By Sonya A. Smith-Valentine
The Fair
Debt Collection Practices Act (FDCPA) is a federal law that governs what
actions a debt collector can take while trying to collect a debt. Collection
attorneys are also governed by the FDCPA. As such, collection attorneys should
take note of several recent rulings in 2005 from federal courts around the
country regarding the FDCPA.
Oral Disputes
of Debts Count, Too
The Ninth Circuit
has held that debt collectors cannot tell consumers that they will assume a
debt is valid unless they receive written notification of a dispute. A consumer
can dispute the validity of a debt in writing or orally. Although there are
some sections of the FDCPA that require written notice, the Court declined to
impose the written notice provision on other sections. The Court reasoned that
it would not make sense to read a written notice requirement into §1692g(a)(3) because other sections of the FDCPA require debt
collectors to take note of consumers' oral disputes.
The Ninth
Circuit followed Supreme Court rulings that have held that courts should not
insert language into a statute unless the failure to do so would result in
absurd or unreasonable results.
Collectors
Must Notify Credit Bureaus of Orally-Disputed Debts
The FDCPA requires a
collector to notify the credit bureaus that a debt is disputed if the collector
has reason to know the debt is disputed and reports about the debt on a
consumer's credit report. This requirement applies even if the consumer
disputes the debt orally.
This
requirement has been extended by recent court rulings. First, the debt
collector does not have the authority to decide unilaterally if a consumer's
dispute has any merit. As long as a consumer has disputed the debt, the
collector is required to inform the credit bureaus of the dispute.
Second, a
simple inquiry by a consumer about the validity of additional charges is an
oral dispute of the debt and requires reporting to the credit bureaus that the
debt is disputed.
Lastly, a
collector has to report that the debt is disputed in a timely manner. Summary
judgment was denied for a collector in a recent case in
Affidavits
for Garnishments are Covered by the FDCPA
In an important
ruling, the Sixth Circuit has recently held that debt collectors and collection
attorneys who sign and file affidavits to obtain garnishments in state courts
are fair game for FDCPA lawsuits. Collection lawyers will now have to be more
careful about what they and their clients say in these affidavits. In the Sixth
Circuit case, the collector's attorney filed an affidavit stating that he had a
reasonable basis to believe that the debtor's property was nonexempt and garnishable. The debtor's property, however, was Social
Security benefits, which are exempt.
The court
also stated that the FDCPA violation was an independent federal claim from the
state court action and therefore the Supreme Court's Rooker-Feldman
doctrine, which bars federal courts from reviewing state court decisions, did
not apply.
Repeated
or Continuous Telephone Calls Can Mean Trouble
Recent court decisions reaffirm that
repeated or continuous calls to a consumer by a debt collector can bring about
FDCPA violations.
In one case,
six voice-mail messages left on a consumer's home answering machine over a
10-day period was sufficient to defeat summary judgment and could be viewed as
harassment, false threats or unfair practices.
In another
case, the debt collector was denied summary judgment where it called a consumer
multiple times without leaving any messages. The court determined that the
possible FDCPA violation turned on the volume of calls made and on the pattern
of the calls.
In yet
another case, a debt collector was found to have violated the FDCPA by
repeatedly calling a consumer after the consumer had hung up the telephone.
The
Financial Pain of FDCPA Violations
Consumers have the right to file a lawsuit against any debt collector
or collection attorney who violates the FDCPA. The consumer can recover actual
damages, statutory damages of up to $1,000 and attorney's fees and costs.
Some of the
secondary costs to debt collectors and collection attorneys include decreased
collection rates, increased insurance rates and the costs of defending a
lawsuit, just to name a few. As the recent rulings point out, avoiding FDCPA
violations is the best road to travel.