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District Court grants defendant MSJ over cross-motions on a dispute on different debt owed amounts
On February 2, the U.S. District Court for the Western District of Pennsylvania held that a plaintiff had standing to bring two FDCPA claims, but remanded the plaintiff’s third claim for lack of standing. The Court also granted the defendant’s motion for summary judgement as part of a cross-motion. The plaintiff is an individual suing a debt collection company for allegedly attempting to collect a debt improperly and misrepresenting the amount the plaintiff owed under the FDCPA, 15 U.S.C. § 1692. The District Court was presented with cross-motions for summary judgment filed by both parties, and supplemental briefing on Article III standing.
The court first determined that the plaintiff, an individual, had Article III standing in two of three of her FDCPA claims, but that the defendant was entitled to summary judgment on those claims. The Court agreed the plaintiff had Article III standing for the 1692(e) claim that the defendant misrepresented the amount of debt owed when the defendant listed the debt of $22.95 but then attached account statements showing a balance of $271.34. However, the court found that the least sophisticated debtor would understand the collection letter to unambiguously represent that the total amount of debt owed is $22.95. The plaintiff also had standing for her informational injury claim that the defendant violated § 1692g by restarting its collection activity despite having failed to provide information that validated the debt owed of $22.95. However, the court found that the defendant sufficiently validated the debt despite attachments showing a larger balance because “it was not required to show detailed files of the debt, bills, or other evidence.” Regarding the third claim, on that the defendant violated § 1692f when it sent the debt verification to an email the plaintiff owns (but claims is a secondary email), the Court found the plaintiff did not have standing since the plaintiff had not suffered concrete injury.
CFPB files amicus brief on FDCPA case regarding scienter
On January 2, the CFPB announced its filing of an amicus brief in the U.S. Court of Appeals for the First Circuit that takes the position that debt collectors can and should be held strictly liable under the FDCPA regardless of whether they knowingly or unknowingly made a false statement. As the administrator and enforcer of the FDCPA, the CFPB cites that under Section 1692e of the FDCPA, debt collectors are prohibited from “us[ing] any false, deceptive, or misleading representation or means in connection with the collection of any debt.” According to the brief, Section 1692e’s general prohibition does not include a scienter requirement and does not require that a “representation be knowingly or intentionally false, deceptive, or misleading to violate that prohibition.” The CFPB continues that since Congress selectively included an express scienter requirement, which is a level of intent or knowledge required to establish liability, in specific provisions of the FDCPA, but did not include one in Section 1692e, that indicates Congress did not implicitly intend for Section 1692e to include a scienter requirement. The CFPB also noted that “every federal court of appeals to have addressed this issue (8 in total) has held that Section 1692e does not include a scienter requirement.”
Washington Appeals Court overturns ruling for collector
On December 26, 2023, the Court of Appeals of the State of Washington overturned a ruling in favor of a collection agency. In the initial action, the collection agency sued an individual over a medical debt that was assigned to the agency. The individual filed counterclaims against the collection agency alleging violations of the Washington Consumer Protection Act (CPA), the Washington Collection Agency Act (CAA), and the FDCPA. Each counterclaim centered on the legitimacy of the debt owed since the individual had not been screened for charity care as required by law. The individual was granted charity care that assisted with paying 75 percent of the owed debt and the collection agency accepted the payment. Later, the collection agency sought to enforce a supposed settlement agreement. The trial court granted the collection agency’s motion for summary judgment and dismissed the individual’s counterclaims and denied the collection agency’s motion to enforce settlement. As a result, the dismissal of the individual’s counterclaims was reversed, the denial of the collection agency’s motion to enforce the settlement agreement was upheld, and the case was sent back to the trial court for further proceedings in line with the court's findings.
District Court affirms FDCPA case dismissal
On December 21, 2023, the U.S. District Court for the District of Oregon affirmed the dismissal of an FDCPA case after it granted a debt collector’s motion to dismiss in March 2023 because the plaintiff’s claims were filed outside of the one-year statute of limitations. The plaintiff contended that the court made a clear error by dismissing their claim as untimely without considering the potential impact of equitable tolling on the limitations period. The court held that the plaintiff's request for reconsideration based on equitable tolling was not raised in response to the defendant’s motion to dismiss and was declined. Plaintiff also referenced a new legal precedent, set earlier this year, arguing that it impacts the timing of their claims under the FDCPA. However, the court found this reference untimely and unrelated to the original motion. As previously covered in InfoBytes, the referenced case established that both serving and filing a lawsuit could be independent violations of the FDCPA, depending on certain conditions. However, in this case, where service occurred after filing, the court determined that it did not constitute a new FDCPA violation. Therefore, the court denied the plaintiff's motion for reconsideration based on this precedent.
California Appellate Court overturns ruling on FDCPA
On December 18, a California Court of Appeal overturned a lower court’s dismissal of a case involving claims under the federal FDCPA and California’s Rosenthal Fair Debt Collection Practices Act (Rosenthal Act). The appellate court found the lower court had erred in dismissing the case pursuant to California’s anti-SLAPP statute, which provides a mechanism for early dismissal of meritless lawsuits arising from protected communicative activities.
The dismissal arises from a class action filed in 2021, alleging that the defendant debt collector – who had filed an action to collect on a defaulted student loan – lacked the documents necessary to collect or enforce the loan, and thus violated the FDCPA and the Rosenthal Act. The complaint also claimed the collector violated California’s Unfair Competition Law (UCL) by engaging in “prohibited unlawful, unfair, fraudulent, deceptive, untrue, and misleading acts and practices as part of its direct and indirect collection and attempted collection of debts that have previously been adjudicated.” The complaint referenced a 2017 CFPB consent order with the defendant, previously covered by InfoBytes here, where the consent order involved allegations that the collector had filed lawsuits against consumers for private student loan debt that it could not prove was owed or that was outside the applicable statute of limitations.
In response to the complaint, the defendant debt collector filed a demurrer and an anti-SLAPP motion. While the lower court granted the anti-SLAPP motion, the appellate court reversed, concluding that the plaintiff’s claims were not barred by the litigation privilege. The appellate court found that the lower court had “only considered the litigation privilege in considering the probability that [the plaintiff] would prevail on her claims,” and did not consider the public interest exception to California’s anti-SLAPP law (which provides that the anti-SLAPP law does not apply to actions brought solely in the public interest or on behalf of the general public if certain conditions are met). The appellate court directed the trial court to determine whether the plaintiff met her burden of demonstrating a probability of prevailing on the merits of her claims and to consider the public interest exception.
CFPB fines and shuts down debt collector for alleged FDCPA, FCRA violations
On December 15, the CFPB announced a consent order against a Pennsylvania-based nonbank medical debt collection company for alleged violations of the FCRA and FDCPA. According to the order, the company failed to (i) establish and implement reasonable written policies and procedures for ensuring the accuracy and integrity of information furnished to consumer reporting agencies; (ii) conduct reasonable investigations into direct and indirect consumer disputes about furnished information; (iii) report direct dispute investigation results to consumers; and (iv) indicate disputed items when furnishing information to reporting agencies. The company also allegedly lacked a reasonable basis for debt-related representations made to consumers and engaged in collection activities after receiving a written dispute within 30 days of the consumer’s receipt of a debt validation notice but before obtaining and mailing a verification of the debt.
The consent order permanently bans the company from involvement or aid in debt collection, purchasing or selling of any debts, or any consumer reporting activities. The company must also request credit reporting agencies to delete all collection accounts previously reported by the company. Additionally, the company is obligated to pay a $95,000 civil money penalty and must display on its website information that informs consumers about the option to file a complaint with the CFPB.
District Court grants motion to dismiss in FDCPA case regarding an undated Model Validation Notice
On December 5, the U.S. District Court for the Southern District of New York granted a debt collection agency (the defendant) a motion to dismiss an individual’s (plaintiff’s) complaint. The case considers whether an undated Model Validation Notice (MVN) is a material detail that provides standing to sue under the FDCPA. An MVN is a form provided by the CFPB in Appendix B of the Debt Collection Rule to assist debt collection agencies in complying with FDCPA notice and disclosure requirements. However, the CFPB provides an undated MVN, so many debt collectors who use this template fail to provide a date when sending a debt collection letter to individuals, leading to a recipient’s confusion when the debt collector writes “today” or “now.”
In this case, the plaintiff alleges that the undated collection letter suggests the defendant “withheld a material term from [p]laintiff which made it confusing for him to understand the nature of the subject debt.” The plaintiff did not pay the debt, and instead, he alleged that he suffered damages from the defendant’s “suspicious, misleading, deceptive, unfair, and unconscionable actions.”
Before addressing the merits of the plaintiff’s claims, the court applied Article III standing to determine if the plaintiff had a basis to sue. The court considered whether the plaintiff had suffered a “concrete, particularized injury” in receiving an undated letter from the defendant and concluded that the plaintiff did not suffer harm as a result of this act under Article III because “[t]ime and money spent due to concern and confusion are not concrete harms.” The court held the plaintiff had no standing to bring this action and granted the defendant’s motion to dismiss the plaintiff’s claims. The court, however, gave the plaintiff the opportunity to file an amended complaint.
District Court dismisses FDCPA suit; clarifies debt collector communication on identity theft
On December 5, the U.S. District Court of New Jersey dismissed an FDCPA suit brought against a debt collector. According to the opinion, plaintiff originally filed suit because they received a letter from defendant regarding an outstanding cell phone bill. The letter provided instructions on what to do if the recipient suspected identity theft. Additionally, the letter contained a summary of plaintiff’s account and a QR code that linked to defendant’s website for online payment. Plaintiff contended that the dual approach of offering assistance while simultaneously pursuing collection of a debt was false and misleading. A District Court judge, however, disagreed and dismissed the case, at which point the plaintiff filed an amended complaint.
The amended complaint alleges that the debt collector breached the FDCPA by using false, deceptive or misleading representations regarding the rights of the plaintiff and the obligations of the debt collector with respect to communications concerning identity theft. Specifically, plaintiff argued defendant was in violation of § 1681m(g) of the FDCPA, which obligates a debt collector to take certain steps upon being notified of identity theft, but the court disagreed, finding that the collector’s specific steps taken were in accordance with the Act.
The court emphasized that plaintiff did not introduce any new factual claims in the amended complaint, and merely clarified how the facts already outlined in the initial complaint breached the FDCPA. The judge ruled that the letter not only allows plaintiff to inform defendant about potential identity theft, but also may serve to bring potential identity theft to plaintiff’s attention. The ruling stated that there is no obligation to extensively explain recommended procedures in the case of an identity theft occurrence, and only an “idiosyncratic reading” of the letter would lead to the conclusion that the letter misrepresents defendant’s obligations.
3rd Circuit affirms district court’s decision that losing a debt collection case does not necessarily violate FDCPA
On December 12, the U.S. Court of Appeals for the Third Circuit affirmed a U.S. District Court’s order denying a consumer’s motion for reconsideration of the grant of summary judgment against the consumer. After the consumer successfully defended herself in a debt collection action in municipal court, she sued the debt collection agency that had brought suit against her in federal court alleging that the agency violated the FDCPA by utilizing false or deceptive means in collecting debts that she did not owe in violation of 15 U.S.C. § 1692e and unfair or unconscionable means in the collection of any debt in violation of 15 U.S.C. § 1692f.
The district court granted judgment to the debt collection company and denied the individual’s motion for reconsideration. The appellate court found that the consumer failed to produce evidence that proved the debt collection agency made any false or deceptive representations or acted unfairly or unconscionably in bringing the debt collection action against the consumer. Although the agency failed to meet its burden of proof in the municipal action, the court noted that “losing a debt collection lawsuit does not in itself mean a defendant violated the FDCPA.”
White House convenes on reducing medical debt
On December 8, President Biden met with over 80 federal and state officials to discuss reducing medical debts for Americans. The Biden-Harris administration desires to address medical payment products, unfair debt collection practices, surprise billing and facility fees, and charity care. This roundtable was one of several actions taken by the administration to lower Americans’ healthcare costs, in addition to (i) the CFPB’s report on how medical debt collectors pursue debts under the FDCPA, such as through misattributed billing and billing consumers without contacting them (previously covered by InfoBytes, here); and (ii) the CFPB’s proposed rule to remove medical bills from credit reports (also previously covered by InfoBytes, here). The roundtable featured speakers from the president’s council, the CFPB, the Center for Medicare and Medicaid Services, DHHS, the Treasury, and representatives from California, Colorado, and Washington.