Tomio is a partner of Simmonds & Narita LLP, www.snllp.com, a California law firm specializing in defending claims arising under the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Rosenthal Act. He has served as lead counsel defending scores of class actions and representative actions in state and federal courts in California and across the country. A member of the California Bar, Tomio is also admitted to the United States Supreme Court, the Second, Third and Ninth Circuit Courts of Appeals and all District Courts of California. Tomio is regularly invited to speak at collection industry events, discussing issues arising under the FCRA and FDCPA. He is a member of the American Bar Association (Vice Chair, Debt Collection Practices and Bankruptcy Subcommittee of Consumer Financial Services Committee), ACA International (Chair of the MAP Committee, 2009-10), the National Association of Retail Collection Attorneys (Associate Member; Member of the Amicus Committee), and the Bar Association of San Francisco.
There has been a lot of litigation relating to envelopes recently, but section 1692f(8) of the FDCPA, which regulates collection envelopes, is not new. It has been a source of frustration for collectors for decades. Fortunately, some courts have recognized that a strict application of section 1692f(8) may lead to absurd results, and have held that “benign language” on an envelope does not violate the FDCPA. Unfortunately, the word “benign” can be VERY slippery.
Section 1692g of the FDCPA says collectors must provide a notice to consumers within five days of initial communication stating the amount of the debt, the name of the current creditor, and explaining the consumer’s right to dispute the debt and to obtain verification. You might assume that a collector can comply with that section by simply copying the language from the statute into their initial notice to consumers. Not exactly.
Does a consumer need to be “protected” from repaying his own debts? Can a consumer be “harmed” if he voluntarily makes a payment on a debt that he admittedly owes? The CFPB apparently believes that sometimes the answer is “yes.”
The CFPB does not want debt collectors to tell consumers that paying their debts might help them to improve their credit score. Nor does the CFPB want collectors to encourage consumers to pay by informing them that their failure to do so might harm their credit. Is this position consistent with case law on this subject?
The Dodd-Frank Act gave the CFPB sweeping authority to prohibit the use of “unfair, deceptive or abusive” acts or practices (UDAAPs) in connection with the collection of consumer debts. How can a collector know exactly what the CFPB will consider to be an “unfair” or “deceptive” or “abusive” collection practice?
Beginning in 1995, when the Supreme Court issued Heintz v. Jenkins, lawyers have known that if they seek to collect consumer debts for clients – even when doing so through litigation – they might qualify as a “debt collector” under the FDCPA. But how often must a lawyer or a law firm engage in consumer debt collection activities before they are subject to the Act?
A new law in California focused on debt buyers imposes a series of new requirements on purchasers that start before any collection letter is sent to a consumer, and that continue throughout the collection process, including during any collection litigation.
Although the law was designed to protect consumers and increase the information available to them, a likely result will be to decrease the level of communication between debt buyers and consumers, while increasing the amount of collection litigation.
The lengthy report describes a comprehensive study conducted by the FTC over a three-year period using data obtained from the nation’s largest debt buyers. Many will view the Report as another chance to engage in debt-buyer bashing, which has become a favorite pastime for mainstream media and consumer advocates. But a close reading reveals how wrong this report is.
When a consumer disputes their debt, an accepted and conservative practice is for the data furnisher to promptly report the dispute to the consumer reporting agencies. But under what circumstances will the failure to report a dispute give rise to a violation of section 1692e(8) of the FDCPA?
For example, what if a consumer or their attorney simply calls or writes and states, “I dispute this,” without providing the collector with any substantive information regarding the basis for the dispute? Does the collector violate section 1692e(8) if it fails to report that “dispute” to the consumer reporting agencies? The answer must be “no.”
Does the Consumer Financial Protection Bureau (CFPB) have the power to tell debt collectors to turn over their attorney-client privileged communications? The answer may depend on who you ask. The CFPB certainly seems to think it does, while federal courts tell a different story. In our top story, we check in with Tomio Narita, who goes into this topic at greater length.