No Harassment Under FDCPA With 179 Collection Calls
In Jones v. Rash Curtis & Associates in the Northern District of California, the Court granted summary judgment for defendant in a case that elaborates on plaintiff's burden to show an FDCPA violation.
In Jones, plaintiff alleged approximately 179 collection calls in a one-year time period. Plaintiff's complaint alleged FDCPA violations based on allegations that: (1) defendant constantly and continuously placed collection calls to Plaintiff seeking payment for an alleged debt; (2) defendant placed approximately 200 collection calls to Plaintiff in 2009; (3) defendant contacted Plaintiff’s mother and disclosed the nature and existence of an alleged consumer debt to her; (4) defendant failed to identify itself as a debt collector; and (5) defendant placed collection calls to Plaintiff from blocked and private numbers.
The Court granted summary judgment for defendant on plaintiff's FDCPA claims, noting that plaintiff bears the burden of showing more than simply a high volume of collection calls. The Court identified certain factors that might establish an FDCPA violation for harassment, including: (1) calling a consumer back immediately after the consumer hung up on the collector; (2) calling the consumer after the consumer requested the collector cease communications; or (3) calling the consumer at a time or pace which is known to be inconvenient to the consumer. Absent evidence of these actions, the Court found there was no evidence of harassment. Significantly, the Court noted that plaintiff "did not complain about the content of calls, rarely answered the calls, and never instructed [defendant] to stop calling."
Mistake of Law No Defense to FDCPA
The U.S. Supreme Court yesterday issued its opinion in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, holding that a mistake of law cannot be the basis of a bona fide error defense to the Fair Debt Collection Practices Act.
In Jerman, plaintiff filed suit against a collection law firm alleging violations of the FDCPA, among other things, based on assertions to plaintiff by the law firm that her debts would be assumed valid unless she disputed the debt in writing, which is not required by the FDCPA. The district court granted summary judgment for defendant, holding that defendant's mistake of law was a bona fide error under the FDCPA, shielding them from liability. Plaintiff appealed. The Sixth Circuit affirmed, holding that mistakes of law, in addition to clerical errors, can be the basis of a bona fide error defense under the FDCPA.
The Supreme Court reversed and remanded, resolving a split in the circuits on this issue, holding that "A violation resulting from a debt collector’s misinterpretation of the legal requirements of the FDCPA cannot be “not intentional” under §1692k(c)" and thus cannot be the basis of a bona fide error defense.
One to Watch: U.S. Supreme Court Considers FDCPA Defense
The U.S. Supreme Court has granted certiorari in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 538 F.3d 469 (6th Cir. 2008), to consider whether a mistake of law can be the basis of a bona fide error defense under the Fair Debt Collection Practices Act.
In Jerman, plaintiff filed suit against a collection law firm alleging violations of the FDCPA, among other things, based on assertions to plaintiff by the law firm that her debts would be assumed valid unless she disputed the debt in writing, which is not required by the FDCPA. The district court granted summary judgment for defendant, holding that defendant's mistake of law was a bona fide error under the FDCPA, shielding them from liability. Plaintiff appealed. The Sixth Circuit affirmed, holding that mistakes of law, in addition to clerical errors, can be the basis of a bona fide error defense under the FDCPA.
The Sixth Circuit rejected plaintiff's argument that a mistake of law is not a valid basis for a bona fide error defense under the FDCPA because it has been expressly rejected as a basis for a bona fide error defense under the Truth in Lending Act. The Court interpreted the absence of an express exclusion of a mistake of law as a bona fide error in TILA as evidence that Congress did not intend to exclude it under the FDCPA, which does not contain such an exclusion.
The U.S. Supreme Court is expected to resolve a split in the Circuits between courts that recognize mistakes of law as bona fide errors under the FDCPA (10th Circuit, 6th Circuit) and courts that do not (2nd Circuit, 8th Circuit, 9th Circuit).
FTC Clarifies FDCPA-FACTA Conflict
In an Advisory Opinion, the Federal Trade Commission has clarified a statutory conflict between the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and its regulations implementing the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"), which added new sections to the Fair Credit Reporting Act, ("FCRA"), 15 U.S.C. § 1681 et seq.
Specifically, the the FDCPA provides that "if a consumer has notified a debt collector in writing that 'the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate with the consumer with respect to such debt' (with some exceptions not applicable here)." 15 U.S.C. § 1692c(c). Separately, FTC regulation implementing FACTA "requires furnishers of information to CRAs to report the results of a direct dispute to the consumer, 16 CFR § 660.4(e)(3), or notify the consumer if the furnisher determines the dispute is frivolous or irrelevant, 16 CFR § 660.4(f)(2)."
As written, a furnisher of credit information that contacts a debtor regarding a credit dispute investigation, as required by FTC FACTA regulations, could violate the cease-communication rules of the FDCPA. The FTC Opinion eliminates this conflict, providing:
a debt collector does not violate Section 805(c) of the FDCPA if the consumer directly disputes information after sending a written “cease communication” to the collector, and the collector complies with the Rule by means of a communication that has no purpose other than complying with the Rule by stating (1) the results of the investigation or (2) the collector’s belief that the communication is frivolous or irrelevant.
9th Circuit Addresses FDCPA "Bona Fide Error" Defense
In Reichert, plaintiff debtor sued National Credit Systems ("NCS") in connection with its collection activities for debtor's former landlord. The debt that NCS attempted to collect included a $225 charge by the landlord's attorney for writing a letter to the debtor. The debtor alleged, among other things, that the inclusion of this charge, which was not specifically provided in the lease, violated FDCPA provision 15 U.S.C. §1692f(1). The district court granted summary judgment for the debtor. NCS appealed. On appeal, NCS asserted that the creditor had provided accurate information about debts in the past, and that this made its reliance on the creditor's information reasonable. NCS also cited the affidavit submitted in the district court from an NCS manager who referenced its "extensive procedures" to avoid errors.
The Ninth Circuit affirmed summary judgment for the debtor, citing its 2006 opinion in Clark v. Capital Credit and Collection Services, Inc., 460 F.3d 1162 (9th Cir. 2006), which held that the FDCPA is a strict liability statute and "defendant bears the burden of showing the violation can be excused." The Court recognized the inherent tension between a strict liability statue and the affirmative defense of bona fide error, and concluded that establishing that an error was unintentional, without more, is insufficient to establish the defense.
Specifically, the Court found that NCS had failed to carry its burden to establish that its reliance on the information provided by its client was reasonable because "[t]he fact that the creditor provided accurate information in the past cannot, in and of itself, establish that reliance in the present case was reasonable." The Court also found the evidence submitted by NCS failed to meet its burden to establish the bona fide error defense because it did not explain the procedures in place or the manner in which the procedures were adapted to avoid the error.
