In a case decided on February 4, 2016, the US District Court, Eastern District of Missouri has granted summary judgment to AllianceOne Receivables Management on a claim that the firm violated FDCPA § 1692d-f, and to the Plaintiff, Schuller, on the claim that the firm violated FDCPA § 1692g. Trial has been scheduled for April 11, 2016 on the matter of damages regarding the §1692g claim.

The facts are as follows:

  • On November 13, 2014 AllianceOne sent a standard demand letter regarding a credit card debt, including the 30-day validation notice, to Schuller. The letter was compliant with 15 U.S.C. §1692g.
  • Three phone conversations took place between the company and the consumer regarding this debt.Schuller sued the company based on two of the calls.
  • The first, initiated by an AllianceOne representative on November 17. On that call, the collector erroneously stated that the letter was mailed on November 12, when it was mailed on November 13. That call also contained a conversation about the timing of when a payment would/could be made. The consumer said he could make a payment on the first of the month. The collector said “…if nothing’s going to take place within this month I have to mark the file accordingly.” He also offered his direct number.
  • The second call in question was initiated by Schuller on November 20. He spoke with a different representative, who tried to defer the consumer until the original collector could call him back, but he pushed for an answer to the question, ”when do I have to take care of this debt?” According to the court document, here is how this went,She told Schuller that his account came in on November 12 and when any account comes into AllianceOne, they look to resolve the balance immediately. In response to Schuller again asking when he needed to take care of his debt, Robinson stated that AllianceOne was looking for payment on the account “as soon as possible” and told him the total amount due was $9454.08. Schuller asked if she meant payment in full, and Robinson responded, “Correct.” He asked if they wanted it paid immediately, and she responded, “Correct.” Schuller informed Robinson that he could not pay the debt and had hired an attorney, and he provided his attorney’s information.

Schuller sued under 1692d-f, claiming that the calls were unfair, deceptive, or misleading because the representative lied about the date its letter was sent and harassed him about payment. After review of the calls, the court in this case concluded that while both collectors may have been persistent, neither representative’s behavior rose to the level of harassing, oppressive, or abusive under 1692d.

The court also concluded that the representatives were relatively polite, and that Schuller pointed to no case law supporting an argument that a failure to remind a debtor of his dispute rights under these circumstances is a violation of 1692f. “In fact, so long as a written notice has already been sent, even 1692g does not require a debt collector to remind a debtor of his dispute rights during a subsequent call.” Finally, the court found that the collector’s statement that the letter was mailed on November 12 when in fact it was mailed on November 13 did not represent a genuinely misleading or material statement.

Summary judgment was therefore granted for AllianceOne under the claims related 1692d-f.

Schuller also filed a 1692g claim, relating to the fact that during the “…30 days, unless the debtor disputes the debt or requests the name of the original creditor, collection efforts may continue but ‘may not overshadow or be inconsistent with’ the consumer’s rights in 1692g(a).” (emphasis added)

Schuller claimed that the demands for immediate (or “as soon as possible”) payment overshadowed his 1692g(a) rights. While the judge, referencing Founie v. Midland Credit Mgmt., Inc., noted that “the 30-day validation period provided in §1692g is not a grace period, and in the absence of a dispute notice from the debtor, the debt collector is allowed to demand immediate payment and continue collection activity,” she also referred to several other cases to determine whether the communication in this case met the following criteria for overshadowing:

1)      Indicates that the time for disputing the debt has passed,

2)      Misrepresents or clouds the amount of time remaining to dispute the debt, or

3)      Contains overt misinformation, apparent contradiction, or a noticeable lack of clarity concerning the validation period or the debtor’s rights under 1692g.

Indeed, she concluded that even though a clear demand for payment within the dispute period was not made, the more ambiguous suggestions made in this case that it would be best to make payment within the dispute period were enough to confuse a consumer into thinking that they would no longer have the right to dispute.

insideARM Perspective

This is yet another in a long list of gray areas for the ARM industry. The fact that there is not a simple answer to the question, “when is payment due?” that both satisfies the client and is clear to the consumer is ridiculous. At the same time, the judge in this case ruled that

  • “the 30-day validation period provided in §1692g is not a grace period, and in the absence of a dispute notice from the debtor, the debt collector is allowed to demand immediate payment and continue collection activity”
  • …and that the collector should not have asked for payment “immediately”

What should the collector have said?

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