1. law, govt and politics

Pitfalls in Collection Letters Under the
Fair Debt Collection Practices Act and
Ohio Consumer Sales Practices Act1
Elizabeth M. Shaffer
Elizabeth M. Shaffer is an Associate with Dinsmore & Shohl, LLP, 255 East Fifth Street, Suite 1900, Cincinnati,
Ohio 45202. Ms. Shaffer may be contacted at (513) 977-8128 or by e-mail at [email protected].
______________________________________________________________________________
I.
OVERVIEW OF THE FAIR DEBT COLLECTION PRACTICES ACT
A.
What Is the FDCPA?
The Fair Debt Collection Practices Act ("FDCPA") is found in 15 U.S.C. § 1692 et seq.
“The Fair Debt Collection Practices Act ... provides a remedy for consumers who have been
subjected to abusive, deceptive, or unfair debt collection practices by debt collectors.” Nicholas
v. CMRE Financial Services, Inc., No. 08-4857, 2009 WL 1652275, at *2 (D. N.J. June 11,
2009) (quoting Pollice v. National Tax Funding, L.P., 225 F.3d 379, 400 (3d Cir. 2000)).
B.
What Is the Purpose of the FDCPA?
The FDCPA is “a statute designed to curb aggressive debt-collection practices.” Taylor
v. Cavalry Investment, LLC, 365 F.3d 572, 574 (7th Cir. 2004). Furthermore, it has been held
that “[t]he FDCPA is designed to protect against abusive debt collection practices which would
likely disrupt a debtor’s life.” Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1059
(7th Cir. 2000); see also 15 U.S.C. §§ 1692(e) (stating that the purpose of the FDCPA is to
"eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors
who refrain from using abusive debt collection practices are not competitively disadvantaged,
and to promote consistent State action to protect consumers against debt collection abuses").
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The purpose of this article is to provide an overview of issues often raised in litigation so that a debt
collector may attempt to avoid litigation. Nothing within this article should be read to suggest that an actual
violation of the FDCPA or OCSPA has occurred based on any particular conduct.
The purpose of the FDCPA is not only to protect consumers from unfair debt collection
practices, but also to avoid "imposing unnecessary restrictions on ethical debt collectors." Peter
v. GC Servs, L.P., 310 F.3d 344, 351-352 (5th Cir. 2002) (quoting S. Rep. No. 95-382, at 1-2,
reprinted in 1977 U.S.Code Cong. & Admin. News 1695, 1696). Thus, the FDCPA is designed
to protect against disruption in a debtor's life, while still allowing a creditor to ethically collect a
debt which it is owed.
C.
What Are the Elements of an FDCPA Claim?
To establish a prima facie case for a violation of the FDCPA, plaintiffs must prove four
essential elements:
1.
the plaintiff is a natural person who is harmed by violations
of the FDCPA, or is a “consumer” within the meaning of
15 U.S.C.A. §§ 1692a(3), 1692(d) for purposes of a cause
of action, 15 U.S.C.A. § 1692c or 15 U.S.C.A. §
1692e(11)[;]
2.
the “debt” arises out of a transaction entered primarily for
personal, family, or household purposes, 15 U.S.C.A. §
1692a(5)[;]
3.
the defendant collecting the debt is a “debt collector”
within the meaning of 15 U.S.C.A. § 1692a(6); and
4.
the defendant has violated, by act or omission, a provision
of the FDCPA, 15 U.S.C.A § 1692a-1692o; 15 U.S.C.A §
1692a; 15 U.S.C.A § 1692k.
Whittiker v. Deutsche Bank Nat. Trust Co., 605 F. Supp.2d 914, 938 -939 (N.D. Ohio 2009).
The absence of any one of the four essential elements is fatal to a FDCPA lawsuit. Id.
D.
Key Sections Governing Liability Under the FDCPA
1.
Key Definitions
•
"Consumer": Any natural person obligated or allegedly obligated to pay any
debt. 15 U.S.C. § 1692a(3).
•
"Creditor": Any person who offers or extends credit creating a debt or to whom
a debt is owed, but such term does not include any person to the extent that he
receives an assignment or transfer of a debt in default solely for the purpose of
facilitating collection of such debt for another. 15 U.S.C. § 1692a(4).
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•
“Debt”: 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).
•
“Debt collector”: 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, or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another.
Notwithstanding the exclusion provided by clause (F) of the last sentence of this
paragraph, the term includes any creditor who, in the process of collecting his
own debts, uses any name other than his own which would indicate that a third
person is collecting or attempting to collect such debts. For the purpose of section
1692f(6) of this title, such term also includes any person who uses any
instrumentality of interstate commerce or the mails in any business the principal
purpose of which is the enforcement of security interests. The term does not
include-(A) any officer or employee of a creditor while, in the name of the creditor,
collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both of whom
are related by common ownership or affiliated by corporate control, if the person
acting as a debt collector does so only for persons to whom it is so related or
affiliated and if the principal business of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to the extent that
collecting or attempting to collect any debt is in the performance of his official
duties;
(D) any person while serving or attempting to serve legal process on any other
person in connection with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request of consumers, performs bona
fide consumer credit counseling and assists consumers in the liquidation of their
debts by receiving payments from such consumers and distributing such amounts
to creditors; and
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(F) any person collecting or attempting to collect any debt owed or due or asserted
to be owed or due another to the extent such activity (i) is incidental to a bona fide
fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which
was originated by such person; (iii) concerns a debt which was not in default at
the time it was obtained by such person; or (iv) concerns a debt obtained by such
person as a secured party in a commercial credit transaction involving the
creditor. 15 U.S.C.A. § 1692a(6).
2.
Communications After Notice of Representation by an Attorney - 15
U.S.C. § 1692c(a)(2).
Under 15 U.S.C. § 1692c(a)(2), a debt collector may not communicate
with a consumer if the debt collector knows the consumer is represented by an
attorney: "Without the prior consent of the consumer given directly to the debt
collector or the express permission of a court of competent jurisdiction, a debt
collector may not communicate with a consumer in connection with the collection
of any debt . . . if the debt collector knows the consumer is represented by an
attorney with respect to such debt and has knowledge of, or can readily ascertain,
such attorney's name and address, unless the attorney fails to respond within a
reasonable period of time to a communication from the debt collector or unless
the attorney consents to direct communication with the consumer." 15 U.S.C. §
1692c(a)(2).
Even if a debt collector knows a debtor is represented by an attorney, the
debt collector may still send a dunning letter to the consumer with respect to a
different debt. Masuda v. Thomas Richards & Co., 759 F.Supp. 1456, 1464 (C.D.
Cal. 1991) (holding dunning notices sent by debt collector after it had received
notice from debtor's attorney to communicate only with attorney did not violate
the FDCPA where they referred to debts other than those which had been
assigned to the debt collector at the time of the communication from the attorney;
the debt collector would not be charged with knowledge that the attorney
represented the debtor with respect to debts assigned to the debt collector after the
date of the attorney's letter, even though those debts were assigned by the same
creditor which assigned the earlier debts.)
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3.
Communications with Third Parties - 15 U.S.C. § 1692c(b)
Under 15 U.S.C. § 1692c(b), a debt collector generally may not
communicate with third parties regarding a consumer's debt: "Except as provided
in section 1692b of this title [governing acquisition of location information],
without the prior consent of the consumer given directly to the debt collector, or
the express permission of a court of competent jurisdiction, or as reasonably
necessary to effectuate a postjudgment judicial remedy, a debt collector may not
communicate, in connection with the collection of any debt, with any person other
than the consumer, his attorney, a consumer reporting agency if otherwise
permitted by law, the creditor, the attorney of the creditor, or the attorney of the
debt collector." 15 U.S.C. § 1692c(b) (emphasis added).
4.
Harassment or Abuse- 15 U.S.C. § 1692d
15 U.S.C. § 1692d renders a debt collector liable for engaging in conduct
that has the natural consequence of harassing, oppressing, or abusing a debtor in
connection with the collection of a debt. Section 1692d lists several nonexclusive
examples of such conduct, including, inter alia, threats of violence, use of obscene
or profane language, causing a telephone to repeatedly ring with intent to annoy,
abuse, or harass a person, and so forth.
The district court of Minnesota found that the natural consequence of
language used in debt collector's dunning letter, stating that “in case of an
emergency, will you be refused credit because of this unpaid account we have for
collection?” was not abusive to an unsophisticated reader under the FDCPA.
Although it was arguably abusive to the subjective eyes of an abnormally
sensitive reader, the question was not “offensive” in a way that was akin to
profanity or obscenity. Bryant v. Bonded Account Service/Check Recovery, Inc.,
208 F.R.D. 251 (D. Minn. 2000).
5.
False or Misleading Representations - 15 U.S.C. § 1692e
Most consumers who bring suit against debt collectors under the FDCPA
do so under one of the following sections of 15 U.S.C. § 1692e. Cases
interpreting these provisions in the context of collection letters are discussed more
fully below.
•
15 U.S.C. § 1692e: "A debt collector may not use any false, deceptive, or
misleading representation or means in connection with the collection of
any debt."
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•
15 U.S.C. § 1692e(2)(A): A debt collector may not falsely represent "the
character, amount, or legal status of any debt"
•
15 U.S.C. § 1692e(2)(B): A debt collector may not falsely represent "any
services rendered or compensation which may be lawfully received by any
debt collector for the collection of a debt."
•
15 U.S.C. § 1692e(3): A debt collector may not falsely represent or imply
"that any individual is an attorney or that any communication is from an
attorney."
•
15 U.S.C. § 1692e(5): A debt collector may not threaten "to take any
action that cannot legally be taken or that is not intended to be taken."
•
15 U.S.C. § 1692e(10): A debt collector may not use "any false
representation or deceptive means to collect or attempt to collect any debt
or to obtain information concerning a consumer."
6.
Unfair or Unconscionable Acts - 15 U.S.C. § 1692f
15 U.S.C. § 1692f specifically provides that a debt collector may not use
unfair or unconscionable means to collect or attempt to collect any debt,
including, without limitation, collecting "any amount (including any interest, fee,
charge, or expense incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or permitted by law." 15
U.S.C. § 1692f. Along with filing suit under 15 U.S.C. § 1692e, consumers often
allege a violation of the relatively broad Section 1692f, which generally prohibits
unfair or unconscionable acts. See Edwards v. McCormick, 136 F. Supp.2d 795,
806 (S.D. Ohio 2001) (quoting Adams v. Law Offices of Stuckert & Yates, 926 F.
Supp. 521, 528 (E.D. Pa. 1996)) ("While § 1692d prohibits 'harassment or abuse,'
and § 1692e forbids 'false or misleading representations,' § 1692f serves a
backstop function, catching those 'unfair practices' which somehow manage to
slip by §§ 1692d & 1692e. That is, '§ 1692f allows the court to sanction improper
conduct that the FDCPA fails to address specifically.'"
E.
The Bona Fide Error Defense
The FDCPA contains a bona fide error defense that can shelter a debt collector from
liability arising out of actions which would otherwise violate the statute. 15 U.S.C. § 1692k(c)
states:
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A debt collector may not be held liable in any action brought under
this subchapter if the debt collector shows by a preponderance of
evidence that the violation was not intentional and resulted from a
bona fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.
15 U.S.C. § 1692k(c). Thus, under the bona fide error defense, "a debt collector cannot be held
liable under the FDCPA if it shows by a preponderance of the evidence the following three
elements: (1) the violation was not intentional; (2) the violation resulted from a bona fide (or
good faith) error; and (3) the violator maintained procedures reasonably adapted to avoid any
such error." E.g. Foster v. D.B.S. Collection Agency, 463 F. Supp.2d 783, 794-795 (S.D. Ohio
2006).
The Sixth Circuit recently held that the bona fide error defense applies to mistakes of law,
not just to procedural or clerical errors. See Jerman v. Carlisle, McNellie, Rini, Kramer &
Ulrich LPA, 538 F.3d 469, 476-477 (6th Cir. 2008). In Jerman, an initial validation letter
incorrectly stated that a dispute must be in writing. The parties agreed that the defendant-law
firm's mistake as to the written dispute requirement was a question of law, as opposed to a
clerical error. The Sixth Circuit affirmed the district court's decision that the bona fide error
defense applies to questions of law, and that the law firm was entitled to the bona fide error
defense under the facts of the case. Id. at 476. As evidence of good faith, the court noted that
the defendant law firm designated its senior principal as the individual responsible for
compliance with the FDCPA; he regularly attended conferences and seminars that focus on
FDCPA issues; the firm subscribed to “Fair Debt Collection,” a part of “The Consumer Credit
and Legal Practice Series,” together with the supplements thereto; the senior principal routinely
distributed copies of cases relevant to the firm's practices and procedures to all attorneys at the
firm; all new employees, attorneys and non-attorneys, were advised of the firm's obligations
under the FDCPA and provided with the firm's FDCPA Procedures Manual, and encouraged to
seek the senior principal's advice with questions regarding the FDCPA; and the senior principal
conducted a mandatory meeting at least twice a year for all available employees wherein FDCPA
issues and developments were discussed. Id. at 477. Federal circuit courts are split on whether
the bona fide error defense applies to mistakes of law and, on June 29, 2009, the United States
Supreme Court granted a petition for writ of certiorari to resolve the issue. See Jerman v.
Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 129 S.Ct. 2863 (2009).
F.
Standard for Evaluation of Collection Letters
1.
The FDCPA is a strict liability statute. Miller v. Javitch, Block &
Rathbone , 561 F.3d 588, 592 (6th Cir. 2009). Thus, a consumer may
recover statutory damages if the debt collector violates the FDCPA even if
the consumer suffered no actual damages. Id.
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2.
The Sixth Circuit, like Most Circuits, Applies the Least Sophisticated
Consumer Standard.
To determine whether a statement qualifies as misleading under the
FDCPA, the Sixth Circuit employs an objective, “least-sophisticated-consumer”
test. Miller v. Javitch, Block & Rathbone , 561 F.3d 588, 592 (6th Cir. 2009);
Kistner v. Law Offices of Michael P. Margelefsky LLC, 518 F.3d 433, 438-39 (6th
Cir. 2008). This standard “protects naive consumers [while] prevent[ing] liability
for bizarre or idiosyncratic interpretations of collection notices by preserving a
quotient of reasonableness and presuming a basic level of understanding and
willingness to read with care.” Miller, 561 F.3d at 592. Stated differently, courts
“will not ‘countenance lawsuits based on frivolous misinterpretations or
nonsensical interpretations of being led astray.’” Id. (quoting Fed. Home Loan
Mortgage Corp. v. Lamar, 503 F.3d 504, 514 (6th Cir. 2007)); See also Belile v.
Allied Med. Accounts Control Associated Bureaus (In re Belile), 209 B.R. 658,
662 (E.D. Pa. 1997) (Violations of the FDCPA are assessed from the perspective
of the "least sophisticated consumer.")
3.
A Minority of Courts Apply the Unsophisticated Consumer Standard.
The Seventh Circuit has long been a proponent of the "unsophisticated
consumer standard." The Seventh Circuit adopted the unsophisticated consumer
standard rather than the least sophisticated consumer standard because it held that
standard better “admits an objective element of reasonableness” into the
determination of whether a “reasonable” consumer would perceive the collection
message to be “deceptive or misleading.” Gammon v. GC Servs. Ltd. P'Ship, 27
F.3d 1254, 1257 (7th Cir. 1994). The Seventh Circuit held that the unsophisticated
consumer standard serves a dual purpose: it “protects the consumer who is
uninformed, naïve, or trusting, yet [also] . . . shields complying debt collectors
from liability for unrealistic or peculiar interpretations of collection
[communications].” Id.; see also Pettit v. Retrieval Masters Creditors Bureau,
Inc., 211 F.3d 1057, 1060, 1061–62 (7th Cir. 2000) (holding that the standard
assumes the “uneducated debtor possesses rudimentary knowledge about the
financial world, is wise enough to read collection notices with added care,
possesses ‘reasonable intelligence,’ and is capable of making basic logical
deductions and inferences . . . [and that] a statement will not be confusing or
misleading unless a significant fraction of the population would be similarly
misled”).
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The Fifth Circuit has not ruled whether it will apply the "least
sophisticated consumer standard" or the "unsophisticated consumer standard" in
its evaluation of collection letters under the FDCPA. E.g. Gonzalez v. Kay, No.
08-205442009 U.S. App. LEXIS 17194 (5th Cir. Aug. 3, 2009) (citation omitted)
("When deciding whether a debt collection letter violates the FDCPA, this court
'must evaluate any potential deception in the letter under an unsophisticated or
least sophisticated consumer standard.'"); Goswami v. American Collections
Enter., Inc., 377 F.3d 488, 495 (5th Cir. 2004); Taylor v. Perrin, Landry,
deLaunay & Durand, 103 F.3d 1232, 1236 (5th Cir. 1997); McKenzie v. E.A.
Uffman & Assocs., Inc., 119 F.3d 358, 362 (5th Cir. 1997). The Fifth Circuit and
the Western District of Texas have recognized that the unsophisticated consumer
standard "is designed to protect consumers of below average sophistication or
intelligence without having the standard tied to 'the very last rung on the
sophistication ladder.'" Taylor, 103 F.3d at 1236 (quoting Gammon v. GC Servs.
Ltd P'ship, 27 F.3d 1254, 1257 (7th Cir. 1994)); Goswami, 377 F.3d at 495;
Youngblood v. GC Servs. Ltd. P'Ship, 186 F. Supp.2d 695, 697 (W.D. Tex. 2002).
The Western District of Texas commented that the purported least
sophisticated consumer standard "cannot really mean to protect the least
sophisticated consumer" because such a consumer "is a dull bulb indeed."
Youngblood, 186 F. Supp.2d at 695. A true least sophisticated consumer analysis
would lead to an unworkable rule of law: "Even if never before that time had
anyone ever been so ignorant as to be misled by the letter in question, we would
have a new leader in the never-ending race to the bottom, a new least
sophisticated consumer, and a new and unforeseeable burden on the legitimate
and important, if unpopular, business of debt collection" Id. at 698. The Western
District of Texas concluded that the unsophisticated consumer standard was
"more practical" than the least sophisticated consumer standard. Id. The
unsophisticated consumer standard "protects the consumer who is uninformed,
naïve, or trusting, yet it admits an objective element of reasonableness. The
reasonableness element in turn shields complying debt collectors from liability for
unrealistic or peculiar interpretations of collection letters." Id. (quoting Gammon,
27 F.3d at 1257).
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4.
Courts Avoid Peculiar Interpretations of Collection Letters.
Although the FDCPA is a strict liability statute, courts nevertheless seek to
avoid idiosyncratic and peculiar interpretations of collection letters. See
Youngblood, 186 F. Supp. 2d at 698 (quoting Gammon, 27 F.3d at 1257) (stating
that debt collectors must be shielded "from liability for unrealistic or peculiar
interpretations of collection letters"); Durkin v. Equifax Check Servs., 406 F.3d
410, 414 (7th Cir. 2005) (holding that courts must “disregard unrealistic, peculiar,
bizarre, and idiosyncratic interpretations” of collection communications). Besides
refusing to adopt peculiar interpretations of collection letters, courts reject literal
interpretations "where using the plain meaning . . . creates an 'absurd result.'" See
Peter v. GC Servs, L.P., 310 F.3d 344, 351 (5th Cir. 2002) (quoting In re
Hammers, 988 F.2d 32, 34 (5th Cir. 1993)). Therefore, “even if the plaintiffs
have a decent technical argument for their preferred interpretation,” that particular
interpretation should not be followed if “its unreasonable consequences weigh
heavily against it, even as a matter of interpretation[.]” Olvera v. Blitt & Gaines,
P.C., 431 F.3d 285, 289 (7th Cir. 2005).
G.
Damages
Any debt collector who violates the FDCPA with respect to any person is liable to such
person for: (1) any actual damages sustained as a result of the violation; (2) statutory damages;
and (3) costs and reasonable attorney fees. Foster v. D.B.S. Collection Agency, 463 F. Supp.2d
783, 806 (S.D. Ohio 2006); 15 U.S.C. § 1692k(a). Section 1692k states:
[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(1) any actual damage sustained by such person as a result of such
failure;
(2)(A) in the case of any action by an individual, such additional
damages as the court may allow, but not exceeding $1,000; or
(B) in the case of a class action, (i) such amount for each named
plaintiff as could be recovered under subparagraph (A), and (ii)
such amount as the court may allow for all other class members,
without regard to a minimum individual recovery, not to exceed
the lesser of $500,000 or 1 per centum of the net worth of the debt
collector; and
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(3) in the case of any successful action to enforce the foregoing
liability, the costs of the action, together with a reasonable
attorney's fee as determined by the court. On a finding by the
court that an action under this section was brought in bad faith and
for the purpose of harassment, the court may award to the
defendant attorney's fees reasonable in relation to the work
expended and costs.
15 U.S.C. § 1692k(a). In assessing the amount of damages, the court must consider, among
other factors, "the frequency and persistence of noncompliance by the debt collector, the nature
of such noncompliance, and the extent to which such noncompliance was intentional." 15 U.S.C.
§ 1692k(b)(1).
Statutory damages are limited to $1,000 "per proceeding" rather than "per violation."
Wright v. Finance Service of Norwalk, Inc., 22 F.3d 647, 651 (6th Cir. 1994).
Consumers often allege that actual damages encompass not only out of pocket losses, but
also damages for anxiety, emotional suffering, embarrassment, and distress. Generally, a court
will only award actual damages for emotional distress where it finds that "the illegal debt
collection practice was extreme and outrageous." See e.g., Foster v. D.B.S. Collection Agency
463 F. Supp.2d 783, 806 (S.D. Ohio 2006) (holding a genuine issue of material fact existed
whether a debt collector's FDCPA violations rose to the level of extreme and outrageous conduct
to justify an award of actual damages for mental distress for all of the class members); Boyce v.
Attorney's Dispatch Serv., Case No. C-3-94-347, 1999 WL 33495605, at *1 (S.D. Ohio 1999)
(awarding actual damages for emotional distress; “Of the more than 100 cases under the FDCPA
and the OCSPA that have been filed with this Court, this particular lawsuit involves the most
egregious conduct by any defendant”).
Punitive damages are not available for violation of the FDCPA. Boyce v. Attorney's
Dispatch Serv., Case No. C-3-94-347, 1999 WL 33495605, at *2 (S.D. Ohio 1999) ("The
Plaintiffs are not entitled to recover punitive damages under the FDCPA. That statute expressly
sets forth the types of relief that a plaintiff can recover, to wit: compensatory damages, statutory
damages and costs, including reasonable attorney's fees. [citation omitted]. However, neither the
FDCPA nor its legislative history (see Senate Report 95-382, reprinted in 1977 U.S.C.C.A.N.
1695) remotely suggests that a prevailing plaintiff can recover punitive damages for a violation
of that statute. Indeed, courts have indicated that statutory damages are punitive in nature.");
Aronson v. Creditrust Corp., 7 F. Supp.2d 589 (W.D. Pa.1998); Thomas v. Pierce, Hamilton and
Stern, Inc., 967 F. Supp. 507 (N.D. Ga.1997).
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II.
OVERVIEW OF THE OHIO CONSUMER SALES PRACTICES ACT
A.
What Is the OCSPA and What Does it Cover?
The Ohio Consumer Sales Practices Act ("OCSPA") is found in Ohio Revised Code §
1345.01 et seq. Generally speaking, under the OCSPA a debt collector may not engage in unfair
or deceptive acts or practices in connection with a consumer transaction. R.C. § 1345.02. Ohio
consumers who bring actions under the FDCPA generally also allege violation of the OCSPA.
The Ohio courts have held that the OCSPA applies to debt collectors. See Broadnax v.
Greene Credit Service (2d Dist. 1997), 118 Ohio App.3d 881, 893, 694 N.E.2d 167, app. den., 79
Ohio St.3d 1483, 683 N.E.2d 787 (1997); Celebrezze v. United Research, Inc. (9th Dist. 1984),
19 Ohio App.3d 49, 50, 482 N.E.2d 1260; see also Hartman v. Asset Acceptance Corp., 467 F.
Supp.2d 769, 780 (S.D. Ohio 2004). So, too, has the Sixth Circuit. See Schroyer v. Frankel, 197
F.3d 1170, 1177 (6th Cir. 1999); Hartman v. Asset Acceptance Corp., 467 F.Supp.2d 769, 780
(S.D. Ohio 2004).
B.
Key Sections Governing Liability Under the OCSPA
In relevant part, the OCSPA states the following:
No supplier shall commit an unfair or deceptive act or practice in
connection with a consumer transaction. Such an unfair or
deceptive act or practice by a supplier violates this section whether
it occurs before, during, or after the transaction.
R.C. § 1345.02(A). The OCSPA then provides a non-exhaustive list of acts or practices of a
supplier that are considered "deceptive." R.C. § 1345.02(B). None of the enumerated acts
specifically lend themselves to disputes regarding the contents of collection letters.
The OCSPA also prohibits unconscionable acts by suppliers: "No supplier shall commit
an unconscionable act or practice in connection with a consumer transaction. Such an
unconscionable act or practice by a supplier violates this section whether it occurs before, during,
or after the transaction." R.C. § 1345.03(A).
The OCSPA defines a “consumer transaction,” in relevant part, as "a sale, lease,
assignment, award by chance, or other transfer of an item of goods, a service, a franchise, or an
intangible, to an individual for purposes that are primarily personal, family, or household, or
solicitation to supply any of these things. R.C. § 1345.01(A).
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The OCSPA defines “supplier,” in relevant part, as "a seller, lessor, assignor, franchisor,
or other person engaged in the business of effecting or soliciting consumer transactions, whether
or not the person deals directly with the consumer." R.C. § 1345.01(C).
The OCSPA defines a “consumer” as "a person who engages in a consumer transaction
with a supplier." R.C. § 1345.01(D).
When determining whether a consumer states a claim under the OCSPA, the debt
collector should consider whether it falls within the definition of a "supplier" who is governed by
the statute. Generally speaking, however, "Ohio courts have read these provisions to hold that
the collection of debts associated with consumer transactions . . . falls within the purview of the
OCSPA because such debt collection covers acts that occur before, during, or after the
transaction." Schroyer v. Frankel , 197 F.3d 1170, 1177 (6th Cir. 1999). "While the definition
of 'supplier' under the OCSPA is substantially broader than the definition of 'debt collector' under
the FDCPA, the requirements of the statutes are similar in that to prove that an attorney was
'engaged in the business of effecting or soliciting consumer transactions' under the OCSPA, a
plaintiff must show 'more than one isolated occurrence, especially when the occurrence is not
within the usual course of business. The phrase has generally been held to mean continuous or
regular activity, not a single isolated occurrence.'" Id. (quoting Renner v. Derin Acquisition
Corp., 111 Ohio App.3d 326, 676 N.E.2d 151, 159 (1996)) In the context of attorneys who may
collect a debt, to determine "whether an attorney is a 'supplier' under the OCSPA, a court must
consider specifically the regularity with which the attorney engages in the type of transaction
attacked by the plaintiff, and not the entire gamut of transactions in which the attorney
participates." Id.; Renner, 676 N.E.2d at 159 (finding that attorney who sent a letter demanding
payment on behalf of her client was not a “supplier” given lack of proof that she sent such letters
in the regular course of business); see also Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 412 (6th
Cir. 1998) (finding that attorney was not a “supplier” due to absence of proof that he regularly
and deliberately filed collection suits in improper jurisdiction). Thus, to determine whether
attorneys are “suppliers” under the OCSPA, courts must ask essentially the same question that is
asked to determine whether an attorney is a “debt collector” under the FDCPA: Did debt
collection activities fall within the attorney's regular and usual course of business so that he or
she was “engaged in the business of” debt collection? Schroyer v. Frankel, 197 F.3d 1170, 1177
(6th Cir. 1999).
C.
The Bona Fide Error Defense
Like the FDCPA, the OCSPA provides a supplier with a bona fide error defense: "In any
case arising under Chapter 1345 of the Revised Code, if a supplier shows by a preponderance of
the evidence that a violation resulted from a bona fide error notwithstanding the maintenance of
procedures reasonably adopted to avoid the error, no civil penalties shall be imposed against the
supplier under division (D) of section 1345.07 of the Revised Code, no party shall be awarded
attorney's fees, and monetary recovery shall not exceed the amount of actual damages resulting
from the violation." R.C. § 1345.11(A).
13
Under the plain language of R.C. § 1345.11(A), if the supplier establishes a bona fide
error, the consumer's damages are limited to actual damages.
Courts will analyze the bona fide error defense under the OCSPA in the same manner as
they analyze the bona fide error defense under the FDCPA. See Foster v. D.B.S. Collection
Agency , 463 F.Supp.2d 783, 810 (S.D. Ohio 2006).
D.
Damages
With respect to damages, the OCSPA states the following:
(B) Where . . . an act or practice determined by a court of this state
to violate section 1345.02, 1345.03, or 1345.031 of the Revised
Code and committed after the decision containing the
determination has been made available for public inspection under
division (A)(3) of section 1345.05 of the Revised Code, the
consumer may rescind the transaction or recover, but not in a class
action, three times the amount of the consumer's actual economic
damages or two hundred dollars, whichever is greater, plus an
amount not exceeding five thousand dollars in noneconomic
damages or recover damages or other appropriate relief in a class
action under Civil Rule 23, as amended.
R.C. § 1345.09 (B). Generally speaking, therefore, a consumer may recover statutory damages
of $200 or three times his actual damages, whichever is greater, plus an amount not exceeding
$5,000 for non-economic damages. R.C. § 1345.09(B).
Attorneys' fees are also available to a prevailing party under the OCSPA:
The court may award to the prevailing party a reasonable attorney's
fee limited to the work reasonably performed, if either of the
following apply:
(1) The consumer complaining of the act or practice that
violated this chapter has brought or maintained an action
that is groundless, and the consumer filed or maintained the
action in bad faith;
(2) The supplier has knowingly committed an act or practice
that violates this chapter.
14
R.C. § 1345.09(F). Therefore, attorneys' fees are available to a prevailing consumer if a supplier
knowingly violates the OCSPA. Under Ohio law, "to establish a knowing violation of [the
OCSPA], for an award of attorney fees, a plaintiff need prove only that the defendant acted in a
manner that violated the CSPA and need not prove that the defendant knew that the conduct
violated the law." Charvat v. Ryan (Ohio 2007), 116 Ohio St.3d 394, 401, 879 N.E.2d 765, 772.
Because there may be a relatively small recovery of actual or statutory damages on
OCSPA claims, attorneys' fees may comprise much of any award of damages. For example, in
Luft v. Perry County Lumber & Supply Co. (10th Dist.) 2003-Ohio-305, a consumer sued a paint
manufacturer, lumber yard, and others claiming fraud, negligence, breach of contract, breach of
express and implied warranties, and violation of OCSPA, and product liability for paint failure
on pre-coated lumber used in the consumer's buildings. The consumer prevailed and received
compensatory damages in the amount of $8,000 and attorneys' fees of $86,000. In affirming the
award, the Tenth District Court of Appeals held that the trial court was not required to consider a
proportionality determination of reasonable attorney fees. The trial court properly considered
time spent on case, hourly rate, and complexity of issues in arriving at the fee award. The court
noted that the legislative purpose of the OCSPA attorney fee provision was to permit meritorious
consumer protection claims to be brought in spite of a relatively small potential damages.
Similar to the FDCPA, a prevailing supplier may also recover attorneys' fees if it
establishes that the consumer brought a groundless action and filed or maintained the action in
bad faith. R.C. 1345.09(F)(1). As one might expect, a court will rarely award a prevailing
supplier its attorneys' fees. See Davis v. Axelrod Chrysler Plymouth, Inc. (8th Dist.), 2003-Ohio438, ¶ 34 (reversing trial court's award of attorneys' fess to a car dealership on consumer's
OCSPA claim and holding that prevailing care dealership was not entitled to its attorney fees,
absent any evidence that the buyer brought her action for any purpose other than pursuing her
perceived rights under the CSPA.)
A prevailing consumer may also recover punitive damages in connection with a violation
of the OCSPA. Boyce v. Attorney's Dispatch Serv., Case No. C-3-94-347, 1999 WL 33495605,
at *2 (S.D. Ohio 1999) (quoting Preston v. Murty, 32 Ohio St.3d 334, 512 N.E.2d 1174 (1987)
(syllabus)) (awarding punitive damages to a prevailing consumer and noting "[p]unitive damages
may be awarded under the law of Ohio, when, inter alia, the defendant has acted with “a
conscious disregard for the rights and safety of other persons that has a great probability of
causing substantial harm.”).
III.
What Are the Requirements for a Collection Letter?
A.
Governed by 15 U.S.C. § 1692g(a)
15 U.S.C. § 1692g(a) sets forth the required contents of a typical collection, or dunning,
letter:
15
(a)
Notice of debt; contents
Within five days after the initial communication with a consumer
in connection with the collection of any debt, a debt collector shall,
unless the following information is contained in the initial
communication or the consumer has paid the debt, send the
consumer a written notice containing--
B.
(1)
the amount of the debt;
(2)
the name of the creditor to whom the debt is owed;
(3)
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;
(4)
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; and
(5)
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.
Typical Notice of Validation of Debt.
A typical notice of validation of a debt that would appear in a collection letter is as
follows: "Unless you notify this office within 30 days after receiving this notice that you dispute
the validity of this debt or any portion thereof, this office will assume this debt is valid. If you
notify this office in writing within 30 days from receiving this that you dispute the validity of
this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of
a judgment and mail you a copy of such judgment or verification. If you request this office in
writing within 30 days after receiving this notice this office will provide you with the name and
address of the original creditor, if different from the current creditor."
It is important to note that a consumer need not dispute the debt in writing. See Jerman v.
Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 464 F. Supp.2d 720, 725 (N.D. Ohio 2006).
16
C.
The "Mini-Miranda"
A communication to a consumer must state the following information, typically referred
to as the "mini-Miranda": "This is an attempt to collect a debt. Any information will be used for
that purpose. This communication is from a debt collector."
Under 15 U.S.C. § 1692e(11), a debt collector may not fail "to disclose in the initial
written communication with the consumer and, in addition, if the initial communication with the
consumer is oral, in that initial oral communication, that the debt collector is attempting to
collect a debt and that any information obtained will be used for that purpose, and the failure to
disclose in subsequent communications that the communication is from a debt collector, except
that this paragraph shall not apply to a formal pleading made in connection with a legal action."
IV.
PITFALLS IN COLLECTION LETTERS
A.
Overshadowing - 15.U.S.C. § 1692g(b)
In its initial correspondence with a debtor, a debt collector may not "overshadow" the
time period in which the debtor has to seek verification of the debt. 15 U.S.C. § 1692g(b) states,
"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." Generally speaking, a "[d]ebt collection notice is
'overshadowing' or 'contradictory' if it makes an unsophisticated consumer uncertain as to his or
her rights under Fair Debt Collection Practices Act." Sturdevant v. Thomas E. Jolas, P.C., 942
F. Supp. 426 (W.D. Wis. 1996). Although a collection letter may track the statutory language,
the collector nonetheless violates the FDCPA if it conveys that information in a confusing or
contradictory fashion so as to cloud the required message with uncertainty. Meselsohn v.
Lerman, 485 F.Supp.2d 215 (E.D. N.Y. 2007).
1.
Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991). The court held an
attorney violated 15 U.S.C. § 1692e(10) by demanding payment of a debt
within 10 days, which is inconsistent with the 30 day time frame to dispute
a debt contained in 15 U.S.C. § 1692g. The court reasoned that a notice of
rights, when presented in conjunction with such a contradictory demand, is
not effectively communicated to the debtor.
17
2.
Jacobson v. Healthcare Financial Services, Inc., 516 F.3d 85 (2d Cir.
2008). The court held that the debt collector's letter to consumer stating,
“If your payment or notice of dispute is not received in this office within
30 days, we shall recommend further action be taken against you to collect
this outstanding balance,” did not overshadow or contradict collector's
notice that consumer had right to require verification of debt, on ground
that consumer would be uncertain whether she had any right to dispute
debt at all before payment, in violation of FDCPA. The court reasoned that
the least sophisticated consumer would understand that consumer had
option to submit notice of dispute within 30 days, rather than pay claimed
sum within 30 days, and right to seek validation of debt was further
explained in clear terms on face of demand letter.
3.
Olson v. Risk Management Alternatives, Inc., 366 F.3d 509 (7th Cir.
2004). The court held that a form collection letter twice stating that
amount was “Now Due” did not contradict or overshadow meaning of 30day validation notice, in violation of FDCPA; phrase “Now Due,” even to
an unsophisticated consumer, simply meant that debt collector was willing
to accept less than the total balance of the debt to bring the account to
current status.
4.
Terran v. Kaplan, 109 F.3d 1428, on remand 989 F. Supp. 1025 (9th
Cir. 1997). The court held that language in a debt collector's initial letter
to a debtor, besides statutorily required notice of the debtor's 30-day right
to dispute debt, whereby the debt collector warned the debtor of the need
to “immediately” contact the debt collector in order to avoid possible legal
action, did not contradict or overshadow the validation notice itself, in
violation of the FDCPA, where the debt collector nowhere required
immediate payment but only an immediate call to his office, and where the
letter was typed in uniform, same-size type, which did not emphasize any
particular statement in letter.
5.
Durham v. Continental Cent. Credit, Inc., 600 F. Supp.2d 1124 (S.D.
Cal. 2008). The court held that a debtor's allegation that a second demand
notice sent by a collection agency obscured her right to dispute her was
sufficient to state claim against agency under FDCPA, where the first
notice informed debtor of her right to dispute debt's validity within 30
days, but second notice, sent within that 30-day period, demanded
immediate payment.
18
6.
Owens v. Hellmuth & Johnson, PLLC, 550 F. Supp.2d 1060 (D. Minn.
2008). The court held that a letter seeking to collect overdue homeowners'
association dues contained language that overshadowed or contradicted its
validation notice, in violation of the FDCPA. The court reasoned that
even if threatened consequences of failing to pay were not inexorable,
where the letter advised consumers of their right to contest debt within 30
days of their receipt of letter, but later stated that their entire annual
assessment might be accelerated if they did not pay within 30 days of date
of letter, and letter did not explain that its demand for payment did not
override the consumers' right under FDCPA to seek validation of debt.
7.
Register v. Reiner, Reiner & Bendett, PC, 488 F. Supp.2d 143 (D. Conn.
2007). The court held that language in a debt collector's letter to a
consumer regarding time to cure default overshadowed and contradicted
language informing the consumer about time in which he could dispute his
debt, in violation of the FDCPA, where the letter stated that consumer
only had thirty days to cure default before suit would be brought, and
nothing in letter indicated that the debt collector would halt its debt
collection activity if the consumer made a written request for validation.
8.
Spira v. Ashwood Financial, Inc., 358 F. Supp.2d 150 (E.D. N.Y. 2005).
The court held that notice in a debt collection letter stating it was the debt
collector's policy to report all unpaid accounts to a major credit bureau
after 30 days of the notice and urging the consumer to protect her credit by
paying her debt did not overshadow the letter's validation notice, in
violation of the FDCPA. The court reasoned that the notice did not state
that the policy of reporting unpaid accounts depended on how the
consumer responded or that the consumer's failure to pay her debt and
forego her right to contest it would hinder her ability to obtain credit in the
future, and the validation notice was presented in same font, size and typeface.
9.
Kelly v. Montgomery Lynch & Associates, Inc., No. 1:07-CV-919, 2008
WL 1775251, *8 (N.D. Ohio Apr. 15, 2008). Where a collection letter
stated that the consumer must make a payment within 10 days and also
stated that the consumer had 30 days to dispute the debt, the court found a
genuine issue of material fact whether the thirty-day validation notice was
overshadowed by the debt collector's implicit threat that the consumer
would be criminally prosecuted for failing to pay the debt within 10 days
of receipt of the letter.
19
B.
Misrepresenting the Character of the Debt - 15 U.S.C. § 1692e(2)(A)
In the age of form collection letters, debt collectors are presented with significant
challenges to avoid making misrepresentations as to the character of a debt. Collection letters
should avoid referring to the debtor as a "customer" if the debtor is not a customer, avoid stating
that the debt collector "issued" an account if it was actually issued by an original creditor, and
avoid stating that the debt collector is "subrogated" to the original creditor's rights if the debt
collector is not so subrogated.
1.
Aronson v. Commercial Fin. Servs., Inc., No. Civ.A. 96-2113, 1997 WL
1038818 (W.D. Pa. Dec. 22, 1997). A debt collector sent a collection
letter to a debtor addressed as "Dear Customer," even though the debtor
was not a "customer" of the debt collector because the debt collector was
not the original creditor. The debtor sued under section 1692(e)(2) for
misrepresentation of the character of the debt. The court granted the debt
collector's motion for summary judgment because the letter would not
deceive a least sophisticated consumer by addressing the recipient as a
customer. The letter clearly identified itself as an attempt to collect a debt
on behalf of a company that acquired the rights to the debtor's credit card
accounts. Even though the debt collector was not the original creditor, it
did not attempt to mislead the debtor. Moreover, the language tracked the
language in section 1692g for notices to consumers. Therefore, the court
held the debt collector did not misrepresent the nature of the debt.
2.
King v. Arrow Fin. Servs., LLC, No. CIV.A. 02-0867 (E.D. Pa. July 31,
2003). A court granted a debt collector's motion for partial judgment on
the pleadings. There, a debt collector purchased an account from JC
Penney, and in a collection letter to a debtor referred to the debtor as "our
client." The debtor claimed that by referring to him as "our client," the
debt collector violated section 1692e(2) by misrepresenting the nature of
the debt since it actually purchased the account from JC Penney. The
court held the debt collector did not misrepresent the nature of the debt
and the effect of using the term "client" at most had a "di minimus" effect
on the least sophisticated consumer. "Although the pro-consumer
objectives of the FDCPA are broad, they do not encompass an incorrect
statement that has no material affect on the collection of a debt."
3.
Gearing v. Check Brokerage Corp., 233 F.3d 469 (7th Cir. 2000). A
debt collector brought suit against a debtor and, in the complaint, alleged
that it was "subrogated" to the rights of a creditor when, in fact, it was not
subrogated to the rights of the creditor. The court held that this
representation violated sections 1692e(2) and 1692e(10) because it was a
false representation to collect a debt, even though it was unintentional.
20
C.
Misrepresenting the Amount of the Debt - 15 U.S.C. § 1692e(2)(A)
A collection letter must not only accurately represent the character of a debt, it must also
accurately represent the amount of the debt. In this context, a consumer might allege that a
collection letter violates Section 1692e(2)(A) by failing to provide the exact amount due, by
failing to explain that the amount of the debt was adjustable on a daily basis based on interest
accrual, or by failing to break down the amount due into principal, interest, finance and other
charges.
1.
Fields v. Wilbur Law Firm, P.C., 383 F.3d 562 (7th Cir. 2004). The
Seventh Circuit reversed a district court's decision that a consumer failed
to state an FDCPA claim where a collection letter listed an account
balance that exceeded the principal obligation, but did not explain that the
debt collector was seeking attorneys' fees. The Seventh Circuit stated,
"Even if attorneys' fees are authorized by contract . . . and even if the fees
are reasonable, debt collectors must still clearly and fairly communicate
information about the amount of the debt to debtors. This includes how the
total amount due was determined if the demand for payment includes addon expenses like attorneys' fees or collection costs." Id. at 565.
2.
Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark, LLC,
214 F.3d 872 (7th Cir. 2000). A collection letter stated that the "unpaid
principal balance" of the mortgage loan was $178,844.65. The letter also
stated that "this amount does not include accrued but unpaid interest,
unpaid late charges, escrow advance, or other charges for preservation and
protection of the lender's interest in the property as authorized by your
loan agreement. The amount to reinstate or pay off your loan changes
daily. You may call our office for complete reinstatement and payoff
figures." Id. at 875. The court expressed concern that the letter only
provided a principal balance, and the court found that the list of other
charges that may or may not be owed violated the FDCPA because it
implied that the amount in the letter was not actually the full amount of the
debt owed. The court stated that the FDCPA required the debt collector to
state "the total amount due - interest and other charges as well as principal
on the date the dunning letter was sent." Id.
3.
Bartlett v. Heibel, 128 F.3d 497, 499 (7th Cir. 1997). The Seventh
Circuit provided a "safe harbor" letter for debt collectors to use to avoid
violation of the FDCPA, which stated the total amount of the debt owed as
of a particular date: "I have been retained by Micard Services to collect
from you the entire balance, which as of September 25, 1995, was
$1,656.90, that you owe. . . ."
21
D.
Misrepresenting the Legal Status of a Debt - 15 U.S.C. § 1692e(2)(A)
Consumers often allege a violation of 15 U.S.C. § 1692e(2) when there is any inaccuracy
whatsoever regarding the amount or other characteristics of the debt. The Seventh Circuit has
concluded that a literally false statement in a collection letter violates the FDCPA as a matter of
law. See, Avila v. Rubin, 84 F.3d 222, 227 (7th Cir.1996). The Sixth Circuit suggested in an
unpublished opinion that an “incorrect” representation in a collection letter is sufficient under
section 1692e(2) to withstand a motion to dismiss, without discussing its deceptive or misleading
character. See, Savage v. Hatcher, 109 Fed.Appx. 759, 761, 2004 WL 2030310, *2 (6th
Cir.2004); Kelly v. Great Seneca Financial Corp., 443 F.Supp.2d 954, 961 (S.D. Ohio 2005).
Few cases focus on the "legal status" language from Section 1692e(2)(A). However, in
Hartman v. Asset Acceptance Corp., 467 F.Supp.2d 769 (S.D. Ohio 2004), the court held that a
debt collector's employee's affidavit attached to a state-court complaint seeking judgment against
consumer for an unpaid credit card debt, allegedly falsely representing debt collector as “holder
in due course,” was actionable under the FDCPA and OCSPA as a representation concerning the
“legal status” of debt, if the representation was in fact false, and if the debt collector could not
establish its entitlement to the FDCPA's bona fide error defense.
E.
Misrepresenting the Compensation that May be Received by the Debt
Collector (i.e., attorneys' fees) - 15 U.S.C. § 1692e(2)(B).
Under 15 U.S.C. § 1692e(2)(B), a debt collector may not falsely represent "any services
rendered or compensation which may be lawfully received by any debt collector for the
collection of a debt."
In Foster v. D.B.S. Collection Agency, 463 F. Supp.2d 783, 802 (S.D. Ohio, 2006), the
district court held that a standard request for attorney fees in Ohio debt collection action
complaints against consumer debtors was deceptive or misleading from the perspective of the
least sophisticated consumer, in violation of FDCPA, where the statement constituted an absolute
entitlement to attorney fees, but such fees were not recoverable under Ohio law. In that case,
consumers asserted that a debt collector's state court complaints against class members
unlawfully demanded a right to attorney's fees, in violation of § 1692e(2)(B). The district court
noted that, under Ohio law, creditors are not permitted to recover attorneys fees incurred in
connection with debt collection suits involving “personal, family, or household” debts. Id.; see
R.C. § 1301.21. In this case, the debt collector sought relief for attorney fees in the underlying
complaints. From the perspective of the “least sophisticated consumer,” that statement in a
prayer for relief constituted an absolute entitlement to attorney fees, even though such fees are
not recoverable under Ohio law. Therefore, the court concluded that the debt collector's standard
request for attorney fees in Ohio debt collection action complaints constituted a violation of 15
U.S.C. § 1692e(2)(B), and the court granted summary judgment to the consumer on that issue.
22
Although the Foster case addressed a request for attorneys' fees in an actual state court
complaint, the analysis may be instructive in the context of collection letters. In particular, under
Foster, a debt collector should avoid stating in an Ohio collection letter that it is entitled to
attorneys' fees should it file a collection action against the consumer.
F.
Threatening to Take Legal Action that Is Not Intended to Be Taken - 15
U.S.C. § 1692e(5)
A collection letter violates 15 U.S.C. § 1692e(5) only if a debtor establishes both of the
following: (1) a debtor would reasonably believe that the letter threatens imminent legal action;
and (2) the debt collector does not intend to take legal action. See United States v. National Fin.
Servs., Inc., 98 F.3d 131, 135 (4th Cir. 1996). Courts have rejected claims under Section
1692e(5) based upon allegedly illegal conduct that is not just threatened, but actually undertaken.
See Delawder v. Platinum Financial Services Corp., 443 F.Supp.2d 942, 948 (S.D. Ohio, 2005);
Wehrheim v. Secrest, No. IP 00-1328-C-T/K, 2002 WL 31242783, at *5 (S.D. Ind. Aug.16,
2002) (granting summary judgment to defendant debt collector on Section 1692e(5) claim where
debt collector actually filed allegedly illegal suit to recover on debt); Clark v. Pollard, No. IP 991414-C H/G, 2000 WL 1902183, at *2-3 (S.D. Ind. Dec. 28, 2000) (plaintiff did not state a claim
under Section 1692e(5) for allegedly illegal action actually undertaken); Pearce v. Rapid Check
Collection, Inc., 738 F.Supp. 334, 338 (D. S.D.1990) ("Plaintiff in this case has shown no facts
which would support a conclusion that there was a lack of intent to follow through with the
threat of litigation, and in the face of actual litigation, her allegation fails.").
Generally speaking, a debt collector may state that if a debt is not paid, the debt collector
will refer this matter to an attorney in the debtor's area for legal consideration. Further, the debt
collector may inform the debtor that if judgment is rendered against the debtor, the debt collector
will collect payment using all methods legally available. However, a debt collector cannot make
these assertions in a collection letter if it has no intent on following through with litigation. For
example, if a debt collector sends a dunning letter with this or similar language to a debtor in
Alaska, but the debt collector has never sued a debtor in Alaska, the debtor may have a strong
argument that the debt collector violated 15 U.S.C. § 1692e(5) by threatening to take legal action
it did not intend to take. The key to determining whether language in the collection letter
violates the FDCPA is whether the language threatens "imminent" legal action without the intent
to take such action, or if the letter misleadingly states that legal proceedings have already begun.
23
1.
Cases Finding No Threat of Legal Action
a.
General rule: "A debt collector may state that certain action is
possible, if it is true that such action is legal and is frequently taken
by the collector or creditor with respect to certain debts." Young v.
Manley, No. 99 C 5569, 2000 U.S. Dist. LEXIS 13035, at * 12
(N.D. Ill. Sept. 7, 2000) (quoting FTC Official Staff Commentary
on the Fair Debt Collection Practices Act, 53 Fed.Reg. 50097
(Dec. 13, 1988)).
b.
Jenkins v. Union Corp., 999 F. Supp. 1120, 1137-1138 (N.D. Ill.
1998). An attorney sent a collection letter stating that the
"economic feasibility of some type of litigation" had not been
determined and "if legal action were to be undertaken, it would be
costly and time-consuming." The court ruled that the letter did not
violate 15 U.S.C. § 1692e(5) because "the letter's reference to
litigation lacked imminence." In finding no threat of imminent
litigation, the court noted that the paragraphs discussing litigation
were phrased in terms of hypotheticals such as "if legal action were
taken" and "should such court action occur." The court held that
"for a collection letter to threaten legal action under § 1692e(5), it
must communicate that a lawsuit is not merely a possibility, but
that a decision to pursue legal action is either imminent or has
already been made."
c.
Brown v. Card Service Center, No. 05-0498, 2005 U.S. Dist.
LEXIS 12810, at * 10, *21 (E.D. Pa. June 27, 2005). A
collection agency sent a debt collection letter stating that the
failure of the debtor to cooperate "could" result in legal action.
The court ruled that the letter did not violate 15 U.S.C. § 1692e(5)
because it did "not threaten imminent legal action against plaintiff
and in no way indicate[d] that action had already been taken."
Rather, the letter was a "lawful reminder that litigation is a step
available in the debt collection process."
24
d.
Madonna v. Academy Collection Serv., Inc., No. 3:95CV00875,
1997 U.S. Dist. LEXIS 13315, at *6-*7 (D. Conn. Aug. 12,
1997). A debt collector sent three letters informing the debtor that
"[o]ur client may choose to pursue legal action." The final letter
stated "it is our intent to close our files and inform our client that
you have refused to cooperate." The letter further described
possible consequences of litigation and suggested the debtor obtain
legal counsel. The court held that the letters' references to legal
action were not threats to pursue litigation but, rather, merely
communicated that litigation was one possible course of action.
The court stated, "Far from threatening legal action, the statement .
. . indicates that legal action is an option available to the creditor,
who may indeed choose to take advantage of it." In finding that
the statement in the collection letters did not violate 15 U.S.C. §
1692e(5), the court stated, "The fact that a creditor may sue on an
unpaid debt is a possibility which would be understood even by the
least sophisticated consumer."
e.
Smith v. Transworld Sys., Inc., No. C-3-96-166, 1997 U.S. Dist.
LEXIS 23775, at *10 (S.D. Ohio July 31, 1997). The court held
that a collection letter containing the words "further collection
procedures," "legally due," "protracted and unpleasant collection
effort," "litigation," "legal action," "court costs," "attorneys' fees,"
"court action," "judgment," "garnishment," "execution," "voluntary
settlement," and "no defense to this claim," did not violate 15
U.S.C. § 1692e(5). In so holding, the court reasoned "those words
and phrases, read in the context in which they appear in collection
letters, do not establish, as a matter of law, that the Defendants
threatened imminent legal action against the Plaintiff."
f.
Riveria v. MAB Collections, Inc., 682 F. Supp. 174, 178 (W.D.
N.Y. 1988) (holding language in a collection letter that "legal
action may be necessary in order to collect this bill" did not violate
15 U.S.C. § 1692e(5) because "even an unsophisticated person
would realize this statement to mean that because he has allowed
his debt to remain unpaid, a suit may be brought to collect the
amount owed.")
.
25
2.
g.
Combs v. Direct Marketing Credit Serv., Inc., No. 1998 U.S.
App. LEXIS 32670, at * 5-*6 (7th Cir. Dec. 29, 1998) (holding
language in a collection letter stating "this is your opportunity to
resolve this matter amicably" and "we advise you to consult with
your attorney regarding your liability" did not violate 15 U.S.C. §
1692e(5) because the words did not "imply that litigation has been,
or will be, initiated").
h.
Knowles v. Credit Bureau of Rochester, No. 91-CV-14S, 1992
U.S. Dist. LEXIS 8349, at *3, *6 (W.D. N.Y. May 27, 1992)
(holding language in a collection letter stating "failure to pay will
leave our client no choice but to consider legal action" did not
violate 15 U.S.C. § 1692e(5) because "[a]t most, the language at
issue here threatened that the creditor will have to consider legal
action[.]").
i.
Courts have further noted that where the likelihood of legal action
is unclear from the text of a collection letter, the letter's source can
be determinative, "especially if it purports to be from an attorney."
E.g. Jenkins, 999 F. Supp. at 1137; see also Brown, 2005 U.S.
Dist. LEXIS 12810, at * 9-*10 (quoting Crossley v. Lieberman,
868 F.2d 566, 570 *3d Cir. 1989) (finding that the fact that a
collection letter was sent by a collection agency rather than an
attorney was an important distinction because "abuses by attorney
debt collectors are more egregious than those of lay collectors
because a consumer reacts with far more duress to an attorney's
improper threat of legal action than to a debt collection agency
committing the same practice"). Thus, a collection letter from a
debt collector is less likely to threaten imminent litigation in
violation of 15 U.S.C. § 1692e(5) than one sent from an attorney.
Cases Finding an Unlawful Threat To Take Legal Action
a.
United States v. National Financial, 98 F.3d 131, 137 (4th Cir.
1996) (finding that a collection letter sent by an attorney stating
"only immediate payment will stop further legal action" violated
section 1692e(5) because the letter "connote[d] that a real attorney,
acting like an attorney, ha[d] considered the debtor's file and
concluded in his professional judgment that the debtor [was] a
candidate for legal action").
26
b.
Bentley v. Great Lakes Collection Bureau, Inc., 6 F.3d 60, 62 (2d
Cir. 1993) (holding that a collection letter stating that a collection
agency had authority to file suit when it did not, in fact, have such
authority "implied that the commencement of legal proceedings
was imminent" and violated section 1692e(5)).
c.
Keli v. Universal Fidelity Corp., No. Civ. 96-00366ACK, 1997
U.S. Dist. LEXIS 23940, at *19 (D. Haw. Feb. 25, 1997) (holding
that a collection letter violated section 1692e(5) because it "clearly
indicate[d] the possibility of an impending legal action" despite the
fact that the debt collector was not even authorized to take such
action).
Pipiles v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 25 (2d
Cir. 1989) (holding that a collection letter stating "this item has
already been referred for collection action" violated section
1692e(5) because "[t]he clear import of the language, taken as a
whole, is that some type of legal action [had] already been or [was]
about to be initiated and [could] be averted from running its course
only by payment").
d.
3.
Cases Discussing the Debt Collector's "Intent."
a.
The debtor bears the burden of proof with respect to a debt
collector's intent under 15 U.S.C. § 1692e(5). Tsenes v. TransContinental Credit & Collection Corp., 892 F. Supp. 461, 465
(E.D. N.Y. 1995); Kapeluschnik v. LeSchack & Grodensky, P.C.,
No. 96-CV-2399, 1999 U.S. Dist. LEXIS 22883, at * 23-*24
(E.D. N.Y. Aug. 25, 1999).
b.
A creditor's intent cannot be determined merely by examining the
collection letter. See Moore v. Frazier, No. 00-60590, 2002 WL
753508, at * 2 n.2 (5th Cir. Apr. 10, 2002).
27
c.
Where a collection letter threatens suit, but the debt collector never
actually files suit, the mere fact that the debt collector did not bring
suit is insufficient to establish it never "intended to" bring suit.
E.g. Kapeluschnik, 1999 U.S. Dist. LEXIS 22883, at * 24
(granting summary judgment to a debt collector under 15 U.S.C. §
1692e(5) because a debtor could not meet his burden of
establishing that the debt collector did not intend to bring suit by
the mere fact that the debt collector never actually filed suit against
the debtor); Gaetano v. Payco of Wisconsin, Inc., 774 F. Supp.
1404, 1408 (D. Conn. 1990) (dismissing a debtor's 15 U.S.C. §
1692e(5) claim because the debtor "has offered no evidence, other
than counsel's bald assertions, regarding defendant's intent as to
any future actions"); Tsenes, 892 F. Supp. at 465 (stating that to
meet its burden of proof and "affirmatively show the defendant did
not intend to bring legal action," the debtor would have to show
that a lawsuit would not even be an option because, for example,
the creditor had a practice of not litigating claims against
consumers).
d.
Madonna v. Academy Collection Serv., Inc., No. 3:95CV00875,
1997 U.S. Dist. LEXIS 13315, at *20 (D. Conn. Aug. 12, 1997).
The court held that, under 15 U.S.C. § 1692e(5), a debtor failed to
established that a debt collector never intended to bring suit
because the debt collector had accounts for litigation in all fifty
states, including the state where the debtor brought suit.
e.
United States v. National Financial Servs., Inc., 98 F.3d 131 (4th
Cir. 1996). An attorney sent "literally millions" of collection
letters, only filed suit 15 times, and never filed suit against anyone
within the two year term of that litigation. Thus, plaintiff
established that debt collector never "intended" to file suit.
f.
Young v. Manley, No. 99 C 5569, 2000 U.S. Dist. LEXIS 13035,
at * 10-*11 (N.D. Ill. Sept. 6, 2000). The court held a law firm did
not violate 15 U.S.C. § 1692e(5) because, even though it
threatened suit against the plaintiff and never filed suit, it did file
suit in 20% of the cases for which it sent letters.
g.
Robinson v. Transworld Sys., Inc., 876 F. Supp. 385, 392-393
(N.D. N.Y. 1995). The court held that a debt collector did not
violate 15 U.S.C. § 1692e(5) by threatening suit, but not bringing
suit, because it did actually refer files to an office that
recommended legal action depending on the facts of each case.
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h.
G.
H.
Edwards v. McCormick, 136 F. Supp. 2d 795, 805 (S.D. Ohio
2001). The court held that a collection letter threatening to
foreclose on real property of a consumer violated 15 U.S.C. §§
1692e(5) and 1692e(10). Such foreclosure was prohibited by R.C.
2329.66(A)(1)(a), and the debt collector testified that that he never
foreclosed upon the homes of consumer debtors, which was the
only evidence before the court as to his intention, or lack thereof,
to foreclose upon the consumer's residence.
Threatening to Take Legal Action that Cannot Be Taken - 15 U.S.C. §
1692e(5).
1.
Where a debt collector threatens to sue on a debt it knew was time-barred
by the statute of limitations, a violation of the FDCPA will lie. See
Gervais v. Riddle & Associates, P.C., 479 F.Supp.2d 270 (D. Conn.
2007); Stepney v. Outsourcing Solutions, No. 97 C 5288, 1997 U.S. Dist.
LEXIS 18264, at *5 (N.D. Ill. Nov. 13, 1997); Kimber v. Federal Fin.
Corp., 668 F. Supp. 1480, 1488-90 (M.D. Ala. 1987). However, since
the running of the statute of limitations does not extinguish a debt, courts
have permitted debt collectors to send collection letters for time-barred
debt where the letters do not threaten collection action. Gervais, 479
F.Supp.2d at 273. Courts have also found that absent a threat of litigation
or other remedy that the debt collector could not legally pursue, there is no
FDCPA violation in attempting to collect on a time-barred debt. Id.
2.
Gionis v. Javitch, Block & Rathbone, 405 F.Supp.2d 856 (S.D. Ohio
2005). The court held that a law firm, as a debt collector, threatened to
take action that it could not legally take or that it did not intend to take, in
violation of the FDCPA, by filing complaint in n Ohio lawsuit against
consumer debtor that included an attached affidavit from a creditor which
declared that the creditor was entitled to recover, to extent permitted by
applicable law, its reasonable attorney's fees as stated in the contract, since
R.C. 1301.21 precluded collection of attorneys' fees from consumer
debtors.
Falsely Representing that a Communication is From an Attorney - 15 U.S.C.
§ 1692e(3)
A debt collector may not falsely represent or imply "that any individual is an attorney or
that any communication is from an attorney." To avoid an arguable violation of this provision, a
general rule of thumb for a non-attorney debt collector is to avoid any reference to a legal
division and avoid use of the suffix "Esq."
29
1.
Tromba v. MRS Assocs., Inc., 323 F. Supp.2d 242, 248 (E.D. N.Y.
2004). A non-lawyer sent a debt collection letter from the debt collector's
"legal department" referring to himself as a "senior legal associate." The
plaintiff argued that this letter violates section 1692e(3) because reference
to the sender as a "senior legal associate" was inaccurate because he was
not licensed to practice law. The debt collector argued in a reply
memorandum in support of a motion to dismiss that not even the least
sophisticated consumer would interpret a "senior legal associate" as
equivalent to an "attorney at law." This argument was not properly before
the court because it was not raised in the initial motion to dismiss.
However, the court stated "it harbors grave doubts as to whether any
reasonable trier of fact, even under the least sophisticated consumer
standard, could conclude that "senior legal associate" was equivalent to
"attorney at law" or "lawyer."
2.
Rumpler v. Philips & Cohen Assocs., 219 F. Supp.2d 251, 257 (E.D.
N.Y. 2002) The court granted a debt collector's motion to dismiss (or,
alternatively, motion for summary judgment). There, a non-lawyer sent a
collection letter to a debtor, and signed his name with the term "Esq." The
debtor asserted a claim under section 1692e(3) for falsely representing that
the communication was from an attorney. The court held that no
reasonable trier of fact could conclude that the term "Esq." was equivalent
to a claim of being an attorney.
3.
Grief v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 217 F.
Supp.2d 336, 341-342 (E.D. N.Y. 2002) The district court granted a law
firm's motion to dismiss a section 1692e(3) claim. There, a law firm sent
a debt collection letter on law firm stationary directing the debtor to call
"Mr.. DeGaetano," a non-lawyer employee of the law firm. The plaintiff
alleged that the letter was in violation of section 1692e(3) because it
falsely implied that Mr. DeGaetano was an attorney. The court held that
the letter did not violate section 1692e(3) and that the letter did not imply
to the least sophisticated consumer that Mr. DeGaetano was an attorney.
The letter did not give his title, but did not affirmatively state he was an
attorney. Further, the words "counsel" or "lawyer" did not appear in the
letter, except in reference to attorneys' fees. Therefore, the court granted
the defendant's motion to dismiss.
30
I.
4.
Belile v. Allied Med. Accounts Control Associated Bureaus (In re
Belile), 209 B.R. 658, 662 (E.D. Pa. 1997). The court held that a debt
collector's collection letter threatening to refer a claim to its "legal
department" violated section 1692e(5), which prohibits threats of legal
action that cannot legally be taken or that are not intended to be taken.
Because the debt collector lacked a license to bring legal action, the court
found the threat to be a false and misleading representation. The court
further found that the letter violated section 1692e(10).
5.
Kistner v. Law Offices of Michael P. Margelefsky, LLC, No.
3:05CV7238, 2007 U.S. Dist. LEXIS 1925 (N.D. Ohio Jan. 10, 2007).
A debt collector sent a collection letter to a consumer printed on "Law
Offices of Michael P. Margelefsky, LLC" letterhead, and containing the
address and telephone number of the debt collection business. Id. at *2.
The consumer brought suit against the debt collector alleging that the
letter violated Section 1692e(3) because the name of the collection agency
was "Law Offices of Michael P. Margelefsky, LLC," the notice was on
"Law Offices of Michael P. Margelefsky, LLC" letterhead, and the law
practice and the collection business operated out of the same office,
among other reasons. Id. at *6. The court granted summary judgment in
favor of the debt collector because, among other reasons, the notice clearly
stated it was from a "debt collector" and the law firm letterhead was not
determinative. Id.
Harassing or Abusing the Debtor - 15 U.S.C. § 1692d
15 U.S.C. § 1692d renders a debt collector liable for engaging in conduct that has the
natural consequence of harassing, oppressing, or abusing a debtor in connection with the
collection of a debt. Section 1692d lists several nonexclusive examples of such conduct,
including, inter alia, threats of violence, use of obscene or profane language, causing a telephone
to repeatedly ring with intent to annoy, abuse, or harass a person, and so forth.
1.
Bryant v. Bonded Account Service/Check Recovery, Inc., 208 F.R.D. 251
(D. Minn. 2000). The district court of Minnesota found that the natural
consequence of language used in debt collector's dunning letter, stating
that “in case of an emergency, will you be refused credit because of this
unpaid account we have for collection?” was not abusive to
unsophisticated reader under FDCPA. Although it was arguably abusive
to subjective eyes of abnormally sensitive reader, the question was not
“offensive” in a way that was akin to profanity or obscenity.
31
J.
2.
Gaetano v. Payco of Wisconsin, Inc., 774 F. Supp. 1404 (D. Conn.
1990). The court held that reference in second collection notice from a
debt collector giving debtor “THIS OPPORTUNITY TO SETTLE THIS
MATTER IN A FRIENDLY MANNER,” following the first notice in
which the debt collector stated it would resort to all approved means to
collect debt, did not imply that the debt collector would resort to
unfriendly methods including violence if friendly methods did not
succeed, in violation of provision of the FDCPA prohibiting harassing,
oppressing, or abusive conduct in connection with collection of a debt.
3.
Masuda v. Thomas Richards & Co., 759 F. Supp. 1456 (C.D. Cal. 1990).
The court held that even if all of the alleged 48 letters sent to a debtor by a
debt collector over a period of eight months referred to the same debt, the
mailing of six letters per month would not be “harassing.”
4.
Harvey v. United Adjusters, 509 F. Supp. 1218 (D. Or. 1981). The court
held that a letter which was sent by a debt collector to a consumer and
which implied that the consumer removed her head when she received
letters from the collector, that she ignored her mail and her bills, and that
she lacked common sense to handle her financial matters properly, when
in fact she had called collector in response to earlier letter and her call had
not been returned, violated 15 U.S.C. § 1692d, which prohibited a debt
collector from engaging in any conduct that harasses or abuses any person
in connection with collection of debt.
Threatening to Collect an Amount Not Authorized by Law - 15 U.S.C. §
1692f(1)
Under 15 U.S.C. § 1692f(1): A debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt, including, without limitation, collecting "any
amount (including any interest, fee, charge, or expense incidental to the principal obligation)
unless such amount is expressly authorized by the agreement creating the debt or permitted by
law."
32
In Delawder v. Platinum Financial Services Corp., 443 F.Supp.2d 942, 948 (S.D. Ohio
2005), a consumer claimed that a debt collector violated Section 1692f(1), by attempting to
collect an amount of debt when that amount was not expressly authorized by the agreement
creating the debt or permitted by law. The district court noted that courts generally recognize
claims under Section 1692f(1) where, as in this case, a debt collector filed a lawsuit seeking an
amount allegedly greater than the amount owed under a debt agreement; thus the court concluded
the consumer stated a claim under Section 1692f(1). Id.; See also Conner v. Howe, 344 F.Supp.
2d 1164, 1172-73 (S.D. Ind. 2004) (granting plaintiff summary judgment for Section 1692f(1)
claim against debt collector-attorney for filing lawsuit seeking to collect amount greater than
permitted by loan agreement, that additionally was invalid); Miller v. Wolpoff & Abramson, 321
F.3d 292, 308 (2nd Cir. 2003) (recognizing plaintiffs would state a claim against defendant law
firm if law firm sued to collect an amount not permitted by debt agreement or by law, but
affirming dismissal of plaintiff's claim on other grounds).
Although the Delawder decision involved statements in a collection complaint rather than
a collection letter, the rationale nevertheless likely applies to collection letters. Thus, a debt
collector should be cautious in stating the amount owed and ensure that it is consistent with the
credit application or other agreement creating the debt.
V.
AVOIDING THE PITFALLS IN COLLECTION LETTERS
A.
Develop and maintain an effective system to document whether a consumer is
represented by an attorney. Because a debt collector may not communicate with a
consumer if the debt collector knows the consumer is represented by an attorney,
the simple act of mailing a collection letter may violate the FDCPA if a consumer
can establish that he or she previously notified the debt collector of representation
by counsel with respect to that debt.
B.
Develop and maintain an effective system to document the correct contact
information of the consumer. Because a debt collector generally may not
communicate with third parties regarding a consumer's debt, a debt collector may
violate the FDCPA by sending a collection letter to the wrong person. A debt
collector is particularly susceptible to allegations of FDCPA violations in "Jr."
and "Sr." situations.
C.
Be nice. Do not use profane or obscene language that would harass or abuse a
consumer.
33
D.
When providing the notice of validation of debt, track the exact language of 15
U.S.C. § 1692g(a). There is no reason to get creative. To do so will only expose
you to the possibility of litigation, even if your additional language does not
violate the statute. The amount you will spend to defend litigation will likely
outweigh any additional amounts you might collect based upon your creative
language.
E.
Provide the full mini-Miranda on any letter: "This is an attempt to collect a debt.
Any information will be used for that purpose. This communication is from a
debt collector." An initial communication requires a statement that the debt
collector is attempting to collect a debt and that any information obtained will be
used for that purpose. Subsequent communication require a statement that the
communication is from a debt collector. To be safe, include all three statements
in all communications.
F.
In an initial validation notice, do not demand payment within a certain number of
days (i.e., 10 days, 31 days). In doing so, you risk overshadowing the statutorily
required 30 day validation notice.
G.
In an initial validation notice, or any subsequent correspondence sent within 30
days of that notice, do not demand "immediate payment" of the debt. Again, in
doing so, you risk overshadowing the statutorily required 30 day validation
notice.
H.
Be careful how you describe your relationship to the original creditor, to any
subsequent account owner for whom you are collecting the debt, or to the
consumer. You must be accurate in such descriptions, particularly since the
FDCPA is a strict liability statute. For example, collection letters should avoid
referring to the debtor as a "customer" if the debtor is not a customer, avoid
stating that the debt collector "issued" an account if it was actually issued by an
original creditor, and avoid stating that the debt collector is "subrogated" to the
original creditor's rights if the debt collector is not so subrogated.
I.
State the total amount owed as of a particular date, including all interest, fees and
costs. For example, in stating the amount of the debt, a collection letter could
state, "I have been retained by [insert creditor] to collect from you the entire
balance, which as of [insert date], was [insert amount], that you owe. . . .
J.
Determine whether a lawsuit to collect a debt is time-barred before sending a
collection letter. Only discuss the possibility of legal action for debts that are not
time-barred.
34
K.
In Ohio, do not threaten to collect attorneys' fees in a subsequent action if the
consumer fails to pay the debt.
L.
Do not threaten imminent legal action unless you have a history of actually filing
suit in the subject jurisdiction.
M.
Do not indicate that litigation is imminent or that a decision regarding litigation
has already been made. Less objectionable language may include that the
"economic feasibility of some type of litigation" had not been determined; "if
legal action were to be undertaken, it would be costly and time-consuming;" or
"[o]ur client may choose to pursue legal action."
N.
A non-attorney debt collector should avoid any reference to a legal division and
avoid use of the suffix "Esq." Although some case law is instructive that these
references will not violate the FDCPA, in light of the fact that the issue is heavily
litigated, you should avoid even the possibility of an action by refraining from the
use of such language.
35