on each written communication that summarizes their rights
under the FDCPA.<span style="mso-spacerun: yes;"> </span>Finally, the Consent
Decree provides that Asset will pay a civil penalty of $2.5 million to the FTC.</div>
<br />
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<span style="mso-tab-count: 1;"> </span>Enforcement actions filed against
original creditors can also provide guidance to debt buyers and other
collectors about areas of CFPB concern.<span style="mso-spacerun: yes;">
</span>For example, service provider practices were a major focus of the <a href="http://files.consumerfinance.gov/f/201207_cfpb_consent_order_0001.pdf"><span style="color: blue;">July
18, 2012 Stipulation and Consent Order between the CFPB and Capital One Bank,
(USA) N.A</span></a>. (“CapOne”) which related to allegedly deceptive practices in the
sale of payment protection and credit monitoring products made by CapOne’s
service providers during the card activation process.<span style="mso-spacerun: yes;"> </span>The CFPB charged that CapOne violated section
5536 of the Dodd-Frank Act when call center representatives employed by
CapOne’s service providers deviated from the call scripts, or misinterpreted
them, while explaining the products to consumers, and that ‘ineffective oversight”
by CapOne had resulted in the failure to detect and prevent these improper
sales practices.<span style="mso-spacerun: yes;"> </span>Among other things,
CapOne agreed to implement a new “Bank Service Provider Management Policy”
which, at a minimum, will require: 1) that CapOne assess, before entering into
any contract, whether a service provider has the capacity to comply with all
consumer protection laws, 2) that CapOne have contracts that require service
providers to train their employees on CapOne’s policies and applicable consumer
protection laws, and that allow CapOne to terminate the agreement for
noncompliance, and 3) that CapOne conduct periodic onsite reviews of the
service providers’ controls, performance and information systems.<span style="mso-spacerun: yes;"> </span>CapOne agreed to reimburse approximately $140
million to its customers and to pay a $25 million penalty to the CFPB. </div>
<br />
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<div style="line-height: 150%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>Credit reporting practices, service
provider oversight and time-barred debts were a focus of the <a href="http://files.consumerfinance.gov/f/2012-CFPB-0002-American-Express-Centurion-Consent-Order.pdf"><span style="color: blue;">October
2012 Consent Order between the CFPB and American Express Centurion Bank, Salt
Lake City, Utah and American Express Bank, FSB</span></a> (“Amex”) which related to
allegedly unfair, deceptive and abusive practices engaged in by Amex in violation
of sections 5531 and 5536 of the Dodd-Frank Act.<span style="mso-spacerun: yes;"> </span>The CFPB claimed that Amex had misrepresented
to certain consumers that the payment of their debts could improve their credit
scores, despite the fact that Amex was not reporting those debts to the consumer
reporting agencies.<span style="mso-spacerun: yes;"> </span>Amex also allegedly
failed to report certain consumer disputes to the consumer reporting
agencies.<span style="mso-spacerun: yes;"> </span>The CFPB claimed that Amex had
failed to implement an effective employee training program regarding applicable
consumer protection laws, and had failed to adequately monitor consumer
complaints.<span style="mso-spacerun: yes;"> </span>According to the CFPB, Amex
had failed to properly manage its service providers, who had committed the
alleged violations. </div>
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<span style="mso-tab-count: 1;"> </span>Amex agreed to “continue to provide
disclosures concerning the expiration of the Bank's litigation rights when
collecting debt that is barred by applicable state statutes of
limitations.”<span style="mso-spacerun: yes;"> </span>In addition, when
collecting on obsolete debt, Amex agreed to provide a new disclosure which
states: “The law limits how long a debt can be reported to a consumer reporting
agency.<span style="mso-spacerun: yes;"> </span>Because of the age of your debt,
we cannot report it to a consumer reporting agency.<span style="mso-spacerun: yes;"> </span>Payment or non-payment of this debt will not
affect your credit score.”<span style="mso-spacerun: yes;"> </span>If Amex sells
any time-barred or obsolete debt, it must require the buyer to provide
consumers with the same disclosures.<span style="mso-spacerun: yes;">
</span>Amex agreed to pay $85 million of restitution to cardholders, $14.1
million of civil penalties to the CFPB, and to substantially revise its
Compliance Risk Management Program.<span style="mso-spacerun: yes;"> </span></div>
<br />
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<span style="mso-tab-count: 1;"> </span>Telephone harassment, consumer
disputes and voice mail messages were a focus of the <a href="http://www.ftc.gov/sites/default/files/documents/cases/2013/07/130709ncoorder.pdf"><span style="color: blue;">July
9, 2013 Stipulated Order For Permanent Injunction and Monetary Judgment between
the FTC and Expert Global Solutions, Inc., f/k/a NCO Group, Inc</span></a>.
(“NCO”).<span style="mso-spacerun: yes;"> </span>NCO agreed that there would be
a rebuttable presumption that it intended to annoy, abuse or harass a person if
it placed more than one call to any person about a debt after that person had
notified NCO “either orally or in writing” that the person refused to pay or
wanted NCO to cease further communication.<span style="mso-spacerun: yes;">
</span>NCO also agreed not place calls to any telephone number about a
particular account if NCO had already been informed by anyone at that number
that the debtor cannot be reached at that number or the person does not have
location information about the debtor.</div>
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<div style="line-height: 150%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>If at any time any person “denies,
disputes or challenges” NCO’s claim that they owe a debt, NCO must, within fourteen
(14) days, report the debt as disputed to the consumer reporting agencies, or
request deletion of the reporting concerning the account.<span style="mso-spacerun: yes;"> </span>In addition, following any such dispute, NCO
must commence and complete an investigation within thirty (30) days.<span style="mso-spacerun: yes;"> </span>If NCO concludes that the consumer owes the
debt, it must within fifteen (15) days provide the consumer with verification
of the debt, and inform the consumer of NCO’s conclusion and the basis for it.<span style="mso-spacerun: yes;"> </span>If NCO concludes that the consumer does not
owe the debt, it must within fifteen (15) days inform the consumer of this
conclusion, request deletion of the tradeline, cease collection efforts and not
sell or transfer the debt.</div>
<br />
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<div style="line-height: 150%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>Regarding voicemails, NCO agreed
that it would not leave any voicemail message that states the first or last
name of the debtor and that NCO is a debt collector attempting to collect a
debt, or that the debtor owes any debt, unless 1) the greeting on the voicemail
includes a first and last name that is the same as the debtor, or 2) NCO has
already spoken to the debtor using the phone number associated with voicemail.</div>
<br />
<br />
<div style="line-height: 150%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>NCO also agreed to provide a new
notice to consumers on each written communication sent to collect a debt, as
follows: “Federal and state law prohibit certain methods of debt collection,
and require that we treat you fairly.<span style="mso-spacerun: yes;"> </span>If
you have a complaint about the way we are collecting your debt, please visit
our website at <a href="http://www.ncogroup.com/"><span style="color: blue;">www.ncogroup.com</span></a> or
contact the FTC online at <a href="http://www.ftc.gov;/"><span style="color: blue;">www.FTC.gov;</span></a> by
phone at 1-877-FTC-HELP; or by mail at 600 Pennsylvania Ave, NW, Washington, DC
20580.<span style="mso-spacerun: yes;"> </span>If you want information about
your rights when you are contacted by a debt collector, please contact the FTC
online at <a href="http://www.ftc.gov/"><span style="color: blue;">www.ftc.gov</span></a>.”<span style="mso-spacerun: yes;"> </span>NCO also agreed to judgment for a civil
penalty totaling $3.2 million.</div>
<br />
<br />
<div style="line-height: 150%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>Collection litigation practices were
the focus of the <a href="http://www.occ.gov/static/enforcement-actions/ea2013-138.pdf"><span style="color: blue;">September
18, 2013 Consent Order between the Office of the Comptroller of the Currency
(“OCC”) and JPMorgan Chase Bank</span></a>, N.A., JPMorgan Bank and Trust Company,
N.A., and Chase Bank USA, N.A. (“Chase”).<span style="mso-spacerun: yes;">
</span>The OCC alleged that Chase had engaged in “unsafe or unsound banking
practices” by, among other things, 1) filing affidavits where the affiant made
claims that were not based upon personal knowledge or a review of relevant
business records, 2) obtaining judgments based on false affidavits with
financial errors in favor of Chase, 3) filing documents that were not properly
notarized, and 4) failing to implement policies and procedures to properly
oversee internal and external collection litigation processes.<span style="mso-spacerun: yes;"> </span>Chase agreed to implement a new Collections
Litigation Plan to address the deficiencies in the Bank’s internal collection
litigation practices.<span style="mso-spacerun: yes;"> </span>When using any
third party providers in connection with collection litigation, including law
firms, Chase agreed to implement policies and procedures to ensure that the
third parties comply with all legal requirements and OCC guidance.<span style="mso-spacerun: yes;"> </span>In addition, when selling debt, Chase agreed
to ensure that it complies with the OCC’s guidance on debt sales, including
conducting due diligence on all debt buyers to evaluate their past and future
performance in complying with consumer protection and debt collection laws.</div>
<br />
<br />
<div style="line-height: 150%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>Robo-signing was a focus of the <a href="http://files.consumerfinance.gov/f/2013-cfpb_0008_consent-order.pdf"><span style="color: blue;">November
20, 2013 Consent Order between the CFPB and Cash America International, Inc.</span></a>
(“Cash America”).<span style="mso-spacerun: yes;"> </span>The Consent Order
related in part to the allegedly unfair, deceptive or abusive debt collection
practices in violation of section 5531 and 5536 of the Dodd-Frank Act by its
Ohio-based subsidiary, Cashland Financial Services, Inc. (“Cashland”).<span style="mso-spacerun: yes;"> </span>According to the CFPB, between January 2008
and September 2012, legal assistants employed by Cashland were manually
stamping the signatures of managers or attorneys on debt collection affidavits
or pleadings without prior review of those affidavits or pleadings by the
manager or attorney.<span style="mso-spacerun: yes;"> </span>In addition, legal
assistants were allegedly notarizing certain debt collection documents without
following the procedures required by applicable notary law.<span style="mso-spacerun: yes;"> </span>The CFPB found these practices were “unfair”
because they “could potentially cause consumers to pay incorrect debts or legal
costs and court fees to defend against invalid or excessive claims” and that
they were “deceptive” because they were likely to mislead consumers “into
believing that the affidavits or other court filings were reviewed, executed,
and notarized in compliance with applicable law and this information was
material to consumers subject to debt collection litigation.”<span style="mso-spacerun: yes;"> </span>According to the CFPB, Cash America had
failed to conduct adequate internal compliance audits and had therefore failed
to prevent or detect the improper conduct in a timely manner.<span style="mso-spacerun: yes;"> </span>Cash America paid $8 million to affected
consumers, a $5 million civil penalty to the CFPB, and agreed to implement a
comprehensive Compliance Plan designed to ensure compliance with applicable
consumer financial laws.</div>
<br />
<br />
<div style="line-height: 150%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="mso-tab-count: 1;"> </span>While it is impossible to predict
what the CFPB might consider to be a UDAAP in the future, these recent
enforcement actions – which have focused on data integrity, consumer disputes,
service provider oversight, time-barred and obsolete debt, telephone
harassment, voice mail messages and robo-signing practices – can provide
guidance on areas of potential concern.<span style="mso-spacerun: yes;"> </span></div>
<br />Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com3tag:blogger.com,1999:blog-7881335399385517573.post-5104341671968434962013-08-19T16:29:00.001-07:002013-08-19T16:31:36.088-07:00When Is A Lawyer Or Law Firm "Regularly" Collecting Debts Under The FDCPA?<span style="font-size: medium;">Beginning in 1995, when the Supreme Court issued <i>Heintz v. Jenkins</i>, 514 U.S. 291 (1995), lawyers have known that if they seek to collect consumer debts for clients – even when doing so through litigation – they might qualify as a "debt collector" under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 <i>et. seq</i>. ("FDCPA). But how often must a lawyer or a law firm engage in consumer debt collection activities before they are subject to the Act? This question has taken on increasing importance in recent years as more law firms have integrated collection work into their existing practices. Unfortunately for practitioners, there are no bright line rules establishing when a lawyer or a law firm has "regularly" engaged in debt collection. As confirmed by a recent decision from the Tenth Circuit,<i> James v. Wadas</i>, _ F.3d _, 2013 WL 3928631 (10th Cir. 2013), the outcome will turn on a case-by-case analysis of multiple factors relating to the practice of the attorney or the firm. </span><br />
<span style="font-size: medium;">
</span><br />
<span style="font-size: medium;"> Step one, of course, is to confirm that the attorney or firm is collecting "debts" within the meaning of the FDCPA. Not every unpaid obligation qualifies. The Act defines a "debt" as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692a(5). </span><a href="http://fdcpadefense.blogspot.com/2010/04/when-debt-is-not-debt-under-fdcpa.html"><u><span style="color: blue; font-size: medium;"><span style="color: blue; font-size: medium;">Click here</span></span></u><span style="color: blue; font-size: medium;"><span style="color: blue; font-size: medium;"></span></span></a><span style="font-size: medium;"> for more information on what constitutes a "debt" under the FDCPA. </span><br />
<span style="font-size: medium;">
</span><br />
<span style="font-size: medium;"> Assuming the lawyer or firm is collecting "debts" as defined by the FDCPA, how often must they do so in order to qualify as a "debt collector" under the Act. Again, the starting place is with the definitions of the statute. Subject to certain limitations, a "debt collector" is defined as "any person who uses any instrumentality of interstate commerce or the mails in any business<b> the principal purpose of which is the collection of any debts</b>, <b>or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another."</b> 15 U.S.C. §1692a(6) (emphasis added).<b> </b> <br />
<br />
<br />
If the "principal purpose" of your firm or your law practice is collecting consumer debts, then you probably know this already, and you know that you are a "debt collector" under the statute. <i>See, e.g., Scott v. Jones</i>, 964 F.2d 314, 316 (4th Cir. 1992) (where 70-80% of attorney’s fees were generated from collection work and attorney filed approximately 4000 collection cases per year during a four year period, the "principal purpose" of his practice was debt collection). The more difficult issue is determining when a lawyer or a firm or firm with a relatively small collection practice is still "regularly" collecting consumer debts. What exactly does "regularly" mean?<br />
<br />
The issue was easily resolved in favor of the defendant in <i>James v. Wadas</i>, where the defendant only had one debt collection client in her entire legal career, that client had referred just 6-8 collection cases during the past ten years, and defendant had earned only $1700 in fees on collection matters during the prior year. <i>See</i> 2013 WL 3928631, at *4. As part of its analysis, the <i>Wadas</i> Court considered the Black’s Law definition of the terms "regularly" – which means "[a]t fixed and certain intervals, regular in point in time. In accordance with some consistent or periodical rule or practice" – as well as the term "regular" – which means "steady or uniform in course, practice or occurrence . . . usual, customary, normal or general." <i>Id</i>. at *3. The Court also considered the legislative history surrounding the FDCPA and concluded that it offered "little guidance" on what constitutes "regular" collection by an attorney, other than "such collection cannot be isolated or incidental but must, to varying degrees, be a significant aspect of the attorney’s business." <br />
<br />
Ultimately, the Tenth Circuit in <i>Wadas</i> adopted the multi-factor test for determining when a lawyer "regularly" collects debts that had been established by the Second Circuit in <i>Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti</i>, 374 F.3d 56 (2d Cir. 2004). The court considered: "(1) the absolute number of debt collection communications issued, and/or collection-related litigation matters pursued, over the relevant period(s), (2) the frequency of such communications and/or litigation activity, including whether any patterns of such activity are discernible, (3) whether the entity has personnel specifically assigned to work on debt collection activity, (4) whether the entity has systems or contractors in place to facilitate such activity, and (5) whether the activity is undertaken in connection with ongoing client relationships with entities that have retained the lawyer or firm to assist in the collection of outstanding consumer debt obligations. Facts relating to the role debt collection work plays in the practice as a whole should also be considered to the extent they bear on the question of regularity of debt collection activity (debt collection constituting 1% of the overall work or revenues of a very large entity may, for instance, suggest regularity, whereas such work constituting 1% of an individual lawyer's practice might not). Whether the law practice seeks debt collection business by marketing itself as having debt collection expertise may also be an indicator of the regularity of collection as a part of the practice." <i>See Wadas</i>, 2013 WL 3928631, at *4 (quoting <i>Goldstein</i>, 374 F.3d at 62-63). <br />
<br />
Applying this multi-factor test, the Tenth Circuit had no trouble concluding that the defendant was not "regularly" collecting debts: "The record does not demonstrate that Wadas engages in debt collection with any sort of regularity; indeed, over the span of one decade Wadas engaged in only six to eight debt collection cases. Such debt collection activity is minimal. Although the fact that Wadas has an ongoing relationship with Shadakofsky is a factor that would weigh in favor of "debt collector" status, again, the volume of cases accepted from this client comprises only a small portion of Wadas's overall caseload. Other factors also weigh against a finding that Wadas is a "debt collector." For instance, Wadas has not issued debt collection communications, and she does not have any system or personnel to assist with debt collection activity." <i>See Wadas</i>, 2013 WL 3928631, at *5. <br />
<br />
Similarly, the defendants were not "debt collectors" in <i>Schroyer v. Frankel</i>, 197 F.3d 1170 (6th Cir. 1999), where the law firm had handled just 50-75 collection cases annually, which represented less than 2% of the firm’s overall practice. <i>Id</i>. at 1173. The firm did not hire any paralegals nor did it use any computer programs for debt collection work. <i>Id</i>. The attorney defendant had only handled 29 collection cases during the year, which was just 7.4% of his practice, and these cases were referred by clients who sent him other matters not involving debt collection. <i>Id</i>. There was no evidence that the defendants handled collection matters for a major client on an ongoing basis, nor was there evidence as to the total fees recovered on collection matters. <i>Id</i>. The Court held that "to find that an attorney or law firm ‘regularly’ collects debts for purposes of the FDCPA, a plaintiff must show that the attorney or law firm collects debts as a matter of course for its clients or for some clients, or collects debts as a substantial, but not principal, part of his or its general law practice." <i>Id</i>. at 1176. The defendants’ collection practices, however, "were incidental to, and not relied upon or anticipated in, their practice of law, and that therefore they should not be held liable as ‘debt collectors’ under the FDCPA." <i>Id</i>. at 1177. <br />
<br />
Other cases have been more challenging for defendants. For example, in <i>Garrett v. Derbes</i>, 110 F.3d 317 (5th Cir. 1997), evidence that a lawyer had sent 639 demand letters during a nine month period seeking to collect unpaid telephone bills on behalf of a single client was sufficient to prove he "regularly" collected debts. The district court had granted summary judgment in favor of the attorney, noting that "(1) Derbes' work for Bell South constituted less than 0.5 percent of his entire practice during the nine-month period his law firm represented Bell South, (2) there was no ongoing relationship between Derbes and Bell South, and (3) Derbes had not represented Bell South in other matters." <i>Id</i>. at 318. In reversing the district court, however, the Fifth Circuit noted that "a person may regularly render debt collection services, even if these services are not a principal purpose of his business. Indeed, if the volume of a person's debt collection services is great enough, it is irrelevant that these services only amount to a small fraction of his total business activity; the person still renders them ‘regularly.’" <i>Id</i>.<br />
<br />
Similarly, in <i>Goldstein</i>, the law firm had prevailed in the district court on the grounds that it had not "regularly" collected debts, but the Second Circuit reversed. The firm emphasized that it had only derived $5,000 in revenues from collection work during the prior year, which was just 0.05% of its revenue for that period. <i>See Goldstein</i>, 374 F.3d at 61. The Court pointed out, however, that the firm had issued 145 collection notices within that 12-month period, with at least 10 notices sent during 7 of the months, and more than 15 notices sent during 3 of the months. <i>Id. </i>at 63. The firm also had an "ongoing relationship with apparently affiliated entities for which it repeatedly sent collection notices" and that fact "further indicates the regularity of collection work as part of the firm’s business." <i>Id</i>. In addition, the firm had a system in place for preparing and issuing the collection notices. <i>Id</i>. <br />
<br />
In <i>Reese v. Ellis, Painter, Ratteree & Adams, LLP</i>, 678 F.3d 1211 (11th Cir. 2012), the Court held that a law firm that allegedly sent 500 letters in connection with foreclosure proceedings could be a "debt collector" under the FDCPA: "The complaint contains enough factual content to allow a reasonable inference that the Ellis law firm is a ‘debt collector’ because it regularly attempts to collect debts. The complaint alleges that the law firm is ‘engaged in the business of collecting debts owed to others incurred for personal, family[,] or household purposes.’ It also alleges that in the year before the complaint was filed the firm had sent to more than 500 people ‘dunning notice [s]’ containing ‘the same or substantially similar language’ to that found in the letter and documents attached to the complaint in this case. That's enough to constitute regular debt collection within the meaning of § 1692a(6)." <i>Id</i>. at 1218. <br />
<br />
Thus, there is no magic number of consumer debt collection cases and no set percentage of firm revenues that will make an attorney or a firm into a "debt collector" under the FDCPA. Each of these cases will be decided based on a balancing of multiple factors relating to the nature of the practice of the attorney and the firm. <br />
</span>Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com7tag:blogger.com,1999:blog-7881335399385517573.post-55002569004675702392013-07-20T12:13:00.000-07:002013-07-20T12:14:49.679-07:00Why California Fair Debt Buyer’s Act May Decrease Communication And Increase Litigation Between Debt Buyers And Consumers<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>On July 11, 2013, California passed the <a href="http://bit.ly/1bzEGIV" target="_blank"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;"><span style="color: blue; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">FairDebt Buying Practices Act</span></span></a>, California Civil Code section
1788.50 <i>et. seq</i>., in response to criticism that debt buyers did not have
adequate documentation to support the collection lawsuits they were filing
against California consumers.<span style="mso-spacerun: yes;"> </span>The Act
imposes a series of costly new requirements on debt buyers that start before
any collection letter is sent to a consumer, and that continue throughout the
collection process, including during any collection litigation.<span style="mso-spacerun: yes;"> </span></span><span style="font-size: 12pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>Although the Act was designed to protect consumers and
increase the information available to them, a likely result of the Act’s new
requirements will be to decrease the level of communication between debt buyers
and consumers, while increasing the amount of collection litigation.<span style="mso-spacerun: yes;"> </span>Debt buyers are not required to call or write
to consumers before filing suit, but they often prefer to, so they can offer
settlements and identify legitimate consumer disputes.<span style="mso-spacerun: yes;"> </span>Under the new Act, however, if a debt buyer
wants to send a letter to a consumer, it must already have possession of, or
access to, all the documents and information it will need to obtain a default
judgment against the consumer.<span style="mso-spacerun: yes;"> </span>Given the
costs associated with obtaining the required media, debt buyers may become less
flexible in their pre-suit settlement offers with consumers.<span style="mso-spacerun: yes;"> </span>In addition, some debt buyers may conclude
that it is more cost-effective to avoid the pre-suit notice and validation
requirements of the Act and to proceed directly to litigation on a larger number
of accounts.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><o:p> </o:p></span><span style="font-size: 12pt;">Thus,
the Act may have the unfortunate effect of decreasing the level of
communication between consumers and debt buyers, thereby reducing the chance
that consumer will be offered a chance to settle the debt, or dispute it,
before a lawsuit is filed.<o:p></o:p></span></div>
<br />
<b><u><span style="font-size: 12pt;">Scope Of The Act</span></u></b><span style="font-size: 12pt;"><o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>The Act only applies to debt buyers: it does not apply to
creditors, collection agencies or collection attorneys.<span style="mso-spacerun: yes;"> </span>A “debt buyer” is defined as “a person or
entity that is regularly engaged in the business of purchasing charged-off
consumer debt for collection purposes, whether it collects the debt itself,
hires a third party for collection, or hires an attorney-at-law for collection
litigation.” <i>See</i> Cal. Civ. Code § 1788.50(a)(1).<span style="mso-spacerun: yes;"> </span>The term “charged-off consumer debt” means “a
consumer debt that has been removed from a creditor’s books as an asset and
treated as a loss or expense.”<span style="mso-spacerun: yes;"> </span><i>Id</i>.
at § 1788.50(a)(2).<span style="mso-spacerun: yes;"> </span>The term “debt
buyer” does <u>not</u> include “a person or entity that acquires a charged-off
consumer debt incidental to the purchase of a portfolio predominantly
consisting of consumer debt that has not been charged off.<span style="mso-spacerun: yes;"> </span><i>Id.</i> at § 1788.50(a)(1).<span style="mso-spacerun: yes;"> </span>The Act only applies to consumer debts that
are sold or resold on or after January 1, 2014.<span style="mso-spacerun: yes;">
</span><i>Id.</i> at § 1788.50(d).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<b><u><span style="font-size: 12pt;">Information Required
Before Writing To Consumers</span></u></b><span style="font-size: 12pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>The Act regulates information that a debt buyer must
possess, and documentation that the debt buyer must have access to, before the
debt buyer makes “any written statement to the debtor in an attempt to collect
a consumer debt.”<span style="mso-spacerun: yes;"> </span><i>See</i> Cal. Civ.
Code § 1788.52.<span style="mso-spacerun: yes;"> </span>Note, however, that
these requirements only apply if a “debt buyer” as defined by the Act is
writing to the consumer, and they would not apply to any collection agency or
lawyer retained by the debt buyer.<span style="mso-spacerun: yes;"> </span><i>Id.</i><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>If the debt buyer decides to write to a consumer, the
debt buyer must “possess” the following six items of information at the time of
the writing: <o:p></o:p></span></div>
<br />
<span style="font-size: 12pt;">“(1) That the debt buyer is
the sole owner of the debt at issue or has authority to assert the rights of
all owners of the debt.<o:p></o:p></span><br />
<br />
<span style="font-size: 12pt;">(2) The debt balance at
charge off and an explanation of the amount, nature, and reason for all post-charge-off
interest and fees, if any, imposed by the charge-off creditor or any subsequent
purchasers of the debt. This paragraph shall not be deemed to require a
specific itemization, but the explanation shall identify separately the
charge-off balance, the total of any post-charge-off interest, and the total of
any post-charge-off fees. <o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(3) The date of default or
the date of the last payment. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(4) The name and an address
of the charge-off creditor at the time of charge off, and the charge-off
creditor’s account number associated with the debt. The charge-off creditor’s
name and address shall be in sufficient form so as to reasonably identify the
charge-off creditor. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(5) The name and last known
address of the debtor as they appeared in the charge-off creditor’s records
prior to the sale of the debt. If the debt was sold prior to January 1, 2014,
the name and last known address of the debtor as they appeared in the debt
owner’s records on December 31, 2013, shall be sufficient. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(6) The names and addresses
of all persons or entities that purchased the debt after charge off, including
the debt buyer making the written statement. The names and addresses shall be
in sufficient form so as to reasonably identify each such purchaser.”<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<i><span style="font-size: 12pt;">Id.</span></i><span style="font-size: 12pt;"> at § 1788.52(a).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>If the debt buyer decides to write to a consumer, the
debt must also “have access to” the following documentation:<span style="mso-spacerun: yes;"> </span>“a copy of a contract or other document
evidencing the debtor’s agreement to the debt. If the claim is based on debt
for which no signed contract or agreement exists, the debt buyer shall have
access to a copy of a document provided to the debtor while the account was
active, demonstrating that the debt was incurred by the debtor. For a revolving
credit account, the most recent monthly statement recording a purchase
transaction, last payment, or balance transfer shall be deemed sufficient to
satisfy this requirement.”<span style="mso-spacerun: yes;"> </span><i>Id.</i> at
§ 1788.52(b). <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<b><u><span style="font-size: 12pt;">Validation Requirements</span></u></b><span style="font-size: 12pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>If the debtor makes a written request to the debt buyer
“for information regarding the debt or proof of the debt” then the debt buyer
must provide the debtor, within 15 calendar days and without charge, all of the
information or documents required by sections 1788.52(a) and (b) of the Act. <i><span style="mso-spacerun: yes;"> </span>See</i> Cal. Civ. Code § 1788.52(c).<span style="mso-spacerun: yes;"> </span>If the debt buyer cannot provide the documents
or information within 15 calendar days, then it must cease further collection
efforts until it does provide the documents and information.<span style="mso-spacerun: yes;"> </span><i>Id.</i> <o:p></o:p></span></div>
<br />
<span style="font-size: 12pt;"> The
debtor’s request for this information, however, must be made “consistent with
the validation requirements of section 1692g of Title 15 of the United States
Code.”<span style="mso-spacerun: yes;"> </span>In other words, the consumer’s
request must be made in writing and within 30 days of the receipt of the debt
buyer’s validation notice sent under section 1692g of the FDCPA.<span style="mso-spacerun: yes;"> </span><i>See id. </i><span style="mso-spacerun: yes;"> </span>As a result, any verbal requests for
validation, or written requests made outside of the 30-day validation period,
would not require any response, and if a debt buyer does write to consumers,
then it would not be subject to this provision of the Act. <o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><o:p> </o:p></span><b><u><span style="font-size: 12pt;">New Notices To
Consumers</span></u></b><span style="font-size: 12pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>If the debt buyer decides to write to the debtor, then the
first letter to the debtor must include “a separate prominent notice” in no
smaller than 12-point type that states:<span style="mso-spacerun: yes;">
</span>“You may request records showing the following: (1) that [insert name of
debt buyer] has the right to seek collection of the debt; (2) the debt balance,
including an explanation of any interest charges and additional fees; (3) the
date of default or the date of the last payment; (4) the name of the charge-off
creditor and the account number associated with the debt; (5) the name and last
known address of the debtor as it appeared in the charge-off creditor’s or debt
buyer’s records prior to the sale of the debt, as appropriate; and (6) the
names of all persons or entities that have purchased the debt. You may also
request from us a copy of the contract or other document evidencing your
agreement to the debt. A request for these records may be addressed to: [insert
debt buyer’s active mailing address and email address, if applicable].”<span style="mso-spacerun: yes;"> </span><i>See</i> Cal. Civ. Code § 1788.52(d)(1).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>In addition, if the debt buyer is writing to the consumer
about a “time-barred debt” where the obsolescence period of the Fair Credit
Reporting Act has not yet expired, the debt buyer must also include the
following notice in no less than 12-point font: “ The law limits how long you
can be sued on a debt. Because of the age of your debt, we will not sue you for
it. If you do not pay the debt, [insert name of debt buyer] may [continue to]
report it to the credit reporting agencies as unpaid for as long as the law
permits this reporting.”<span style="mso-spacerun: yes;"> </span><i>Id</i>. at
§1788.52(d)(2).<span style="mso-spacerun: yes;"> </span>The term “time-barred
debt” is not defined by the Act, but it is safe to assume that the term refers
to a debt where the applicable statute of limitations for suit has
expired.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>If the debt buyer is not furnishing information to the
consumer reporting agencies about the debt, however, a consumer might argue
that sending this notice falsely implies that the debt buyer is doing so.<span style="mso-spacerun: yes;"> </span>A debt buyer who is not a furnisher should be
able to omit this notice in order to avoid potential liability under the FDCPA.<span style="mso-spacerun: yes;"> </span>This reading is consistent the provision of the
Act provides that “In the event of a conflict between the requirements of
subdivision (d) and federal law, so that it is impracticable to comply with
both, the requirements of federal law shall prevail.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See</i>
Cal. Civ. Code §1788.52(f).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>If the debt buyer is writing to a consumer about a
time-barred debt and the obsolescence period of the Fair Credit Reporting Act
has also run, the debt buyer must also include the following notice in no less
than 12-point font: “The law limits how long you can be sued on a debt. Because
of the age of your debt, we will not sue you for it, and we will not report it
to any credit reporting agency.”<span style="mso-spacerun: yes;"> </span><i>See</i>
Cal. Civ. Code § 1788.52(d)(3).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<b><u><span style="font-size: 12pt;">Documenting Settlements
And Payments</span></u></b><span style="font-size: 12pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>The Act requires that all settlement agreements between a
debt buyer and a debtor must be “documented in open court or otherwise reduced
to writing” and that a debt buyer must ensure<span style="mso-spacerun: yes;">
</span>the debtor is provided with a written copy of the agreement.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See</i>
Cal. Civ. Code § 1788.54(a).<span style="mso-spacerun: yes;"> </span>Whenever a
debt buyer receives a payment on a debt, it must within 30 calendar days
provide a receipt or monthly statement to the debtor that “shall clearly and
conspicuously show the amount and date paid, the name of the entity paid, the
current account number, the name of the charge-off creditor, the account number
issued by the charge-off creditor, and the remaining balance owing, if
any.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>. at § 1788.54(b).<span style="mso-spacerun: yes;"> </span>The
receipt or statement can be provided electronically if the parties agree.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id</i>.<span style="mso-spacerun: yes;"> </span>If the debt buyer accepts a payment as a
payment in full, or as a full and final compromise of the debt, the debt buyer
must also provide a similar written statement or receipt to the debtor.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id.</i>
at § 1788.54(c).<span style="mso-spacerun: yes;"> </span>A debt buyer may not
“sell an interest in a resolved debt, or any personal or financial information
related to the resolved debt.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Id.</i> <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<b><u><span style="font-size: 12pt;">Requirements For
Complaints Filed In Collection Litigation</span></u></b><span style="font-size: 12pt;"> <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>The Act prohibits a debt buyer from filing suit or
initiating an arbitration or other legal proceedings to collect a consumer debt
if the applicable statute of limitations on the debt buyer’s claim has
expired.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See</i> Cal. Civ. Code § 1788.56.<span style="mso-spacerun: yes;">
</span>When a debt buyer does file suit, the Act includes nine specific
requirements that must be included in the allegations of the complaint, as
follows: <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">“(1) That the plaintiff is a
debt buyer. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(2) The nature of the
underlying debt and the consumer transaction or transactions from which it is
derived, in a short and plain statement. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(3) That the debt buyer is
the sole owner of the debt at issue, or has authority to assert the rights of
all owners of the debt. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(4) The debt balance at
charge off and an explanation of the amount, nature, and reason for all
post-charge-off interest and fees, if any, imposed by the charge-off creditor
or any subsequent purchasers of the debt. This paragraph shall not be deemed to
require a specific itemization, but the explanation shall identify separately
the charge-off balance, the total of any post-charge-off interest, and the
total of any post-charge-off fees. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(5) The date of default or
the date of the last payment. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(6) The name and an address
of the charge-off creditor at the time of charge off, and the charge-off
creditor’s account number associated with the debt. The charge-off creditor’s
name and address shall be in sufficient form so as to reasonably identify the
charge-off creditor. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(7) The name and last known
address of the debtor as they appeared in the charge-off creditor’s records
prior to the sale of the debt. If the debt was sold prior to January 1, 2014,
the debtor’s name and last known address as they appeared in the debt owner’s
records on December 31, 2013, shall be sufficient. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(8) The names and addresses
of all persons or entities that purchased the debt after charge off, including
the plaintiff debt buyer. The names and addresses shall be in sufficient form
so as to reasonably identify each such purchaser. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;">(9) That the debt buyer has
complied with Section 1788.52.”<o:p></o:p></span></div>
<br />
<i><span style="font-size: 12pt;">See</span></i><span style="font-size: 12pt;"> Cal. Civ. Code 1788.58(a).<span style="mso-spacerun: yes;"> </span>In addition, a copy of the contract or
document described in section 1788.52(b) must be attached to the
complaint.<span style="mso-spacerun: yes;"> </span><i>Id</i>. at §
1788.58(b).<span style="mso-spacerun: yes;"> </span>The debt buyer must ensure,
however, that it does not disclose with the complaint any “personal, financial,
or medical information, the confidentiality of which is protected by any state
or federal law.”<span style="mso-spacerun: yes;"> </span><i>Id</i>. at § 1788.58
(c).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<b><u><span style="font-size: 12pt;">Requirements For
Defaults In Collection Litigation </span></u></b><span style="font-size: 12pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>The Act also governs the requirements for a debt buyer to
obtain a default judgment.<span style="mso-spacerun: yes;"> </span>Specifically,
it provides that no default may be entered for a debt buyer “unless business
records, authenticated through a sworn declaration, are submitted by the debt
buyer to the court to establish the facts required to be alleged by paragraphs
(3) to (8), inclusive, of subdivision (a) of Section 1788.58" and the debt
buyer submits a copy of the contract or other document required by section
1788.52(b) of the Act, also authenticated through a sworn declaration.<span style="mso-spacerun: yes;"> </span><i>See</i> Cal. Civ. Code §§ 1788.60(a),
(b).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><o:p> </o:p></span><span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>If this information is not provided by the debt buyer,
then the court shall not enter a default judgment and it may, in its
discretion, dismiss the action.<span style="mso-spacerun: yes;"> </span><i>Id</i>.
at § 1788.60 (c).<span style="mso-spacerun: yes;"> </span>If the debt buyer does
submit this information, however, there can be no dispute that the requirements
for entering a default judgment have been met, and judgment should be entered for
the debt buyer as a matter of course. <span style="mso-spacerun: yes;"> </span>One
of the purposes of the Act, after all, was to provide “enforceable standards”
for the litigation of charged-off debt and to “provide needed clarity to
courts” about debt buyer litigation. <i><span style="mso-spacerun: yes;"> </span>See</i> Cal. Civ. Code § 1788.50 (Legislative
Findings, sections (b), (e) and (f). <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-spacerun: yes;"> </span></span><span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>In the event an action brought by a debt buyer proceeds
to trial and the debtor appears for trial, but the debt buyer does not appear
or is not prepared to proceed, if the court does not find good cause for
continuance, it may, in its discretion, dismiss the action with our without
prejudice.<span style="mso-spacerun: yes;"> </span>The court may also award the
debtor’s costs of preparing for trial, including any lost wages and
transportation expenses.<span style="mso-spacerun: yes;"> </span><i>See</i> Cal.
Code Civ. Proc. § 581.5. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><o:p> </o:p></span><b><u><span style="font-size: 12pt;">Remedies For Violating
The Act</span></u></b><span style="font-size: 12pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><o:p> </o:p></span><span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>The Act provides if a debt buyer violates the Act with
respect to any person, it shall be liable to that person in an amount equal to
the sum of:<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><o:p> </o:p></span><span style="font-size: 12pt;">“(1) Any actual damages
sustained by that person as a result of the violation, including, but not
limited to, the amount of any judgment obtained by the debt buyer as a result
of a time-barred suit to collect a debt from that person. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><o:p> </o:p></span><span style="font-size: 12pt;">(2) Statutory damages in an
amount as the court may allow, which shall not be less than one hundred dollars
($100) nor greater than one thousand dollars ($1,000). <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<i><span style="font-size: 12pt;">See</span></i><span style="font-size: 12pt;"> Cal. Civ. Code § 1788.62(a)(1), (2).<span style="mso-spacerun: yes;"> </span>In the case of a successful action to enforce
the Act, the court shall also award costs and reasonable attorney’s fees to the
debtor.<span style="mso-spacerun: yes;"> </span><i>Id</i>. at § 1788.62(c)(1).<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>In the case of a class action, the debt buyer shall be
liable to any named plaintiff for any statutory damages of not less than $100
nor more than $1000.<span style="mso-spacerun: yes;"> </span><i>Id</i>. at
1788.62(b).<span style="mso-spacerun: yes;"> </span>Class members do not get
these statutory damages, but if the Court finds that debt buyer “engaged in a
pattern and practice of violating any provision” of the Act, then the Court may
award “additional damages to the class in an amount not to exceed the lesser of
five hundred thousand dollars ($500,000) or 1 percent of the net worth of the
debt buyer.”<span style="mso-spacerun: yes;"> </span><i>Id</i>.<span style="mso-spacerun: yes;"> </span>These additional damages are not automatically
awarded in a class action.<span style="mso-spacerun: yes;"> </span>Rather, when
determining whether to award any additional damages, the Court will use the
same set of factors set forth in the FDCPA, which include “among other relevant
factors, the frequency and persistence of noncompliance by the debt buyer, the
nature of the noncompliance, the resources of the debt buyer, and the number of
persons adversely affected.”<span style="mso-spacerun: yes;"> </span><i>Id.</i>
at § 1788.62(d).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in 7.0in;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>Debt
buyers are entitled to raise the “bona fide error” defense, and they will have
no liability for a violation if they demonstrate “by a preponderance of evidence
that the violation was not intentional and resulted from a bona fide error, and
occurred notwithstanding the maintenance of procedures reasonably adopted to
avoid any error.”<span style="mso-spacerun: yes;"> </span><i>Id</i>. at §
1788.62(e).<span style="mso-spacerun: yes;"> </span>In addition, if the debt
buyer can prove that the debtor’s “prosecution of the action was not in good
faith” the debt buyer is entitled to recover its reasonable attorney’s
fees.<span style="mso-spacerun: yes;"> </span><i>Id</i>. at § 1788.62(c)(2). <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in 7.0in;">
<span style="font-size: 12pt;"><span style="mso-tab-count: 1;"> </span>Significantly,
the remedies provided in the Act are <u>not</u> cumulative of the FDCPA and
Rosenthal Act.<span style="mso-spacerun: yes;"> </span>The Act specifically
provides that if a debtor recovers in an action brought under the Rosenthal Act
or the FDCPA this “shall preclude recovery for the same acts in an action
brought under this title.”<span style="mso-spacerun: yes;"> </span><i>See</i>
Cal. Civ. Code § 1788.62(g).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in 6.0in 6.5in 7.0in;">
<span style="font-size: 12pt;"><o:p></o:p></span><br /></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com2tag:blogger.com,1999:blog-7881335399385517573.post-25471520630028738222013-02-05T14:02:00.000-08:002013-02-05T14:02:57.172-08:00Where’s The Beef? The FTC 2013 Report On Debt Buyers Contains Zero Evidence Of Debt Collection Abuses The FTC recently released its 162-page report entitled "<a href="http://bit.ly/UNUIpC" target="_blank">The Structure and Practices of the Debt Buying Industry</a>" which describes a comprehensive study conducted by the FTC over a three-year period using data obtained from the nation’s largest debt buyers. Many will view the Report as another chance to engage in debt buyer bashing, which has become a favorite pastime for mainstream media and consumer advocates. <br />
<br />
A close read of the Report, however, reveals that it contains absolutely zero evidence that any debt buyer has engaged in any of the headline-grabbing collection abuses that we always read about. There was no evidence presented that any of the debt buyers used inaccurate information when collecting debts, no evidence that they have sued or threatened to sue anyone on time-barred debts, and no evidence regarding the validity of any dispute raised by any consumer. When you finish reading the Report, you may be tempted to ask yourself: "Where’s The Beef??"<br />
<br />
• <b>No Evidence That Debt Buyers Use Inaccurate Information</b>. <br />
<br />
There is absolutely zero evidence contained in the Report that any debt buyer has purchased or used inaccurate data in the collection process. Indeed, the FTC expressly and repeatedly admits this at multiple places in the Report, making clear that it did <u>not</u> attempt to assess the accuracy of any of the data used by debt buyers. In the Introduction to the Report, for example, the FTC says: "Another limitation of the study is that the FTC did not directly assess the accuracy of the information that debt buyers used in collecting purchased debts or filing lawsuits on this debt." <i>See</i> Report at 2. <br />
<br />
Later, when discussing the purchase and sale agreements that are largely drafted by debt sellers, the FTC concedes the point again, stating: "As noted above, contracts commonly stated that debts were sold ‘as is and with all faults.’ However, <b>the fact that debts were generally sold ‘as is’ does not necessarily mean that errors or inaccuracies were or were not prevalent. The study did not test the accuracy of the information conveyed by debt sellers to debt buyers. </b> <b>Accordingly, the study does not permit any conclusions to be drawn as to the prevalence of errors or inaccuracies in debts generally sold ‘as is.’"</b> Report at 25 (emphasis added). <br />
<br />
When discussing the data that debt buyers receive from sellers, the FTC emphasized that the data provided absolutely no evidence that debt buyers obtained or used inaccurate information, stating: "The data the FTC obtained and analyzed, however, are subject to two important limitations. First, the data evaluated did not include information about debt collection litigation actions, and, <b>therefore, the Commission can neither make findings nor offer conclusions as to the sufficiency and accuracy of information debt buyers have or offer in connection with matters in litigation</b>. Second, the study<b> did not directly evaluate the accuracy of the information that debt buyers obtained </b>but instead focused on what types of information debt buyers obtained, as well as when and how they obtained it." Report at 34 (emphasis added).<br />
<br />
In other words, even though the FTC spent three years analyzing debt buyer data from thousands of portfolios containing nearly 90 million consumer accounts, the FTC Report does not identify a single instance where a debt buyer purchased or used inaccurate data. <br />
<br />
<b>No Evidence That Debt Buyers Sue Or Threaten To Sue On Time-Barred Debt</b> <br />
<br />
Although the FTC repeated its concern that "consumers will be subject to a default judgment on a time-barred debt" the Report itself provides zero evidence that this has occurred. None of the data supplied by the debt buyers established that they had threatened to file suit or had actually filed suit on debts after the statute of limitations expired. In fact, the FTC never asked the debt buyers to provide information on this point. This is expressly conceded in the Report, which states: "The information the FTC received in response to its 6(b) orders did not permit the agency to assess how often debt buyers filed actions in court to recover on debts that were beyond the statute of limitations or the effect of such actions on consumers." Report at 46. <br />
<br />
<b>No Evidence Of The Validity Of Any Consumer Dispute</b> <br />
<br />
The report makes much of the fact that there is a 3.2% consumer dispute rate on debt buyer accounts, which translates into one million disputes per year. But the FTC did not perform any type of qualitative analysis of those disputes in order to determine whether they had any merit. Consumers who actually owe their debts may dispute them for a variety of reasons, including because they do not remember the account, they do not recognize the name of the debt buyer, they have ignored the power of compounding interest, or because the cannot pay or simply want to delay paying debts that they know they owe. Thus, although the Report tracks the dispute rate, it says nothing about whether any of the consumers do, or do not, owe the amount that the debt buyers were seeking to collect. And, as previously noted, the Report could not make this type of assessment, because it made no attempt to determine if the debt buyers’ data about what was owed was accurate or inaccurate. <br />
<br />
The FTC Report actually includes a few passages that are helpful to debt buyers. For example, the FTC acknowledges the important role that debt collection plays in the economy, stating: "Like other contracts, credit contracts are of little value if the parties cannot enforce them. . . . Debt collection reduces the amounts that creditors lose from debts, both directly (by collecting on the debts) and indirectly (by making it more likely that consumers will incur debt only if they can and will repay it). By reducing the losses that creditors incur in providing credit, debt collection also allows creditors to provide more credit at lower prices – that is, at lower interest rates." Report at 11. <br />
<br />
In addition, although media reports often emphasize that debt buyers pay "pennies on the dollar" for the accounts, suggesting they must make super-competitive profits, the Report points out the fallacy of this logic. The debt buyers paid on average 4 cents a dollar for the accounts that were analyzed for the Report, but the FTC noted these prices do not guarantee high profits, stating: "It is important to note, however, that although the price paid by debt buyers for debts is low relative to their face value, it does not necessarily follow that the profit from collecting on those debts will be high. First, debt buyers do not recover the face value of all of the debts that they purchase. Debt buyers typically do not attempt collections on all accounts they purchase, do not usually realize recoveries on every account for which collections are attempted, and do not typically recover the full face value on accounts for which they do realize recoveries. Second, debt buyers, like any other debt collectors, also incur substantial costs in collecting on debts." Report at 23. <br />
<br />
The FTC Report should be read and understood in its proper context. It simply does not provide any evidence that any debt buyer has engaged in any improper collection practices.
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</script>Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com0tag:blogger.com,1999:blog-7881335399385517573.post-54357758841142561822012-12-12T06:28:00.000-08:002012-12-12T06:28:05.920-08:00Fighting FDCPA Class Actions: Challenging The Adequacy Of The Class Representative
<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">The number
of class actions filed against the credit and collection industry continues to
rise, and FDCPA class actions remains a favorite among consumer attorneys.<span style="mso-spacerun: yes;"> </span>Although it is easy for a consumer to file a
class action, getting a class certified is no walk in the park.<span style="mso-spacerun: yes;"> </span>The consumer bears the burden of proving that
all of the requirements of Rule 23 of the Federal Rules of Civil Procedure have
been satisfied, and this includes proving that they are an adequate class
representative.<span style="mso-spacerun: yes;"> </span>When faced with an FDCPA
class action, collectors should not overlook potential challenges to the class
representative.<span style="mso-spacerun: yes;"> </span>An early and thorough
assessment of the named plaintiff in an FDCPA class action could provide a key
to your defense.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><o:p> </o:p></span><span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">Before focusing on the adequacy
requirement, here’s a brief overview of the standards governing class
actions.<span style="mso-spacerun: yes;"> </span>Remember that when a motion for
class certification is filed, the consumer has the burden of proof.<span style="mso-spacerun: yes;"> </span>The Court must deny the motion unless the
consumer can provide evidence to satisfy all four elements of Rule 23(a) of the
Federal Rules of Civil Procedure, and at least one of the subsections of Rule
23(b).<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See Amchem Prods., Inc. v. Windsor</i>, 521 U.S. 591, 614 (1997).<span style="mso-spacerun: yes;"> </span>The consumer has the burden of “affirmatively
demonstrat[ing] compliance with the four prerequisites of Rule 23(a).”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Bennett
v. Nucor Corp.</i>, 656 F.3d 802, 814 (8th Cir. 2011).<span style="mso-spacerun: yes;"> </span>The consumer’s adequacy to serve as class
representative is one of the four requirements of Rule 23(a). <o:p></o:p></span></div>
<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span><o:p></o:p></span><br />
<br />
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<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">Experienced consumer attorneys often
have a standard motion for class certification that they use in every
case.<span style="mso-spacerun: yes;"> </span>But the court cannot simply rubber
stamp a consumer’s motion and certify the class.<span style="mso-spacerun: yes;"> </span>The Supreme Court has held that no class may
be certified until the district court conducts a “rigorous analysis” of the
evidence to determine if it supports each element of Rule 23.<i style="mso-bidi-font-style: normal;"><span style="mso-spacerun: yes;"> </span>See
General Tel. Co. Of Southwest v. Falcon</i>, 457 U.S. 147, 161 (1982)
(reversing certification order: class action “may only be certified if the
trial court is satisfied, after a rigorous analysis, that the prerequisites of
Rule 23(a) have been satisfied.”); <i style="mso-bidi-font-style: normal;">see
also Zinser v. Accufix Research Institute, Inc</i>., 253 F.3d 1180, 1186 (9th
Cir. 2001) (affirming denial of certification:<span style="mso-spacerun: yes;">
</span>“Before certifying a class, the trial court must conduct a ‘rigorous
analysis’ to determine whether the party seeking certification has met the
prerequisites of Rule 23. (citation).”); <i style="mso-bidi-font-style: normal;">Avritt
v. Reliastar Life Ins. Co.</i>, 615 F.3d 1023, 1029 (8th Cir. 2010) (affirming
denial of certification:<span style="mso-spacerun: yes;"> </span>“In making its
determination, the district court must undertake a ‘rigorous analysis’ that
includes examination of what the parties would be required to prove at
trial.”).<o:p></o:p></span></div>
<br />
<br />
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<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">Consumer attorneys often argue that
the merits of their claim should not be considered in the context of a motion
for class certification.<span style="mso-spacerun: yes;"> </span>But the Supreme
Court has recognized that the “class determination generally involves
considerations that are enmeshed in the factual and legal issues comprising the
plaintiff’s cause of action,” and that “sometimes it may be necessary for the court
to probe behind the pleadings before coming to rest on the certification
question.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Falcon</i>, 457 U.S. at 160 (citations omitted).<span style="mso-spacerun: yes;"> </span>The Supreme Court recently reiterated this
point, and emphasized that “Rule 23 does not set forth a mere pleading standard,”
but rather, “[a] party seeking class certification must affirmatively
demonstrate his compliance with the Rule – that is, he must be prepared to
prove that there are <i style="mso-bidi-font-style: normal;">in fact</i>
sufficiently numerous parties, common questions of law or fact, etc.”<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Wal-Mart
Stores, Inc. v. Dukes</i>, 131 S. Ct. 2541, 2550-52 (2011) (citation
omitted).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><o:p> </o:p></span><br />
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><span style="mso-tab-count: 1;"> </span></span></b><span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">With this
background, let’s focus on the adequacy requirement more specifically.<span style="mso-spacerun: yes;"> </span>What exactly does it take to be an adequate
class representative?<span style="mso-spacerun: yes;"> </span>Rule 23(a)(4) of
the Federal Rules of Civil Procedure provides that a consumer must show “that
the representative parties will fairly and adequately protect the interests of
the class.”<span style="mso-spacerun: yes;"> </span>What does this mean?<span style="mso-spacerun: yes;"> </span>The Supreme Court has held that the adequacy
analysis of Rule 23(a) “serves to uncover conflicts of interest between named
parties and the class they seek to represent.” <i style="mso-bidi-font-style: normal;">Amchem Prods., Inc.</i>, 521 U.S. at 625.<span style="mso-spacerun: yes;"> </span>For this reason, a court should deny
certification if the named class representative is subject to a unique defense
that may distract from the litigation.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See Hanon v. DataProds. Corp.</i>, 976 F.2d
497, 508 (9th Cir. 1992) (denying class certification; “Hanon’s unique
background and factual situation require him to prepare to meet defenses that
are not typical of the defenses which may be raised against other members of
the proposed class.”).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span><br />
<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><o:p> </o:p></span><br />
<div class="MsoNormal" style="line-height: 200%; margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><o:p></o:p></span><span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">Thus, collectors should seek to
develop facts during discovery that show that the class representative may be
subject to a unique defense.<span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">See, e.g., Beck v. Maximus, Inc</i>., 457
F.3d 291, 300 (3d Cir. 2006) (reversing order certifying FDCPA class; remanding
to determine if class representative was adequate in light of potential bona
fide error defense).<o:p></o:p></span></div>
<br />
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<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">What about a consumer that cannot
remember anything during their deposition?<span style="mso-spacerun: yes;">
</span>Or a consumer with poor credibility?<span style="mso-spacerun: yes;">
</span>They will not make a strong class representative.<span style="mso-spacerun: yes;"> </span>Courts have denied certification in FDCPA
actions where the class representative lacks credibility or has a bad memory.<i style="mso-bidi-font-style: normal;"><span style="mso-spacerun: yes;"> </span>See,
e.g., Savino v. Computer Credit, Inc.</i>, 164 F.3d 81, 87 (2d Cir. 1998)
(FDCPA class representative not credible: “The fact that Savino offered
differing accounts about the letters that form the very basis for his lawsuit
surely would create serious concerns as to his credibility at any trial.”);<i style="mso-bidi-font-style: normal;"> Dotson v. Portfolio Recovery Assocs., LLC</i>,
2009 WL 1559813, **3-4 (E.D. Pa. June 3, 2009) (FDCPA plaintiff gave false
testimony and had a bad memory: “Because plaintiff is unable to provide
credible testimony, he cannot adequately protect the interests of absent
members of the proposed class.”).<o:p></o:p></span></div>
<br />
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<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;"><span style="mso-tab-count: 1;">H</span>ow about a consumer who does not
know what claims she is pursuing and has no idea what is happening in the
litigation?<span style="mso-spacerun: yes;"> </span>She won’t make a good class
representative either.<span style="mso-spacerun: yes;"> </span>Courts have
denied certification where the class representative is not familiar with the
claims asserted, has not been actively involved in the litigation, or has
delegated the entire case to their attorneys for handling. <i style="mso-bidi-font-style: normal;">See, e.g., Levine v. Berg</i>, 79 F.R.D. 95, 98 (S.D.N.Y. 1978)
(“Plaintiff's deposition testimony reveals an alarming adversity to unearthing
the facts relevant to her claim, as well as a total reliance on her counsel, to
whom she ‘gave . . . the case and . . . figured whatever he had to do, he
did.’”);<i style="mso-bidi-font-style: normal;"> Burkhalter Travel Agency v. MacFarms
Int’l, Inc.</i>, 141 F.R.D. 144, 154 (N.D. Cal. 1991) (class representative
could not identify defendants and was unfamiliar with scope of class he
represented: “As plaintiff’s counsel would be acting on behalf of an
essentially unknowledgeable client, certifying a class with Specialty as its
representative would risk a denial of due process to the absent class
members.”);<i style="mso-bidi-font-style: normal;"> Efros v. Nationwide Corp.</i>,
98 F.R.D. 703, 707-08 (S.D. Ohio 1983) (plaintiff gave “unfettered discretion”
to her attorneys and her deposition revealed “glaring lack of familiarity with
the facts of this litigation”); <i style="mso-bidi-font-style: normal;">Lubin v.
Sybedon Corp</i>. 688 F. Supp. 1425, 1462 (S.D. Cal. 1988) (class
representative’s unfamiliarity with case was “alarming” where he testified, <i style="mso-bidi-font-style: normal;">inter alia</i>, that “he had never read or
seen either the original complaint or the amended complaint, that he did not
even recognize the names of many of the defendants, [and] that he
misunderstands the nature of the complaint’s fraud allegations”); <i style="mso-bidi-font-style: normal;">Kelly v. Mid-America Racing Stables, Inc</i>.,
139 F.R.D. 405, 409 (W.D. Ok. 1990) (“these plaintiffs are inadequate
representatives because of their almost total lack of familiarity with the
facts of their case. Indeed, what the plaintiffs know appears to come entirely
from their counsel.”). <o:p></o:p></span></div>
<br />
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<span style="font-size: 13pt; line-height: 200%; mso-bidi-font-size: 10.0pt;">In sum, do not assume that the
consumer who has sued you can adequately represent the class.<span style="mso-spacerun: yes;"> </span>Collectors faced with FDCPA class actions
should conduct an early and continuing assessment of whether the case can meet
all of the requirements of Rule 23.<span style="mso-spacerun: yes;"> </span>During
this process, they should not forget to develop evidence relating to the
adequacy of the class representative.<span style="mso-spacerun: yes;">
</span>Not everyone will qualify.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
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<o:p> </o:p></div>
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<span style="mso-tab-count: 1;"> </span><o:p></o:p></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com0tag:blogger.com,1999:blog-7881335399385517573.post-11308864114741546012012-08-16T07:18:00.000-07:002012-08-16T07:18:20.218-07:00The CFPB's Plans For The Collection Industry<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">If you are a collection professional working
for a creditor, debt buyer, collection agency or collection law firm, and you
have not yet added the website for the </span><a href="http://www.consumerfinance.gov/"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: blue;">Consumer Financial Protection Bureau (CFPB)</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> to the favorites on
your web browser, it is high time that you do so.<span style="mso-spacerun: yes;"> </span>The CFPB has been publishing lots of
information this year, and has laid out some details of how it plans to
directly or indirectly regulate virtually all aspects of the collection
industry.<span style="mso-spacerun: yes;"> </span>This article is hardly
comprehensive, but here are a few highlights.<o:p></o:p></span></div>
<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">On February 17, 2012, the CFPB published its </span><a href="https://www.federalregister.gov/articles/2012/02/17/2012-3775/defining-larger-participants-in-certain-consumer-financial-product-and-service-markets"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: blue;">Proposed Rule
Defining Larger Participants in Certain Consumer Financial Product and Service
Markets</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">.<span style="mso-spacerun: yes;"> </span>Entities in the debt collection market that
generate $10 million in annual receipts from consumer collection activities
would be deemed a “larger participant” in the market.<span style="mso-spacerun: yes;"> </span>This “larger participant” designation would subject
those entities to direct supervision by the CFPB.<span style="mso-spacerun: yes;"> </span>The Bureau estimated that approximately 175
collection entities would qualify as “larger participant” under the Proposed
Rule.<span style="mso-spacerun: yes;"> </span>As of the date of this writing,
the CFPB has not published a Final Rule relating to larger participants in the
debt collection market.<span style="mso-spacerun: yes;"> </span>If your company
does not meet the $10 million “larger participant” threshold, however, you
should not feel left out in the cold.<span style="mso-spacerun: yes;">
</span>The CFPB has several other methods that it plans to employ to supervise or
otherwise regulate members of the collection industry, and some of them are
discussed below. <o:p></o:p></span></div>
<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">On March 20, 2012, the CFPB issued its first </span><a href="http://www.consumerfinance.gov/reports/fair-debt-collection-practices-act/"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: blue;">Annual Report to
Congress on the Fair Debt Collection Practices Act.</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>In it, the CFPB explains that it now has
primarily responsibility for administering the FDCPA, including rulemaking and
supervisory authority, and that it now shares overall enforcement authority
with the FTC and other federal agencies.<span style="mso-spacerun: yes;">
</span>The CFPB emphasizes its belief that “consumer complaint data provides
useful insight into the acts and practices of debt collectors” and that it will
continue the FTC’s practice of gathering consumer complaints about members of
the collection industry through its website, via telephone, mail, faxes and by
referral from other agencies.<o:p></o:p></span></div>
<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">On April 13, 2012, the CFPB released its </span><a href="http://files.consumerfinance.gov/f/201204_cfpb_bulletin_service-providers.pdf"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: blue;">Bulletin 2012-03
relating to Service Providers</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">. <span style="mso-spacerun: yes;"> </span>In
it, the CFPB explains its position that it not only has the power to supervise
and examine banks and non-banks, but it also may supervise and examine “service
providers” for those entities.<span style="mso-spacerun: yes;"> </span>A
“service provider” is any entity that “provides a material service to a covered
person in connection with the offering or provision by that person of a
consumer financial product or service.”<span style="mso-spacerun: yes;">
</span>It therefore appears that the CFPB believes that it has the power to
supervise and examine virtually any entity operating in the consumer collection
industry.<span style="mso-spacerun: yes;"> </span>In addition, the CFPB makes
clear in the Bulletin that it expects all supervised banks and nonbanks to
ensure that their service providers implement effective processes to comply
with all statutes and regulations governing the collection process to avoid
unwarranted risks to consumers.<span style="mso-spacerun: yes;"> </span>Thus,
the CFPB expects supervised entities to conduct due diligence on all service
providers to ensure they understand and can comply with the laws, to review the
compliance policies and procedures used by their service providers and their
training and oversight practices, to include contractual provisions with
service providers designed to ensure compliance, to establish monitoring
processes designed to determine compliance by service providers, and to take
prompt action, including termination, to address any problems identified by the
monitoring process.<o:p></o:p></span></div>
<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">On May 25, 2012, the CFPB published its </span><a href="https://www.federalregister.gov/articles/2012/05/25/2012-12718/procedural-rules-to-establish-supervisory-authority-over-certain-nonbank-covered-persons-based-on"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: blue;">Proposed Procedural
Rules to Establish Supervisory Authority Over Certain Nonbank Covered Persons
Based on Risk Determination</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">.<span style="mso-spacerun: yes;"> </span>Here, the CFPB
sets out the method by which it will supervise any nonbank covered person who
the Bureau has reasonable cause to believe “is engaging, or has engaged, in
conduct that poses risks to consumers” in connection with consumer financial
products or services.<span style="mso-spacerun: yes;"> </span>Generally
speaking, the CFPB will serve the company with a notice explaining why it has
reasonable cause to believe the company presents a risk to consumers.<span style="mso-spacerun: yes;"> </span>If the company disagrees, it will have 20
days to file a written response under penalty of perjury explaining why it
feels the CFPB is mistaken and why it should not be subject to
supervision.<span style="mso-spacerun: yes;"> </span>The response must be
accompanied by all records and documents that support the company’s position.<span style="mso-spacerun: yes;"> </span>The company may also make a request for the
opportunity to supplement that response verbally.<span style="mso-spacerun: yes;"> </span>In the alternative, the company can simply
agree to consent to supervision by the CFPB.<span style="mso-spacerun: yes;">
</span>It seems clear that the consumer complaints that the CFPB plans to
compile concerning members of the collection industry will be the genesis for
the CFPB’s determination of its “reasonable cause to believe” that an entity
presents risks to consumers.<o:p></o:p></span></div>
<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">If you have been worried about how your
attorney-client privileged documents are going to be handled when the CFPB has
arrived, keep worrying.<span style="mso-spacerun: yes;"> </span>On July 5, 2012,
the CFPB issued its </span><a href="https://www.federalregister.gov/articles/2012/07/05/2012-16247/confidential-treatment-of-privileged-information"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: blue;">Final Rule on
Confidential Treatment of Privileged Information</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">.<span style="mso-spacerun: yes;"> </span>In it, the CFPB makes clear that if it asks a
supervised or regulated entity for documents or information – even if it “may
be subject to one or more statutory or common law privileges, including the
attorney-client privilege and attorney work product protection” – it will
expect the documents and information to be produced.<span style="mso-spacerun: yes;"> </span>The CFPB claims that you should not worry
about this, however, because in its opinion, giving privileged documents and
information to the CFPB will not result in a waiver of the attorney-client
privilege.<span style="mso-spacerun: yes;"> </span>It is unclear whether the
CFPB is correct on this point, however, and legislation designed to clarify the
issue has not been passed as of the date of this writing. <span style="mso-spacerun: yes;"> </span>The CFPB also states that it will not
“routinely” share the confidential information it gets from you with law
enforcement agencies, including State Attorneys General, but that it reserves
the right to do so in some circumstances.<o:p></o:p></span></div>
<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">It should be clear that debt collection will
be a major focus of the CFPB now that the agency is up and running.<span style="mso-spacerun: yes;"> </span>Collection professionals should watch for
more CFPB rules, guidance, enforcement actions and other developments in the
coming months.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com0tag:blogger.com,1999:blog-7881335399385517573.post-48562360982161636322012-06-09T08:45:00.001-07:002012-06-09T09:03:15.180-07:00Only "Material" Disputes Support A Claim Under Section 1692e(8) Of The FDCPA<span style="font-size: medium;"> When a consumer disputes their debt, an accepted and conservative practice is for the data furnisher to promptly report the dispute to the consumer reporting agencies. But under what circumstances will the failure to report a dispute give rise to a violation of section 1692e(8) of the FDCPA? For example, what if a consumer or their attorney simply calls or writes and states "I dispute this" without providing the collector with any substantive information regarding the basis for the dispute? Does the collector violate section 1692e(8) if it fails to report that "dispute" to the consumer reporting agencies? The answer must be "no." Where a consumer has not identified any legitimate basis for disputing their responsibility for the debt as reported by the collector, a blanket statement that they "dispute" the debt, without more, is not sufficient to support a section 1692e(8) claim. </span><br />
<span style="font-size: medium;">
</span><br />
<span style="font-size: medium;"> The FDCPA is sometimes referred to as a "strict liability" statute, but this is not entirely true. There are a number of provisions of the Act – and section 1692e(8) is one of them – which require a consumer to provide evidence of knowledge or intent by the collector. Section 1692e(8) prohibits a collector from communicating or threatening to communicate false credit information to any person, but only where the collector <u>knows</u> or <u>should</u> <u>know</u> that the credit information is false. <i>See</i> 15 U.S.C. § 1692e(8) (prohibits the collector from: "Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed."). <br />
<br />
The <u>knowing</u> failure to communicate that a "disputed" debt is disputed is a violation of section 1692e(8). <i>Id; see also Brady v. The Credit Recovery Co.</i>, 160 F.3d 64, 67 (1st Cir. 1998) (section 1692e(8) "requires a debt collector who <b>knows or should know </b>that a given debt is disputed to disclose its disputed status to persons inquiring about a consumer's credit history.") (emphasis added); <i>Sunga v. Rees Broome</i>, 2010 WL 1138319, *4 (E.D. Va. Mar.18, 2010) (dismissing section 1692e(8) claim: "Under the express terms of § 1692e(8), Plaintiff must allege sufficient factual allegations supporting the finding that Defendant knew or should have known that the debt amount as stated in the demand letter was false."). <br />
<br />
Thus, if the collector knows that the debt is subject to a true "dispute" it may not knowingly transmit "false" credit information about the debt to consumer reporting agencies. But what exactly would make the credit information "false" within the meaning of the FDCPA? We know that not all "false" statements by a collector will violate the FDCPA. To the contrary, courts around the country have recognized that an allegedly false or misleading statement does <u>not</u> violate the FDCPA unless the statement is "material." <i> See, e.g., Donohue v. Quick Collect, Inc.</i>, 592 F.3d 1027, 1033-34 (9th Cir. 2010) (no violation of sections 1692e and 1692f of the FDCPA where collection complaint sought correct amount of debt, even though the elements comprising the total were not accurately described)<i>; Hahn v. Triumph Partnerships LLC</i>, 557 F.3d 755, 757-58 (7th Cir. 2009) (letter that accurately stated total amount due did not violate sections 1692e or e(2) of the FDCPA: "The statute is designed to provide information that helps consumers to choose intelligently, and by definition immaterial information neither contributes to that objective (if the statement is correct) nor undermines it (if the statement is incorrect)."); <i>Wahl v. Midland Credit Mgmt., Inc</i>., 556 F.3d 643, 646 (7th Cir. 2009) (letter describing debt, which included interest applied by original creditor, as the "principal" amount owed to collector did not violate section 1692e: "If a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA - even if it is false in some technical sense."); <i>Miller v. Javitch, Block & Rathbone</i>, 561 F.3d 588, 596 (6th Cir. 2009) (collection complaint that described an unpaid credit card debt as "money loaned" did not violate section 1692e); <i>Peters v. General Serv. Bureau, Inc.</i>, 277 F.3d 1051, 1055-56 (8th Cir. 2002) (even "literally false" statements may not violate the Act, if they are merely "susceptible of an ingenious misreading.").<br />
<br />
</span><span style="font-size: medium;">Thus, if the collector accurately reports the amount of the debt, the failure to report an unsubstantiated dispute made by the consumer is not "material" and does not violate section 1692e(8). A "material" misstatement is one that is "genuinely misleading." <i> Donohue</i>, 592 F.3d at 1034. As the Ninth Circuit has made clear, "In assessing FDCPA liability, <b>we are not concerned with mere technical falsehoods that mislead no one, </b>but instead with genuinely misleading statements that may frustrate a consumer’s ability to intelligently choose his or her response." <i>Donohue</i>, 592 F.3d at 1034 (emphasis added). </span><br />
<span style="font-size: medium;">
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The consumer must provide the collector with information showing they have a legitimate, good faith dispute concerning the amount of the debt as reported to the consumer reporting agencies. If the consumer does so, the collector’s subsequent failure to report the dispute to the consumer reporting agencies may be knowingly and "materially" false in violation of section 1692e(8). By contrast, if the consumer has not provided information showing that they have a meritorious dispute, then the collector’s failure to subsequently report the debt as "disputed" would be, at best, a "mere technical falsehood" that does not violate the FDCPA.<i> Donohue</i>, 592 F.3d at 1034 <br />
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This reading of section 1692e(8) of the FDCPA is completely consistent with cases interpreting the Fair Credit Reporting Act ("FCRA"). For example, in <i>Gorman v. Wolpoff & Abramson</i>, 584 F.3d 1147, 1163 (9th Cir. 2009), the Ninth Circuit held that a furnisher’s failure to report a "meritless dispute" to a consumer reporting agency would <u>not</u> violate section 1681s-2(b) of the FCRA. To prevail under section 1681s-2(b), a consumer must show that the failure to report the dispute was "misleading in such a way and to such and extent that it can be expected to adversely affect credit decisions." <i>Id</i>. (citations, quotation marks omitted). Only a "material" or "bona fide" dispute by a consumer about their debt can support a valid claim for relief. The <em>Gorman</em> Court stated: <br />
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<b>In other words, a furnisher does not report "incomplete or inaccurate" information within the meaning of § 1681s-2(b) simply by failing to report a meritless dispute, because reporting an actual debt without noting that it is disputed is unlikely to be materially misleading. It is the failure to report a bona fide dispute, a dispute that could materially alter how the reported debt is understood, that gives rise to a furnisher's liability under § 1681s-2(b).</b><br />
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<i></i>The holding in <i>Gorman</i> dovetails with decisions of courts around the country which have also required consumers to prove a material dispute in order to prevail under section 1681s-2(b) of the FCRA. <i>See</i> <i>Chiang v. Verizon New England Inc.</i>, 595 F.3d 26, 37-38 (1st Cir. 2010) (affirming judgment for furnisher on section 1681s-2(b) claim where consumer failed to prove "actual inaccuracy" in credit report); <i>Noel v. First Premier Bank</i>, 2012 WL 832992, *10 (M.D. Pa. March 12, 2012) (granting motion to dismiss consumer’s section 1681s-2(b) claim because "absent a bona fide dispute, Defendant had no obligation to mark the account disputed"); <i>Saunders v. Branch Banking & Trust Co. of Va.</i>, 526 F.3d 142, 150 (4th Cir. 2008) (affirming jury verdict for consumer where reporting of the debt without mention of the consumer’s dispute might have been "misleading in such a way and to such an extent that it can be expected to have an adverse effect.").<br />
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There is no reason to believe that Congress wanted a consumer "dispute" to be treated one way under the FCRA and another way under the FDCPA. Under the FCRA, a collector may deem a dispute to be "frivolous or irrelevant" if the consumer fails to provide the collector with sufficient information to investigate. <i>See</i> 15 U.S.C. § 1681s–2 (a)(8)(F)(i)(I); 16 C.F.R. § 660.4(f). The same standard must hold true under the FDCPA. At the <i>Noel</i> Court observed, "Rather than being fair and equitable to the consumer, a system which allows a consumer to inflate his credit score and thus derive a benefit from filing a frivolous dispute allows the consumer to do an end-run on the purpose of the statutory scheme." <i>Noel</i>, 2012 WL 832992, *7 (citation omitted). <br />
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In sum, to prevail on a claim under section 1692e(8) of the FDCPA, the consumer must prove the collector knew or should have known that it was reporting "false" credit information. The "false" information must be "materially" false, meaning that it is inaccurate in a way that could have an improper adverse effect on the consumer. If the consumer has not provided the collector with specific information demonstrating that they have a bona fide dispute about the amount the collector is reporting to the consumer reporting agencies, then the collector’s subsequent failure to report the account as "disputed" is not knowingly false and does not support a section 1692e(8) claim.</span><br />
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</script>Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com2tag:blogger.com,1999:blog-7881335399385517573.post-68598975362045947372012-02-20T06:17:00.000-08:002012-02-20T06:17:29.450-08:00Can The CFPB Make Debt Collectors Reveal Their Attorney-Client Privileged Documents?Does the Consumer Financial Protection Bureau (CFPB) have the power to tell debt collectors to turn over their attorney-client privileged communications? The answer may depend on who you ask. The CFPB claims to have the right to obtain privileged documents from all “supervised institutions” as well as from any “service provider” (such as a law firm or collection agency) who performs material services for a supervised institution. Thus, the Bureau effectively believes it can obtain the privileged documents of any debt collector in the country. Really? <br />
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Lets look at what the CFPB has said about this. In January 2012, the CFPB issued guidance concerning its plans to collect information from the institutions it will supervise. The Bureau said it will not allow supervised institutions to refuse to produce documents to it on the grounds that they contain information covered by the attorney-client privilege. <i>See</i> CFPB Bulletin 12-01 <a href="http://1.usa.gov/y551lH">http://1.usa.gov/y551lH</a> According to the CFPB, reviewing privileged documents can be “efficient” – in fact it “may often be the most efficient means for a supervisor to assess and understand an issue” – so the Bureau will feel free to request privileged materials from supervised institutions “as appropriate.” <i>Id</i>. According to the CFPB, you should not worry about this, because if you turn over your privileged information to the Bureau, this will not result in a waiver of the attorney-client privilege. <i>Id</i>. Don’t you find that comforting?<br />
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Are debt collectors expected to seek candid legal advice about how to comply with the FDCPA and other consumer protection laws, only to find that their attorney’s privileged communications will be turned over to the CFPB? Regardless of how you might feel about debt collectors, the attorney-client privilege is not something that federal regulators should be allowed to trample on. <br />
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The Supreme Court has repeatedly recognized that the attorney-client privilege is essential to the proper functioning of our system of justice, noting that it is “the oldest of the privileges for confidential communications known to the common law.” <i>See Upjohn Co. v. United States</i>, 449 U.S. 383, 389 (1981). The purpose of the privilege is to promote compliance with the law, <i>i.e., </i>“to encourage full and frank communication between attorneys and their clients, and thereby promote broader public interests in the observance of law and administration of justice.” <i>Id.</i> The privilege simply will not work unless the client and the lawyer can be certain that their communications will not be disclosed. <i>See, e.g., Hunt v. Blackburn</i>, 128 U.S. 464, 470 (1888) (noting that the privilege “is founded upon the necessity, in the interest and administration of justice, of the aid of persons having knowledge of the law and skilled in its practice, which assistance can only be safely and readily availed of when free from the consequences or the apprehension of disclosure.”).<br />
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Why should debt collectors care about the CFPB’s desire to obtain privileged documents? After all, those “supervised institutions” regulated by the CFPB are just the really huge banks, mortgage companies, and securities firms, right? Wrong. The CFPB recently issued a proposed rule to define “larger participants” in the market for consumer debt collection, <i>i.e., </i>the entities who will be subject to the Bureau’s supervisory powers. <i>See</i> Docket No. CFPB-2012-0005 <a href="http://1.usa.gov/A6C2Bs">http://1.usa.gov/A6C2Bs</a> The CFPB wants a “larger participant” to be any consumer debt collector who has more than $10 million in “annual receipts.” <i>Id</i>. The Bureau estimates that this will bring approximately 175 entities, or the largest 4 percent of consumer collection firms, within the definition. <i>Id</i>. <br />
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So this means that the other 96 percent of consumer debt collection companies can just ignore this and go back to sleep, right? Wrong. The CFPB made a point of stating, in footnote 4 of its discussion about the proposed rule, that its supervisory authority also extends to “service providers” of any covered entity. <i>Id</i>. The Bureau states: “Service providers to consumer debt collectors and consumer reporting agencies may include firms such as data aggregators, law firms, data and record suppliers, account maintenance services, call centers, software providers, and developers of credit scoring algorithms.” <i>Id</i>. <br />
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Surely collection law firms should not be concerned about the CFPB coming after their client’s privileged documents, right? Wrong again. The Bureau specifically noted that plans to exercise supervisory authority over collection law firms. <i>Id</i>. The Bureau’s summary of the proposed rule regarding “larger participants” states: “Collection attorneys and law firms also play a key role in the consumer debt collection market. They sometimes are the primary (or only) debt collector with which the consumer will interact. . . . By one estimate, approximately one in 20 delinquent accounts gets referred to a law firm that specializes in debt collection.” <i>Id.</i> <br />
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What is an attorney supposed to do if the CFPB comes knocking, asking for their clients’ privileged documents? The attorney likely has an ethical duty to resist the Bureau's request. In fact, Rule 1-6 of the American Bar Association’s Model Rules of Professional Conduct, which has been adopted by virtually every state, provides that a lawyer must not reveal information relating to the representation of a client, unless the client gives informed consent. This make sense, because the attorney-client privilege is completely worthless unless the attorney and the client can depend on confidential information <b>remaining</b> confidential. <i>See, e.g., Upjohn</i>, 449 U.S. at 393 (“if the purpose of the attorney-client privilege is to be served, the attorney and client must be able to predict with some degree of certainty whether particular discussions will be protected. An uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all.”). <br />
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The CFPB has no business regulating the practice of law, nor should it interfere with the attorney-client privilege. The regulation of the practice of law is a job for the states and the courts, not the agencies of the federal government. <i>See, e.g., American Bar Association v. Federal Trade Commission</i>, 430 F.3d 457,471 (D.C. Cir. 2005) (“It is undisputed that the regulation of the practice of law is traditionally the province of the states. Federal law may not be interpreted to reach into areas of State sovereignty unless the language of the federal law compels the intrusion.”) (citations omitted); <i>Leis v. Flynt</i>, 439 U.S. 438, 442 (1979) (“Since the founding of the Republic, the licensing and regulation of lawyers has been left exclusively to the States and the District of Columbia within their respective jurisdictions. The States prescribe the qualifications for admission to practice and the standards of professional conduct. They also are responsible for the discipline of lawyers.”).<br />
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If the CFPB wants to encourage compliance with the laws while advancing its consumer protection goals, it should do so without infringing upon the attorney-client privilege of the debt collectors that it regulates. The Supreme Court has recognized that the attorney-client privilege should be read broadly, because a narrow view of the privilege “not only makes it difficult for corporate attorneys to formulate sound advice when their client is faced with a specific legal problem, but also threatens to limit the valuable efforts of corporate counsel to ensure their client's compliance with the law. In light of the vast and complicated array of regulatory legislation confronting the modern corporation, corporations, unlike most individuals, constantly go to lawyers to find out how to obey the law, particularly since compliance with the law in this area is hardly an instinctive matter.” <i>See Upjohn</i>, 449 U.S. at 392 (citations omitted). The CFPB can hardly expect debt collectors to seek out candid legal advice about compliance when the Bureau reserves the right to examine all privileged communications as part of its supervisory powers. <br />
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</script>Tomio Naritahttp://www.blogger.com/profile/14214037190651923280noreply@blogger.com1tag:blogger.com,1999:blog-7881335399385517573.post-77383911634189678702012-01-28T12:03:00.000-08:002012-01-28T12:03:52.675-08:00The Limits On Direct And Vicarious Liability Under The FDCPAConsumers and their attorneys are constantly seeking to expand the pool of potential FDCPA defendants using principles of vicarious liability. Debt buyers are being sued based on the conduct of their agencies and law firms. Lawyers and agency owners are being sued based on the conduct of their clients and their collectors. Even original creditors, who are not subject to the FDCPA, are being drawn into FDCPA litigation under various theories of recovery. What are the limits of vicarious liability under the FDCPA? How can debt collectors avoid liability for the conduct of others?<br />
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<b>Limits on Direct Liability<br />
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Before examining vicarious liability under the FDCPA, it is important to remember that Congress significantly limited the scope of direct liability under the Act. For example, generally speaking, the Act applies only to “debt collectors” who regularly attempt to collect debts that are “due another.” For this reason, original creditors are not subject to the FDCPA (except in very limited circumstances). <i>See, e.g., Perry v. Stewart Title Co.</i>, 756 F.2d 1197, 1208 (5th Cir.1985) ( The legislative history of section 1692a(6) indicates conclusively that a debt collector does not include the consumer's creditors . . . or an assignee of a debt, as long as the debt was not in default at the time it was assigned.”). Because original creditors are not subject to the FDCPA, courts have recognized they may not be held vicariously liable for the FDCPA violations of the debt collectors they retain. <i>See Wadlington v. Credit Acceptance Corp.</i>, 76 F.3d 103, 108 (6th Cir. 1996) (assignee of auto loan not vicariously liable for FDCPA violations of its attorneys: “We do not think it would accord with the intent of Congress, as manifested in the terms of the Act, for a company that is not a debt collector to be held vicariously liable for a collection suit filing that violates the Act only because the filing attorney is a ‘debt collector.’”).<br />
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Courts have recognized that shareholders, officers or employees of a corporate debt collector may not be directly liable under the FDCPA, unless the plaintiff can meet the strict requirements necessary to pierce the corporate veil. <i>See, e.g., White v. Goodman</i>, 200 F.3d 1016, 1019 (7th Cir. 2000) (FDCPA claim filed against shareholder of agency was frivolous: “The Fair Debt Collection Practices Act is not aimed at the shareholders of debt collectors operating in the corporate form unless some basis is shown for piercing the corporate veil, which was not attempted here.”) (citation omitted); <i>Pettit v. Retrieval Masters Creditor Bureau, Inc.</i>, 211 F.3d 1057 (7th Cir. 2000) (president and largest shareholder of agency not personally liable: “the extent of control exercised by the officer or shareholder is irrelevant to determining his liability under the FDCPA.”). <i>But see Kistner v. Law Office of Michael P. Margelefsky, LLC</i>, 518 F.3d 433, 437-38 (6th Cir. 2008) (sole member of LLC may be held liable under FDCPA if he plays a significant role in directing the firm’s debt collection activities).<br />
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Even someone who is a “debt collector” under the statute must engage in some sort of prohibited conduct with respect to the debtor in order to be directly, as opposed to vicariously, liable under the FDCPA. The Act allows a plaintiff to seek actual damages and “additional damages” but only where the defendant collector has “fail[ed] to comply” with a “provision of this title” and has done so “with respect to” the plaintiff. <i>See</i> 15 U.S.C. § 1692k(a) (“[A]ny debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of . . . .”). Thus, if the consumer cannot prove that the collector “failed to comply” with the FDCPA, he may not recover any of the remedies provided by the Act from that collector. <br />
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Where a violation occurs, the FDCPA places significant limits on the collector’s liability. In an individual action, a plaintiff may recover actual damages, but courts have consistently held that “additional damages” are limited to a maximum of $1,000 “per proceeding” and not $1,000 “per violation.” <i>See, e.g., Wright v. Finance Servs. of Norwalk, Inc.</i>, 22 F.3d 647, 650-51 (6th Cir. 1994) (additional damages limited to $1,000 even though defendant committed fourteen violations: “Congress certainly knows how to write statutes that make each separate violation subject to a separate penalty, or even that make each separate day of a violation a separate offense subject to a separate penalty.”) (citations omitted); <i>Harper v. Better Bus. Servs., Inc</i>., 961 F.2d 1561, 1563 (11th Cir. 1992) (additional damages limited to $1,000 even though defendant committed seven violations: “The FDCPA does not on its face authorize additional statutory damages of $1,000 per violation of the statute, of $1,000 per improper communication, or of $1,000 per alleged debt. If Congress had intended such limitations, it could have used that terminology.”).<br />
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There are also strict limits on liability in FDCPA class actions, where the statute caps the “additional damages” to the class at the lesser of $500,000 or one percent of the “net worth” of any collector who “fails to comply” with a provision of the Act. <i>See</i> 15 U.S.C. § 1692k(a)(2)(B). The term “net worth” means the “book net worth” or “balance sheet net worth” of the collector, calculated using GAAP, not the “fair market value” of the collector. <i>See Sanders v. Jackson</i>, 209 F.3d 998, 1001-02 (7th Cir. 2000) (the “primary purpose of the net worth provision is a protective one. It ensures that defendants are not forced to liquidate their companies in order to satisfy” a damage award). <br />
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If a violation is established, the court does not automatically award the maximum possible additional damages. In fact, it may award zero damages. One famous example is <i>Jerman v. Carlisle</i>, where the plaintiff prevailed in an FDCPA class action in the United States Supreme Court, but was awarded zero damages upon remand. <i>See Jerman v. Carlisle</i>, et al., 2011 WL 1434679 (N.D. Ohio Apr. 14, 2011). The Jerman court observed that the FDCPA sets “no minimum damages” and that statutory damages are “not automatic.” <i>Id</i>. at *11. It agreed that “where there are no actual damages and no evidence of an intent to engage in abusive and deceptive debt collection practices, additional damages are not warranted.” <i>Id</i>. <br />
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<b>Limits On Vicarious Liability<br />
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If a collector is not directly liable, when may it be held vicariously liable? The scope of vicarious liability turns on proof that the defendant exercised control over another debt collector’s conduct. “[T]o be liable for the actions of another, the principal must exercise control over the conduct or activities of the agent." <i>Clark v. Capital Credit & Collection Servs., Inc</i>., 460 F.3d 1162, 1173 (9th Cir. 2006) (citation omitted). In <i>Clark</i>, the Ninth Circuit affirmed summary judgment for an attorney, because there was no evidence that he exercised control over the actions of his client. <i>Id</i>.<br />
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A collection company will generally be held liable for its employees’ FDCPA violations, using principles of respondeat superior, if the violations occurred within the course and scope of their employment. <i>See Pettit v. Retrieval Masters Creditor Bureau, Inc</i>., 211 F.3d 1057, 1059 (7th Cir. 2000) (“[T]he debt collection company answers for its employees' violations of the statute. With vicarious or respondeat superior liability, the debt collection company and its managers have the proper incentives to adequately discipline wayward employees, as well as to instruct and train employees to avoid actions that might impose liability.”) (citations omitted).<br />
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A collector will not, however, be held vicariously liable for the FDCPA violations of its collection attorney if the collector did not exercise control over the attorney. <i>See, e.g., Cassady v. Union Adjustment Co</i>., 2008 WL 4773976, *6 (N.D. Cal. Oct 27, 2008) (summary judgment granted where “no evidence upon which a reasonable trier of fact could conclude that Union exercised control over Zee Law Group.”). <i>But see Fox v. Citicorp Credit Servs., Inc</i>., 15 F.3d 1507, 1516 (9th Cir. 1994) (collector may be vicariously liable under § 1692i of FDCPA where its attorney sues in wrong venue).<br />
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Similarly, a debt buyer will not be held vicariously liable for the FDCPA violations of its collection agency where there is no evidence the debt buyer exercised control over the conduct that led to the violation. <i>See, e.g., Scally v. Hilco Receivables, LLC</i>, 392 F. Supp. 2d 1036, 1040 (N.D. Ill. 2005) (“Scally offers no facts suggesting that Hilco controlled either the mechanisms or the content of MRS's contact with debtors, other than to outline general principles by which MRS would abide: <i>i.e., </i>observing the requirements of the FDCPA.”). <br />
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Nor will a collector be vicariously liable under the FDCPA for the conduct of vendors, such as process servers or letter companies, if the vendors are not subject to the Act. <i>See, e.g., Worch v. Wolpoff & Abramson, LLP</i>, 477 F. Supp. 2d 1015,1018-19 (E.D. Mo. 2007) (process server who “pounded on the door repeatedly and aggressively” to serve debtor not subject to FDCPA; collection firm not vicariously liable); <i>Federal Home Loan Mortgage Corp. v. Lamar</i>, 2006 WL 2422903, **8-9 (N.D. Ohio Aug. 22, 2006) (process server allegedly involved in an erratic car chase while serving debtor not liable under FDCPA; collection firm not vicariously liable); <i>see also Laubach v. Arrow Serv. Bureau, Inc.</i>, 987 F. Supp. 625 (N.D. Ill. 1997) (letter vendor that printed and mailed letters for collector clients not “debt collector” under FDCPA). <br />
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A general partner can be held vicariously liable for the actions of the partnership if the partner exercised sufficient control over the firm’s collection activities. <i>See Pollice v. National Tax Funding, L.P., </i>225 F.3d 379, 405 (3rd Cir. 2000) (“In light of the general partner's role in managing the affairs of the partnership, we see no reason why the general partner should not be responsible for conduct of the partnership which violates the FDCPA.”); <i>see also Miller v. McCalla, Raymer et al</i>., 214 F.3d 872 (7th Cir. 2000) (“the liability of a partnership is imputed to the partners, and so the plaintiff was entitled to sue the partners as well as the partnership.”). <br />
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The difference between direct and vicarious liability can be particularly significant in FDCPA class actions filed against multiple defendants. Consumer attorneys will often argue that the exposure in such cases is the sum of the net worth of all the collectors. But if one or more of the collectors has been sued solely under a theory of vicarious liability, there is no basis for seeking one percent of that collector’s net worth. Rather, the class would be limited to recovery of one percent of the net worth of the collector who actually violated the Act with respect to the plaintiff and the class. Once those damages are assessed, the other defendants may or may not be jointly responsible for payment of those damages under principles of vicarious liability. <br />
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Collectors named in FDCPA actions should closely examine the claims to determine whether they are alleged to have directly violated the Act, or if their liability is based solely on vicarious liability principles. This answer may significantly alter the approach taken when defending the action.<br />
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