Judge Grants Mixed Ruling in Yet Another Example of FDCPA Ambiguity

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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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Posted in Accounts Receivable Management, Collection Laws and Regulations, Debt Collection, FDCPA, Featured Post .

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  • avatar Bill Lindala says:

    This is pretty clear example of call baiting, but possibly also a clear example of a rep not being trained properly.

    The fact that the consumer pushed for, ”when do I have to take care of this debt?” Should have thrown up a red flag and caused the rep to simply ask, “Are you disputing the debt or any portion of the debt?” If the answer was yes, or maybe or I don’t know from the consumer, then the rep could have reiterated the right to dispute.

    If the answer was a flat out no to the dispute, the simplest thing for the rep to say could be, “Well, if you would like, we could resolve this by phone today with a check, debit or credit card.”

    Call baiting is real and it’s a real problem and if reps aren’t aware of it, then things like this are going to happen.

  • avatar nascar says:

    “This is pretty clear example of call baiting,…”

    Surprise. I actually agree. That said, what would have been wrong with the collector, after having been asked when the debt is due, to say, “Well, according to your creditor, it was due on [enter date here], but now that the claim has been forwarded to collections, you should refer to the letter we sent you on [enter date here] for details about the debt.

    Regarding outbound calls made by the collector, why make those calls at all? Whether they’re permitted or not, set your greed aside and use some common sense. Here, let’s assume AllianceOne paid to defend this case out of pocket (no insurance). How much money do they now have to collect from other folks just to pay defense counsel in this case, win or lose? It begs the question, “How much more profitable could AllianceOne (or any debt collector) be if their business model focused more on restraint and compliance with the law, rather than greed?”

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