Summary Contents - National Consumer Law Center · 23.06.2009 · 1 1 3 Co-Counseling with NCLC 1...

xi

Summary Contents

Volume 1

About the Companion Online Resources ix

Part I Introduction

Chapter 1 Introduction and Overview 1

Chapter 2 Preparation of a Debt Collection Harassment Case 35

Part II The Fair Debt Collection Practices Act

Chapter 3 Overview of the Fair Debt Collection Practices Act 97

Chapter 4 Persons and Transactions Covered by the Fair Debt Collection Practices Act 109

Chapter 5 Protections and Rights Under the Fair Debt Collection Practices Act 193

Chapter 6 Fair Debt Collection Practices Act Litigation and Remedies 419

Chapter 7 Debt Collector’s Defenses and Counterclaims 491

Part III Other Federal and State Debt Collection Claims

Chapter 8 Other Federal Claims 523

Chapter 9 Tort Remedies 587

Chapter 10 Other State Remedies 653

Index 721

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Fair Debt Collection

Volume 2

Appendix A Text of the Fair Debt Collection Practices Act 747

Appendix B Federal Trade Commission Advisory Opinions and Staff Letters Regarding the Fair Debt Collection Practices Act 759

Appendix C Federal Trade Commission Staff Commentary on the Fair Debt Collection Practices Act 787

Appendix D Summary of State Debt Collection Statutes 801

Appendix E Practice Aids 813

Appendix F Sample Complaints 823

Appendix G Sample Discovery 827

Appendix H Sample Trial Documents 835

Appendix I Sample Documents for Award of Attorney Fees 851

Appendix J Fair Debt Collection Practices Act Case Summaries 857

Appendix K Debt Collection on the Web 1403

Appendix L Online Companion Material for This Treatise 1407

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Contents

Volume 1

About the Companion Online Resources ix

Part I Introduction

Chapter 1 Introduction and Overview 1 1 How to Use This Treatise 1 1 1 1 Organization of the Treatise 1 1 1 2 Additional Fair Debt Collection Material Online 1 1 1 3 Co- Counseling with NCLC 1 1 1 4 Who Is a “Debt Collector” 1 1 2 Fair Debt Collection Training and Continuing Legal Education 2 1 3 Representing Consumers with Fair Debt Collection Claims 2 1 4 How Debt Collectors Operate 3 1 4 1 Consumer Credit in the U S 3 1 4 2 Financially Distressed Consumers 3 1 4 3 Abusive Debt Collection 3 1 4 4 Collector Who Ran Fake Courtroom Enjoined from

Further Collection 4 1 4 5 History of Debt Collection and Its Regulation in the U S 5 1 5 The Debt Collection Process and the Players 6 1 5 1 Debt Collection Starts with Creditors 6 1 5 2 Contingent Fee Collection Agencies 8 1 5 3 Collection Lawyers 9 1 5 4 Debt Buyers 10 1 5 4 1 Debt Buying and Selling Changing the Debt

Collection Landscape 10 1 5 4 2 FTC Shuts Down Rogue Debt Buyers 11 1 5 4 3 Debt Buyers Increase Long- Term Pressure on Consumers 12 1 5 4 4 Many of the Debt Buyers Claims Are Not Valid 12 1 5 4 5 Debt Buyers Usually Have Little Information About the Debt 14 1 5 5 Flat Rate Debt Collectors 15 1 5 6 Consumer Locating Services, a k a “Skip Tracers” 15 1 5 7 Foreclosure Law Firms 17 1 5 8 Check Collectors and Check Diversion Companies 17 1 5 8 1 Check Collectors 17 1 5 8 2 Check Collection Agencies Operating in the Name of

the District Attorney 18 1 5 9 Child Support Collectors 18 1 5 10 Credit Card Fee Harvesters Are Big Debt Collectors 18 1 5 10 1 Credit Card Fee Harvesters 18 1 5 10 2 Debt Collection Abuse by Fee Harvester Formerly Known As

Cross Country Bank and Its Affiliated Debt Collector 19 1 5 10 3 CompuCredit Fined 20

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1 5 11 FTC Enjoins Fake, Harassing Payday Loan Debt Collector’s Business 21

1 5 12 Shoplifting Penalty Collectors 21 1 5 13 Charge- Offs, Debtor’s Income Taxes, and IRS Cancellation of

Debt Form 1099- C 21 1 5 14 Debt Collectors and Decedents’ Estates 23 1 5 15 Medical Debt Collectors 24 1 6 Debt Collection Related Businesses 24 1 6 1 Credit Reporting Agencies 24 1 6 2 Credit Counseling Firms 25 1 6 3 Debt Settlement Scams 25 1 6 4 Foreclosure Rescue Scams Target Financially Distressed Consumers 27 1 6 5 Consumer Arbitration Firms 27 1 6 6 Process Servers 27 1 7 “Debtor’s Hell,” Courts Rubber- Stamping Debt Collection Suits 27 1 8 Technological Changes 28 1 8 1 Computerization, Automated Calling, Recording Calls, Scripts 28 1 8 2 Caller ID, Faxes, Cell Phones, and Privacy Issues 29 1 9 Complaints About Collection Agencies Ranked First at

Federal Trade Commission 30 1 10 Debt Collection Laws Apply Broadly 30 1 10 1 Introduction 30 1 10 2 Abusive Landlord Conduct 30 1 10 2 1 Overview 30 1 10 2 2 Deceptive Eviction Notices 31 1 10 2 3 Self- Help Eviction 31 1 10 2 4 Confiscation of Tenant’s Personal Property 31 1 10 2 5 Excessive Withholding from Security Deposit 31 1 10 2 6 Demanding and Collecting Rent Not Due 31 1 10 2 7 Use of Abusive Language or Harassment to Collect Rent 32 1 10 3 Abusive Lending Practices 32 1 10 3 1 Overview 32 1 10 3 2 Coverage 32 1 10 3 3 Collection of Illegal Charges 32 1 10 3 4 False Threats of Criminal Prosecution 33 1 10 4 Litigation Misconduct 33 1 10 5 Debt Pooling 33 1 10 6 Utility Company Disputes 34 1 10 7 Homeowner Protections in Mortgage Foreclosures 34 1 11 Guide to Surviving Debt— Treatise for Consumers 34

Chapter 2 Preparation of a Debt Collection Harassment Case 2 1 Initial Interview 35 2 1 1 Strategy for Initial Interview 35 2 1 2 Questions to Uncover Damages 35 2 1 3 Examining the Validity of the Debt 36 2 1 4 Clarifying the Client’s Legal Objectives 37 2 1 5 Careful Case Selection 39 2 1 6 Developing a Plaintiffs’ Fair Debt Collection Practice 39 2 2 Bankrupts’ Fair Debt Collection Practices Claims 39 2 3 Stopping Debt Harassment Without Litigation or Bankruptcy 39 2 3 1 Introduction 39

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2 3 2 Directing the Collector to Stop Dunning Contacts 40 2 3 3 Notifying the Collector That Bank Account Is Exempt from Seizure 41 2 3 4 Proposing a Workout Agreement 41 2 3 5 Complaining to Consumer Protection Agencies 42 2 3 6 Complaining About Billing Errors 43 2 3 7 Lawyer Letter Requesting the Collector to Stop Contacts 43 2 3 8 Evaluating Strategies for Harassed Debtors 44 2 4 Preparation of a Suit for Damages 45 2 4 1 Client’s Recording of Phone Calls 45 2 4 2 Client’s Written Statement 47 2 4 3 Fee- Generating Debt Collection Cases Must Be Referred to

Private Lawyers by Legal Services Corporation Grantees 47 2 4 4 Developing the Case Chronology of Events 48 2 4 5 Importance of Collector’s Documents Recording the Dates

and General Messages of Contacts and Other Records 48 2 4 6 Pattern or Practice Evidence 49 2 4 7 Pleadings 50 2 4 7 1 Importance of State Claims 50 2 4 7 2 Choice of Federal or State Court 51 2 4 7 3 Specificity of Pleading 51 2 4 7 4 Avoiding Dismissal 54 2 4 7 5 Structuring the Case 54 2 4 7 6 Not Sending Demand Letters 55 2 4 7 7 Sample Complaints 55 2 4 7 8 Proper Service 55 2 4 7 9 Debt Collectors’ Defensive Strategies 55 2 4 8 Mandatory Arbitration of Consumers’ Claims 56 2 4 8 1 Introduction 56 2 4 8 2 Challenges Confronting Debt Collectors Seeking to

Enforce Arbitration Clauses 56 2 4 8 3 Defendants’ Evidentiary Burden 56 2 4 8 4 Debt Buyer’s Right to Enforce the Creditor’s

Arbitration Agreement 57 2 4 8 5 Can a Collection Agency or Attorney Take Advantage of

the Creditor’s Arbitration Agreement? 57 2 4 8 6 Does the Nature of Consumer’s Claims Fall Under the

Arbitration Agreement 59 2 4 8 7 Is NAF Designated As the Sole Arbitration Forum? 59 2 4 8 8 Other Grounds to Challenge the Arbitration

Clause’s Enforceability 60 2 4 8 9 Does the Court or Arbitrator Decide the Challenge to the

Arbitration Requirement? 60 2 4 8 10 Punitive Damages in Arbitration 61 2 4 8 11 Class Arbitration 61 2 4 9 Discovery 61 2 4 9 1 Initial Focus 61 2 4 9 2 Areas of Inquiry Permitted 62 2 4 9 3 Delayed Production of Consumer’s Recordings of

Abusive Calls 66 2 4 10 Prepare for Trial at Beginning of Case 67 2 4 11 FDCPA Claims Frequently Determined by Summary Judgment 67 2 4 12 Jury Trials Advised 67

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2 4 13 Offers of Judgment or Settlement in Individual Actions 67 2 4 13 1 Offers of Judgment in General 67 2 4 13 2 Offers of Incomplete Relief 68 2 4 13 3 Offers of Full Relief 69 2 4 13 4 Ambiguity of the Defendant’s Offer of Reasonable

Attorney Fees for the Successful Consumer 70 2 4 13 5 Other Issues in Settlements and Offers of Judgment 71 2 4 14 Pitfalls Using Surveys and Experts on Deception 72 2 4 14 1 Cost of Survey Evidence 72 2 4 14 2 Rejection of Survey and Expert Evidence 72 2 4 14 3 Sources for Experts 73 2 5 Proving the Nature, Cause, and Value of Actual Damages 73 2 5 1 Maximizing Damage Awards 73 2 5 2 Actual Damages in Collection Abuse Cases 74 2 5 2 1 General Principles 74 2 5 2 2 Common Types of Injuries Resulting from Debtor Abuse 75 2 5 2 2 1 General 75 2 5 2 2 2 Stress- related injuries 75 2 5 2 2 3 Out- of- pocket losses 79 2 5 2 2 4 Injuries to personal relations 81 2 5 2 3 Leveraging Other Relief 82 2 5 3 Evidence Must Establish the Existence, Extent, and Cause

of an Injury and the Value of the Loss 82 2 5 4 Compensable Emotional Stress and Other Losses Vary Among States 84 2 5 5 Causation Is an Important Element in the Proof of Damages

in a Debtor Harassment Case 85 2 5 6 Preparing for a Jury Trial of an FDCPA Case 86 2 5 7 Establishing Deception 87 2 6 Punitive Damages 88 2 6 1 Punitive Damages and Fair Debt Collection Claims 88 2 6 2 Punitive Damages and Fair Credit Reporting Claims Against

Debt Collectors 89 2 7 Consumer Claims Against Collector’s Professional Liability Insurer 90 2 8 Creditor’s and Debt Collector’s Liability for Acts of Its Employees,

Collection Agency, or Attorney 91 2 9 Keeping Time Records for Awards of Attorney Fees 94 2 10 Injunctions, Administrative Agency Complaints, and Community Education 94 2 11 Consumers Representing Themselves in Court 95

Part II The Fair Debt Collection Practices Act

Chapter 3 Overview of the Fair Debt Collection Practices Act 3 1 Scope, Purpose, and Effective Date 97 3 2 Constitutionality of the FDCPA 98 3 3 Sources of Law and Research Aids 99 3 3 1 Construing the Language of the Act 99 3 3 2 Legislative History 100 3 3 2 1 1977 Act 100 3 3 2 2 1986 Amendment 101 3 3 2 3 1996 Amendments 101 3 3 2 4 2006 Amendments 102

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Contents

3 3 2 5 2010 Amendment 102 3 3 2 6 Consumer Financial Protection Bureau Enforcement 102 3 3 2 7 FTC Recommends Amendments to FDCPA 103 3 3 3 Case Developments 103 3 3 4 Federal Trade Commission Formal Advisory Opinions 103 3 3 5 Federal Trade Commission Informal Staff Letters 104 3 3 6 The Consumer Financial Protection Bureau 105 3 3 6 1 General 105 3 3 6 2 CFPB Rulemaking Authority 105 3 3 6 3 CFPB Interpretations of the Fair Debt Collection

Practices Act 105 3 3 7 FTC Staff Commentary on FDCPA 106 3 3 7 1 Introduction 106 3 3 7 2 Authority of FTC Staff to Issue Commentary 107 3 3 7 3 FTC Policy on Collecting Decedents’ Debts 108 3 3 8 Using This Treatise for FDCPA Issues 108

Chapter 4 Persons and Transactions Covered by the Fair Debt Collection Practices Act 4 1 Introduction 109 4 2 Debt Collectors 109 4 2 1 The Term “Debt Collector,” 15 U S C § 1692a(6) 109 4 2 2 Any Person Whose Principal Business Is Collecting Debts

Is a “Debt Collector” 110 4 2 3 Any Person Who Regularly Collects Debts Owed to Another

Is a “Debt Collector” 110 4 2 3 1 Key Definition, “Debt Collector” 110 4 2 3 2 Employees, Managers, Officers, Collection Attorneys 111 4 2 3 3 Direct and Vicarious Liability 113 4 2 3 4 Different Types of Debt Collectors Covered 115 4 2 3 5 Entity’s Description of Itself As “Debt Collector” 116 4 2 4 FDCPA Applies to Debt Buyers 117 4 2 5 Creditors Using False Names Are “Debt Collectors,”

15 U S C § 1692a(6) 119 4 2 6 Repossession, Foreclosure, and Eviction Companies,

15 U S C § 1692a(6) 121 4 2 6 1 General 121 4 2 6 2 Repossession Companies Coverage, 15 U S C § 1692a(6) 122 4 2 6 3 Foreclosure Lawyers and Companies Covered, 15 U S C

§§ 1692a(6), 1692a(6)(F)(iii) 122 4 2 6 4 Eviction Lawyers Covered, 15 U S C § 1692a(6) 131 4 2 7 Forms Providers Who Misrepresent Their Collection Involvement

Violate the Act, 15 U S C § 1692j 131 4 2 7 1 Flat- Rate and Other Collectors Covered 131 4 2 7 2 Extent of Participation in the Collection Process 133 4 2 7 3 Lawyers Must Review File Before Signing

Collection Letter 135 4 2 8 Lawyers Regularly Collecting Consumer Debts Must Now

Comply with All FDCPA Provisions, 15 U S C § 1692a(6) 135 4 2 8 1 Introduction 135 4 2 8 2 1986 Attorney Amendment 135 4 2 8 3 Legislative History 136 4 2 8 4 The “Regularly Collects” Requirement 136

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4 3 Persons Specifically Excluded from the Term “Debt Collector” 139 4 3 1 Narrow Exemptions Help Define FDCPA Coverage 139 4 3 2 Creditors’ Employees Collecting in the Name of the Creditor

Are Specifically Excluded, 15 U S C §§ 1692a(6)(A), 1692a(4) 140 4 3 3 A Commonly Owned or Affiliated Corporate Collector Collecting

Only for Its Affiliates Is Specifically Excluded If It Is Not Principally a Debt Collector, 15 U S C § 1692a(6)(B) 142

4 3 4 State and Federal Officials Performing Their Duties Are Specifically Excluded, 15 U S C § 1692a(6)(C) 143

4 3 5 Process Servers Are Specifically Excluded, 15 U S C § 1692a(6)(D) 144 4 3 6 Bona Fide Nonprofit Consumer Credit Counselors Are

Specifically Excluded, 15 U S C § 1692a(6)(E) 145 4 3 7 Attorneys Specifically Excluded Before 1986 Now Covered 146 4 3 8 Persons Collecting Debts As Part of Bona Fide Fiduciary or Escrow

Arrangements Are Specifically Excluded, 15 U S C § 1692a(6)(F)(i) 146 4 3 9 An Originator of Credit Collecting on Behalf of Another Excluded,

15 U S C § 1692a(6)(F)(ii) 148 4 3 10 Persons Collecting Debts Not in Default When Obtained

Are Specifically Excluded, 15 U S C § 1692a(6)(F)(iii) 148 4 3 10 1 General Rule 148 4 3 10 2 Obtaining Debt by Merger or Corporate Acquisition 150 4 3 10 3 Entity Obtaining Debt in Default Is a Debt Collector

Subject to FDCPA 150 4 3 10 4 Account Obtained with Mistaken Belief It Is in Default

Is Subject to FDCPA 151 4 3 10 5 Determination of When Default Occurs 151 4 3 10 6 Exempt Entity May Lose Exemption by

Using a False Name 153 4 3 11 Enforcer of a Security Interest in an Account Used As Collateral

for a Commercial Loan Exempt, 15 U S C § 1692a(6)(F)(iv) 154 4 3 12 Check Collection Companies Disguised As District Attorneys,

15 U S C § 1692p 154 4 4 Transactions Covered by the Act 155 4 4 1 The Act Covers Debts Owed or Allegedly Owed by a Consumer,

15 U S C § 1692a(3) 155 4 4 2 Debts Covered by the FDCPA 156 4 4 2 1 Consumer, Not Commercial, Debts Covered,

15 U S C § 1692a(5) 156 4 4 2 2 A Broad Range of Consumer Debts Are Covered 159 4 4 2 3 Coverage of Noncontractual Obligations Questioned 163 4 5 FDCPA Protects “Consumers” and “Persons” 166 4 6 Collection Activities Broadly Covered 171 4 6 1 Indirect, Attempted, and Mistaken Collections Covered 171 4 6 2 Attempts to Collect Debt Covered 172 4 6 3 Mistaken and “Alleged” Debts Covered 172 4 6 4 “Communications” Covered by the FDCPA 174 4 6 5 Responses to Consumers Covered 182 4 6 6 Coverage of Communications to Consumer’s Attorney 183 4 6 7 Activities “in Connection with” “Collecting a Debt” 186 4 6 8 Litigation Activities Covered 189

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Contents

Chapter 5 Protections and Rights Under the Fair Debt Collection Practices Act 5 1 Overview; Encouraging the Exercise of FDCPA Rights 193 5 2 General Principles of Construction of the Act 193 5 2 1 Act Protects Least Sophisticated Consumers 193 5 2 2 Waiver of FDCPA Protections Disfavored 195 5 2 3 Strict Liability Under the FDCPA 195 5 2 4 Effect to Be Given to the Plain Meaning of the Act 197 5 2 5 Debtors Deserve Reasonable and Civil Treatment 198 5 2 6 Issues Unique to Attorney Debt Collectors 198 5 2 6 1 FDCPA Applies to Collection

Attorneys 198 5 2 6 2 Venue Provision 198 5 2 6 3 Communications with Third Parties 198 5 2 6 4 FDCPA Notices in Connection with Litigation 198 5 2 6 5 Other Pitfalls to Avoid 199 5 2 7 Lawyers’ Ethical Obligations Intertwine with FDCPA 199 5 2 7 1 Collection Lawyers May Not Engage in “Unfair” or

Unethical Practices 199 5 2 7 2 Ethical Rules Require Lawyers to Avoid False

Threat of Suit 200 5 2 7 3 Ethics Rules Require Interstate Collection Letters

Avoid Misrepresenting Lawyer’s Authority to Sue 200 5 2 7 4 Ethics Rules Prohibit Deceptively Representing

Only Part of the Effects of Suit 201 5 2 7 5 Ethics Rules Restrict Intermingling Activities of

Collection Agency and Attorney 201 5 2 7 6 Ethical Responsibilities with Self- Represented Defendants 202 5 3 FDCPA Limits a Collector’s Communications with a Consumer 202 5 3 1 Consumers’ Privacy and Relationships Protected 202 5 3 2 Contacts at Unusual or Inconvenient Times or Places Prohibited 203 5 3 2 1 Text of 15 U S C § 1692c(a)(1) 203 5 3 2 2 Communications Broadly Covered 203 5 3 2 3 Contacts at Inconvenient Times 203 5 3 2 4 Contacts at Inconvenient Places 204 5 3 2 5 Collector Should Inquire About Convenience of a Contact 204 5 3 2 6 Other FDCPA Provisions Regulate Phone Calls 205 5 3 2 7 Calling Cell Phones at Inconvenient Times or Places 205 5 3 3 Collector May Not Contact a Consumer It Knows to Be

Represented by an Attorney 205 5 3 4 Contacts at Workplace Are Restricted 209 5 3 5 Informing Most Other People of the Consumer’s

Indebtedness Is Prohibited 211 5 3 5 1 Text of 15 U S C § 1692c(b) 211 5 3 5 2 Contacting Friends, Neighbors, Relatives, Employer

Is Usually Prohibited 211 5 3 5 3 Collector May Contact Certain Nondebtors 213 5 3 5 4 Collector May Contact Others in Specific Situations 214 5 3 5 5 Payments from Third Parties, Interpreters, Eavesdropping 216 5 3 5 6 Leaving Messages for Consumers 216 5 3 5 7 Inconsistent FTC Staff Interpretations on the

Term “Communications” 220 5 3 5 8 Relation to Other Provisions 221

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5 3 6 Obtaining Location Information About a Consumer from Other Persons Is Strictly Regulated 222

5 3 7 FTC Enforcement Policy Regarding Collecting Decedents’ Debts 226 5 3 8 Consumers May Modify, by Direct Prior Consent, Protections

from Collection Contacts 227 5 3 9 Right to Stop Collection Contacts 228 5 3 9 1 Text of 15 U S C § 1692c(c) 228 5 3 9 2 Analysis 228 5 3 9 3 Referring a Debt to Another Collector After

Consumer’s Request to Cease Collection 231 5 3 9 4 Giving Notice of a State Right to Terminate

Collection Contacts 232 5 4 Conduct Serving to Harass, Oppress, or Abuse 232 5 4 1 Harassing, Oppressive, and Abusive Conduct Generally

Prohibited 232 5 4 2 Collectors May Not Use or Threaten Violence or Criminal Conduct 239 5 4 3 Collectors May Not Use Obscene, Profane, or Abusive Language 240 5 4 4 Publishing a List of Allegedly Defaulting Debtors 241 5 4 4 1 Text of 15 U S C § 1692d(3) 241 5 4 4 2 Shame Lists Prohibited 241 5 4 4 3 Coded Lists of Debtors Must Conceal Identity 242 5 4 5 Advertising a Debt for Sale to Coerce Payment 242 5 4 6 Repeated or Continuous Telephone Calls Intended to Annoy,

Abuse, or Harass Are Prohibited 243 5 4 7 Collector’s Employee Must Provide Meaningful Disclosure

of Identity When Telephoning 246 5 4 7 1 Text of 15 U S C § 1692d(6) 246 5 4 7 2 General 246 5 4 7 3 Use of Aliases 248 5 5 False, Deceptive, or Misleading Representations and Collection

Methods Are Prohibited 249 5 5 1 General 249 5 5 2 Collectors May Not Use False, Deceptive, or Misleading

Representations or Collection Means 249 5 5 2 1 Selected Text of 15 U S C § 1692e 249 5 5 2 2 Courts Encouraged to Construe 15 U S C § 1692e

to Address New Forms of Deception 249 5 5 2 3 FDCPA Deception Standard Builds on FTC Act 250 5 5 2 4 Deception of the Consumer Plaintiff Not Required 252 5 5 2 5 Least Sophisticated Consumer Standard Altered by

Consumer’s Legal Representation in Some Circuits 253 5 5 2 6 Deceptive Implications of Statements 254 5 5 2 6 1 Literal truth, half- truths, and deception 254 5 5 2 6 2 Courts’ difficulty with deceptive half- truths 256 5 5 2 7 Courts Split on Whether Deception Is a Matter

of Law, Fact, or Mixed 257 5 5 2 8 Materiality Element of Deception Claims 259 5 5 2 9 Expert Witnesses on Deception 262 5 5 2 10 Base Claims on More Specific Provisions of Act

When Possible 264 5 5 2 11 Threat of Suit May Be Deceptive 264 5 5 2 11 1 Misrepresenting imminence of suit, or intent

or authority to sue 264

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Contents

5 5 2 11 2 Lack of intent to sue 266 5 5 2 11 2 1 Establishing lack of intent to sue 266 5 5 2 11 2 2 Using online databases to

establish false suit threats 267 5 5 2 11 3 Disguised threats of suit 267 5 5 2 12 Other Deceptive Threats 270 5 5 2 13 Other Deceptive Statements 274 5 5 2 13 1 Overview 274 5 5 2 13 2 Deceptive settlement offers 278 5 5 2 13 3 Suits and statements involving time- barred

debts 279 5 5 2 13 3 1 Filing or threatening a time- barred

suit is deceptive 279 5 5 2 13 3 2 Seeking payment on time- barred

debts without threatening suit may be deceptive 279

5 5 2 13 3 3 Which statute of limitations applies to debt collector’s suit? 281

5 5 2 13 4 Deceptive practices in state debt collection suits against consumers 283

5 5 2 13 5 Deceptive practices in foreclosures 292 5 5 2 14 Legislative History of 15 U S C § 1692e 295 5 5 3 Collectors May Not Falsely Imply an Affiliation with the

Government, 15 U S C § 1692e(1) 295 5 5 4 Collectors May Not Falsely Represent the Character, Amount,

or Legal Status of a Debt 296 5 5 4 1 Text of 15 U S C § 1692e(2)(A) 296 5 5 4 2 Character 296 5 5 4 3 False Representation of the Amount of the Debt 297 5 5 4 3 1 False representation of the amount of the debt

or the debt balance 297 5 5 4 3 2 Incorrect amount of collection fees 302 5 5 4 3 3 Collection attorney fees 303 5 5 4 3 4 Amount of accruing interest 305 5 5 4 3 5 Amount of the debt; additional considerations 306 5 5 4 4 Legal Status 306 5 5 5 Collectors May Not Falsely Represent the Services They Have

Rendered or the Compensation to Which They Are Entitled 309 5 5 6 Falsely Implying That a Person Is an Attorney or That a

Communication Comes from an Attorney Is Prohibited 310 5 5 6 1 Overview, 15 U S C § 1692e(3) 310 5 5 6 2 Collection Lawyers Must Meaningfully Review

Debts Before Demanding Payment 311 5 5 6 3 Circuits May Allow Lawyer to Disclaim Involvement

and Dun Before Reviewing the Claim 313 5 5 6 4 Mass Filing of Lawsuits 315 5 5 7 Implying That Nonpayment Will Result in Arrest, Garnishment,

Seizure, or Sale If Such Action Is Unlawful or Unintended, 15 U S C § 1692e(4) 317

5 5 8 Threatening Unlawful or Unintended Action 319 5 5 8 1 Text of 15 U S C § 1692e(5) 319 5 5 8 2 Least Sophisticated Consumer Standard 319 5 5 8 3 False Threats of Legal Action 319

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5 5 8 4 Other False Threats 321 5 5 8 5 Unlicensed Debt Collection 322 5 5 8 6 Threats of Illegal Action 324 5 5 8 7 Taking Illegal Action 327 5 5 8 8 Relation to Other Protections 327 5 5 9 Falsely Implying That Transfer of a Debt Will Preclude a

Consumer’s Claim or Defense or Will Subject the Consumer to a Practice Prohibited by the Act 327

5 5 10 Misrepresenting That the Consumer Committed a Crime or Engaged in Other Misconduct in Order to Disgrace the Consumer 328

5 5 11 Communicating or Threatening to Communicate False Credit Information Prohibited, 15 U S C § 1692e(8) 329

5 5 12 Using or Distributing Written Material Giving a False Impression of Its Source, Authorization, or Approval, 15 U S C § 1692e(9) 334

5 5 13 False Representations or Deceptive Means to Collect or Attempt to Collect a Debt or to Obtain Information About a Consumer, 15 U S C § 1692e(10) 336

5 5 14 Debt Collection Notice, 15 U S C § 1692e(11) 340 5 5 14 1 Overview 340 5 5 14 2 Information Required by This Provision Must Be

Effectively Provided 346 5 5 15 Falsely Implying That Accounts Have Been Transferred to

Innocent Purchasers for Value, 15 U S C § 1692e(12) 348 5 5 16 Falsely Implying That Documents Are Legal Process 348 5 5 17 Using Any Business Name Other Than the True Name of the

Collector’s Business, 15 U S C § 1692e(14) 349 5 5 18 Misrepresenting That Legal Process Form Does Not

Require Consumer’s Action 351 5 5 19 Falsely Implying That a Collector Is a Credit Reporting Agency 352 5 6 Use of Unfair or Unconscionable Collection Means 353 5 6 1 General Prohibition; Construing “Unfair” and “Unconscionable,”

15 U S C § 1692f 353 5 6 2 Particular Unfair or Unconscionable Methods Prohibited 358 5 6 3 Collecting an Amount Not Permitted by Law or Contract,

15 U S C § 1692f(1) 363 5 6 4 Restrictions on Soliciting, Accepting, and Depositing Postdated

Checks, 15 U S C § 1692f(2) 369 5 6 5 Causing Expenses to a Person by Concealing the Collection

Purpose of a Communication 370 5 6 6 Repossession and Nonjudicial Foreclosure Regulated,

15 U S C § 1692f(6) 371 5 6 7 Sending Consumer a Postcard Prohibited, 15 U S C § 1692f(7) 373 5 6 8 Language and Symbols on Envelopes Restricted,

15 U S C § 1692f(8) 374 5 7 Verification of a Debt, 15 U S C § 1692g 375 5 7 1 Congress Considered Debt Verification “Significant” 375 5 7 2 The Verification Rights Notice 376 5 7 2 1 Text of 15 U S C § 1692g(a) 376 5 7 2 2 Overview 376 5 7 2 3 Effectively Conveying the Notice 376 5 7 2 4 Oral Verification Notices 378 5 7 2 5 Providing Verification Rights Notices to Consumers 379

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Contents

5 7 2 5 1 Providing the notice in the absence of a formal pleading 379

5 7 2 5 2 Providing the notice after initiating debt collection with formal pleadings 382

5 7 2 5 3 Exception for certain legal notices 384 5 7 2 6 Content of Verification Notice 384 5 7 2 6 1 Statutory requirements 384 5 7 2 6 2 Recommended verification notices 388 5 7 2 6 2 1 Courts’ recommended additions

to verification notice 388 5 7 2 6 2 2 Consumer advocates recommend

simplified debt verification and cease communication rights notice 390

5 7 2 6 3 Notice should state oral disputes overcome collector’s assumption of validity of debt, 15 U S C § 1692g(a)(3) 390

5 7 2 6 4 Disclosing the amount of the debt 392 5 7 2 6 5 Confusing statement of the amount of the debt 393 5 7 2 7 Collection Activities May Not Obscure, Confuse, or

Contradict Verification Rights 394 5 7 2 7 1 Some debt collection activities permitted during

thirty- day verification right period, 15 U S C § 1692g(b) 394

5 7 2 7 2 Demands for immediate payment 395 5 7 2 7 3 Suit or threat of suit 398 5 7 2 7 4 Threats to credit report 400 5 7 2 7 5 Telling consumer to telephone the debt

collector 400 5 7 2 7 6 Other debt collection activities during the period

to request verification 401 5 7 2 7 7 Question of law or fact and proof 402 5 7 2 7 8 Legal standards 403 5 7 2 7 8 1 Effective communication of the

debt verification rights 403 5 7 2 7 8 2 Obscuring or overshadowing the

debt verification notice 403 5 7 2 7 8 3 Contradiction of or inconsistency

with debt verification rights 403 5 7 2 7 8 4 Deception and confusion 403 5 7 3 Verification of a Debt 404 5 7 3 1 Text of 15 U S C § 1692g(b) 404 5 7 3 2 Consumers Should Request Verification in Writing 404 5 7 3 3 A Debt Collector Verifies a Debt by Providing Information

That Is Responsive to the Consumer’s Request, 15 U S C § 1692g(b) 406

5 7 3 4 Debt Collector Must Cease Collection Until Debt Verified, 15 U S C § 1692g(b) 411

5 7 4 Failure by a Consumer to Exercise Verification Rights May 414 5 8 Consumer May Direct Application of Payments When a Collector

Holds Multiple Accounts 414 5 9 Restrictions Against Bringing Suits in Inconvenient Forums 415 5 9 1 Text of 15 U S C § 1692i 415

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5 9 2 Suit Must Be Filed Where Consumer Resides or Signed Contract or Where Property Located 415

5 9 3 Legislative History 418 5 10 Supplying Forms That Misrepresent the Involvement of Another

in the Collection Process 418

Chapter 6 Fair Debt Collection Practices Act Litigation and Remedies 6 1 Private Remedy Is Primary Enforcement Mechanism 419 6 2 Evaluating Cases 419 6 2 1 General 419 6 2 2 Considerations Concerning Remedies 419 6 2 2 1 Increasing FDCPA Individual Awards 419 6 2 2 2 Class Actions Seeking FDCPA Damages 420 6 2 2 3 Bringing a Class Action Seeking Declaratory or

Injunctive Relief 420 6 2 3 A Wide Range of Parties May Bring FDCPA Actions 420 6 2 4 A Wide Range of Defendants May Be Named Under the FDCPA 421 6 2 4 1 Employees and Officers 421 6 2 4 2 Owners, Partners, Franchisors, and Parent Companies 421 6 2 4 3 Collection Attorneys and Their Clients 422 6 2 4 4 Forms Suppliers, Repossessors, and Insurers 422 6 2 4 5 Joining Parties Otherwise Exempt from FDCPA Liability 423 6 2 5 Trial by Jury 423 6 3 Actual Damages, 15 U S C § 1692k(a)(1) 423 6 3 1 General 423 6 3 2 Emotional Distress Damages 423 6 3 3 Proof of Actual Damages 425 6 3 4 Standards of Causation 426 6 3 5 Relation Between FDCPA Actual Damages and Other Awards 426 6 4 Statutory Damages in Individual Actions, 15 U S C § 1692k(a)(2)(A) 426 6 4 1 Introduction 426 6 4 2 Factors for Determining Amount of Statutory Damages

Award in Individual Actions 427 6 4 3 Are Statutory Damages Mandatory? 428 6 4 4 Actual Damages Not a Prerequisite 428 6 4 5 Enhancing Statutory Damages 429 6 4 6 Factors Reducing Statutory Damages Awards 431 6 4 7 Relation Between FDCPA Statutory Damages and Other Awards 431 6 4 8 Multiple Statutory Damages Awards 432 6 4 8 1 Where There Are Multiple Plaintiffs 432 6 4 8 2 Where There Are Multiple Defendants 432 6 4 8 3 Where There Are Multiple Wrongful Acts 432 6 5 Punitive Damages 433 6 5 1 Punitive Damages May Be Unavailable Under FDCPA 433 6 5 2 Punitive Damages in Supplemental State Claims 434 6 6 FDCPA Class Actions 434 6 6 1 Practical Considerations 434 6 6 2 Rule 23 Requirements for Class Certification 435 6 6 2 1 Introduction 435 6 6 2 2 Rule 23(a) requirements 436 6 6 2 2 1 General 436 6 6 2 2 2 Numerosity 436

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Contents

6 6 2 2 3 Commonality 437 6 6 2 2 4 Typicality 439 6 6 2 2 5 Adequacy of representation 439 6 6 2 3 Rule 23(b) Requirements 440 6 6 2 3 1 General 440 6 6 2 3 2 Rule 23(b)(1) 441 6 6 2 3 3 Rule 23(b)(2) 441 6 6 2 3 4 Rule 23(b)(3)— superiority, manageability,

and predominance 441 6 6 2 3 5 Special considerations where class action

seeks actual damages 443 6 6 3 FDCPA Class Actions for Statutory Damages 444 6 6 3 1 General 444 6 6 3 2 Computing One Percent of Net Worth 444 6 6 3 3 Increasing Each Class Member’s Recovery of

Statutory Damages 445 6 6 3 4 Factors Affecting Amount of Class Statutory

Damages Award 446 6 6 4 Defense Tactics 446 6 6 4 1 General 446 6 6 4 2 Offers of Judgment or Settlement 447 6 6 4 3 Counterclaims by Defendants 448 6 6 4 4 Defense Requests to Consider Merits First 448 6 6 5 Class Settlements 449 6 7 Declaratory or Injunctive Relief 450 6 7 1 Declaratory Relief 450 6 7 2 Injunctive Relief 451 6 7 3 Injunctive Relief Under Supplementary State Law Claims 452 6 8 Attorney Fees for Prevailing Consumers 452 6 8 1 General 452 6 8 2 Is a Fee Award Mandatory? 453 6 8 3 Attorney Fees Where Claim Is Settled 454 6 8 3 1 Right to Attorney Fees 454 6 8 3 2 Negotiating a Settlement Containing Attorney Fees 456 6 8 4 To Whom Does the Fee Award Belong? 457 6 8 5 Common Fund Attorney Fee Awards in Class Actions 459 6 8 6 The Lodestar Approach to Calculating Attorney Fees 460 6 8 6 1 General 460 6 8 6 2 Determining the Allowable Hours 460 6 8 6 2 1 General standards 460 6 8 6 2 2 Examples of allowable hours 462 6 8 6 2 3 Computing allowable hours where consumer

does not prevail on all claims 464 6 8 6 2 4 Fees for work on fee petition, appeal,

collection work, and related proceedings 464 6 8 6 3 Establishing the Hourly Rate 467 6 8 6 4 Downward Adjustments to the Lodestar 468 6 8 6 5 Upward Adjustments to the Lodestar 468 6 8 7 Costs 469 6 8 8 Prejudgment Interest 470 6 8 9 Fee Applications 470 6 8 9 1 Requirements 470 6 8 9 2 Preparation of the Fee Application 471

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6 8 10 Appealing Attorney Fee Awards 472 6 9 Proof of Debt Collector’s Intent Not Required 473 6 10 Statute of Limitations 473 6 10 1 Introduction 473 6 10 2 The Discovery Rule 474 6 10 3 When Does the Limitations Period Start Running? 474 6 10 4 When a Series of Violations Occurs 476 6 10 5 Tolling the Limitations Period 478 6 10 6 Counting the One- Year Period 478 6 10 7 When Is the FDCPA Complaint Deemed Filed? 479 6 10 8 Recoupment and Other State Rules 479 6 11 Jurisdiction and Venue 479 6 11 1 State and Federal Courts Have Concurrent Jurisdiction 479 6 11 2 Personal Jurisdiction over Out- of- State Collectors 481 6 11 2 1 Overview 481 6 11 2 2 “Transaction of Business” Test in

Long- Arm Statutes 481 6 11 2 3 Tort Tests in Long- Arm Statutes 482 6 11 3 Federal Court Venue 483 6 11 4 Joining State Law Claims in Federal Court 483 6 11 5 Federal Court Joinder of Creditors Subject to State Claims 485 6 12 Relation of the FDCPA to State Laws and Other Federal Statutes 485 6 12 1 Relationship to State Law 485 6 12 2 Maine Granted FDCPA Exemption 487 6 12 3 Relationship to Other Federal Statutes 487 6 13 Federal Agency Enforcement 487 6 13 1 Rulemaking and Agency Interpretations 487 6 13 2 FTC Enforcement 488 6 13 3 Consumer Financial Protection Bureau Enforcement 489 6 13 4 Other Agency Enforcement 489

Chapter 7 Debt Collector’s Defenses and Counterclaims 7 1 General 491 7 2 Bona Fide Error Defense, 15 U S C § 1692k(c) 491 7 2 1 Overview 491 7 2 2 Mistaken Interpretation of FDCPA Not an Error 493 7 2 3 Errors of State Law or Other Federal Law 494 7 2 4 Factual Errors and Clerical Mistakes 495 7 2 5 Bona Fide Error 495 7 2 6 Reasonable Reliance on the Creditor’s Information 496 7 2 7 Whether the Error Was Unintentional 498 7 2 8 Whether the Collector Maintained Reasonable Procedures 499 7 3 Good Faith Conformity with a Formal FTC Advisory Opinion Later

Ruled Invalid Is a Defense to an FDCPA Suit, 15 U S C § 1692k(e) 504 7 4 Prior Litigation May Bar an FDCPA Action 505 7 4 1 Overview 505 7 4 2 Res Judicata and Collateral Estoppel 505 7 4 3 Comity 507 7 4 4 Rooker- Feldman Doctrine 507 7 4 5 Sovereign Immunity of Government Officials 510 7 4 6 Litigation and Witness Immunity 511 7 5 Other Defenses and Defense Strategies 512

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Contents

7 6 Federal Courts Usually Refuse Supplemental Jurisdiction over a Debt Collector’s Counterclaim to Collect the Underlying Debt 515

7 7 Attorney Fees and Sanctions Against the Consumer or Consumer’s Attorney 516 7 7 1 Attorney Fees Awards to FDCPA Defendants, 15 U S C § 1692k(a)(3) 516 7 7 2 Rule 11 Sanctions 519 7 7 3 Sanctions for Multiplying Proceedings 520 7 7 4 Award of Taxable Costs to Prevailing FDCPA Defendants 521

Part III Other Federal and State Debt Collection Claims

Chapter 8 Other Federal Claims 8 1 Fraudulent or Defamatory Use of Mails 523 8 2 Collecting for Unordered Merchandise May Be Illegal 524 8 3 Telephone and E- Mail Harassment 524 8 3 1 Criminal Statutes 524 8 3 2 Protections Under the Telephone Consumer Protection Act 525 8 3 2 1 Potential Applications to Debt Collection 525 8 3 2 2 Scope of the Prohibition on Autodialed or Prerecorded

Calls to Cell Phones 526 8 3 2 3 What Is an Autodialer? 526 8 3 2 4 Exceptions to the Prohibition on Autodialed or

Prerecorded Calls to Cell Phones; Prior Express Consent 527 8 3 2 4 1 The statute and regulation create three

exceptions 527 8 3 2 4 2 Prior express consent 527 8 3 2 4 3 Who may give consent 527 8 3 2 4 4 Revocation of consent 528 8 3 2 5 Burden of Proof Regarding Exceptions 528 8 3 2 6 TCPA Remedies and Litigation Issues 529 8 3 2 7 Vicarious Liability 529 8 3 2 8 Statute of Limitations 530 8 3 3 Use of Caller ID As a Debt Collection Device 530 8 3 3 1 Introduction 530 8 3 3 2 Transmitting Inaccurate Caller ID Information 530 8 3 3 3 Meaningful Disclosure Under FDCPA Applies to Caller ID 531 8 3 3 4 Automatic Number Identification (ANI) and Blocking

Transmittal of Caller ID 531 8 3 4 Protection from Electronic Messaging Harassment 532 8 3 5 The Role of Telephone Company Tariffs, State Public

Utility Commissions, and the FCC 533 8 4 Truth in Lending Act Disclosures 533 8 4 1 Are TILA Disclosures Required When Collector Enters into

a Repayment Agreement with the Debtor? 533 8 4 2 Collector’s Liability for Originator’s TILA Violation 534 8 5 Extortionate Collection Methods and Other RICO Violations 535 8 5 1 Advantages and Disadvantages of RICO Claims 535 8 5 2 Qualifying Conduct— Collection of an Unlawful Debt or

Pattern of Racketeering Activity 535 8 5 3 RICO’s Substantive Prohibitions 536 8 5 4 RICO and Debt Collection 537 8 5 5 State Racketeering Statutes 537

xxviii


8 6 The Fair Credit Reporting Act 538 8 6 1 Overview 538 8 6 2 Accuracy of Credit Reports; Furnisher’s Duty of Investigation 539 8 6 2 1 Overview 539 8 6 2 2 Common Types of Inaccuracy by Debt Collectors 539 8 6 2 3 Creditors’ and Collectors’ Liability for Making

Inaccurate Reports to Credit Bureau 540 8 6 2 3 1 Notice of the dispute 540 8 6 2 3 2 Furnisher’s duty to conduct a reasonable

investigation 541 8 6 2 3 3 Reinvestigation time limits 541 8 6 2 3 4 Prohibition against re- reporting

inaccurate information 541 8 6 3 Improperly Acquiring Credit Reports 542 8 6 4 Special Duties Where Debt Arises from Fraud or Identity Theft 542 8 6 5 Creditors and Collectors As Consumer Reporting Agencies 543 8 6 6 FDCPA and Other Prohibitions Relating to Credit Reports 543 8 6 6 1 Publicizing Indebtedness; Deceptive Implication

that a Collector is a Credit Bureau 543 8 6 6 2 Disputed Debts and the Verification Process 543 8 6 6 3 Threatening to Report Debt 543 8 6 7 Negotiating a Debt Settlement Covering Credit Reporting 544 8 7 Payments to Debt Collectors: UCC, the Electronic Fund Transfer Act,

and NACHA Rules 544 8 7 1 Overview; What Law Applies 544 8 7 2 Authorization 545 8 7 2 1 Remotely Created Checks and the UCC 545 8 7 2 2 Electronic Fund Transfers and the EFTA 545 8 7 2 3 ACH Payments and NACHA Authorization Requirements 546 8 7 3 Returned Item Fees 547 8 7 4 Re- Presentment of Bounced Checks and Electronic Payments 548 8 7 5 The Right to Stop Payment and Revoke Authorization 548 8 7 6 Remedies 549 8 8 Discrimination in Choice of Collection Tactics on the Basis of

Consumer’s Race, Religion, Sex, Age, or Other Prohibited Category 549 8 9 Federal Credit Repair Organizations Act 551 8 9 1 Overview 551 8 9 2 Whether Creditors and Collectors Are “Credit Repair Organizations” 551 8 9 3 Substantive Restrictions on Credit Repair Organizations 553 8 9 4 Substantive Prohibitions Applicable to Any “Person” 553 8 9 5 Private Remedies 553 8 10 Collection of Taxes by Private Debt Collection Agencies 554 8 11 Bankruptcy 555 8 11 1 General 555 8 11 2 Bankruptcy Basics 555 8 11 2 1 Chapter 7 Overview 555 8 11 2 2 Chapter 13 Overview 556 8 11 2 3 Choosing to File and Choosing a Chapter 557 8 11 2 4 The Automatic Stay 557 8 11 2 5 Property of the Estate and Exemptions 561 8 11 2 6 Discharge 562 8 11 3 Bankruptcy Impact on Consumers’ Claims 564

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Contents

8 11 3 1 General 564 8 11 3 2 Claims Arising Before Bankruptcy 564 8 11 3 2 1 The importance of “scheduling” a debt

collection claim 564 8 11 3 2 2 Unscheduled debt collection claims—

the standing problem 566 8 11 3 2 3 Unscheduled debt collection claims—

the judicial estoppel problem 567 8 11 3 3 Claims Arising During a Bankruptcy Case 569 8 11 3 4 Claims Arising After a Bankruptcy Case 570 8 11 3 5 Litigating Claims in Bankruptcy Court 570 8 11 3 5 1 General 570 8 11 3 5 2 The Supreme Court’s decision in Stern v. Marshall . . . . 571 8 11 3 6 FDCPA Attorney Fees and Bankruptcy 572 8 11 4 Federal and State Fair Debt Collection Claims Relating

to a Bankruptcy 573 8 11 4 1 Introduction 573 8 11 4 2 FDCPA Claims Arising Out of or in Conjunction

with the Bankruptcy Code 574 8 11 4 3 FDCPA and Proof of Claim Problems 577 8 11 4 3 1 Overview of the bankruptcy claims process 577 8 11 4 3 2 FDCPA liability for creditors’ abuse of the

claims process 577 8 11 4 4 Preemption of State Debt Collection Laws 578 8 12 Constitutional Torts 579 8 12 1 Introduction 579 8 12 2 State Action 579 8 12 2 1 General; State As Creditor 579 8 12 2 2 Private Parties 580 8 12 3 What Protections Due Process Requires 582 8 12 4 Fourth Amendment Claims 583 8 12 5 Immunity 585 8 13 Other Federal Restrictions on Debt Collection 585

Chapter 9 Tort Remedies 9 1 Introduction 587 9 1 1 Overview 587 9 1 2 Preemption 588 9 1 2 1 FDCPA and State Debt Collection Statutes

Do Not Preempt Tort Claims 588 9 1 2 2 Preemption by Bankruptcy Code 588 9 1 2 3 Preemption by Federal Banking Laws and

Higher Education Act 588 9 1 3 Privilege 589 9 1 3 1 Privilege for Statements Made in Judicial Proceedings 589 9 1 3 2 Common Interest Privilege 593 9 1 3 3 Anti- SLAPP Statutes 594 9 1 4 Immunity Under the Fair Credit Reporting Act 594 9 1 5 Identity Theft 594 9 2 Intentional or Negligent Infliction of Emotional Distress 595 9 2 1 Elements of Intentional Infliction of Emotional Distress 595 9 2 2 What Constitutes Severe Mental Distress 596

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9 2 3 Whether Physical Injury or Other Non- Emotional Injury Is Required 597 9 2 4 What Constitutes Actionable Conduct 598 9 2 5 Negligent Infliction of Emotional Distress 605 9 2 6 Recovery of Emotional Distress Damages for Other Collection Torts 608 9 3 Invasion of Privacy 609 9 3 1 Overview 609 9 3 2 Intrusion upon the Debtor’s Right to Seclusion 611 9 3 3 Holding Up to False Light 614 9 3 4 Public Disclosure of Private Facts 615 9 4 Intentional Interference with Contractual Relationships or

Prospective Economic Relations 618 9 4 1 Introduction 618 9 4 2 Tortious Interference with a Contract 619 9 4 3 Tortious Interference with Prospective Economic Relations 621 9 4 4 Justification As a Defense 622 9 5 Defamation 622 9 5 1 Overview of Elements 622 9 5 2 Defamation Per Se and Defamation Per Quod . . . . . . . . . . . . . . . . . . . . 623 9 5 3 Is It Defamatory to State That a Person Has Failed to Pay a Debt? 624 9 5 4 Truth As a Defense 625 9 5 5 Immunity and Privilege 626 9 5 6 Pleading and Proof 627 9 6 Malicious Prosecution and Abuse of Process 628 9 6 1 Introduction 628 9 6 2 Malicious Prosecution 629 9 6 2 1 Summary of Elements 629 9 6 2 2 Institution of a Proceeding 630 9 6 2 3 Lack of Probable Cause 631 9 6 2 4 Malice or Improper Purpose 633 9 6 2 5 Termination in Favor 634 9 6 2 6 Examples 636 9 6 3 Abuse of Process 637 9 6 3 1 Elements 637 9 6 3 2 “Process” Defined 639 9 6 3 3 Ulterior Purpose 640 9 6 3 4 Examples 642 9 7 Other Debt Collection Torts 644 9 7 1 Torts Involving Personal Injury or Restraint 644 9 7 2 Trespass 645 9 7 3 Conversion and Other Torts Directed Against the

Consumer’s Property 645 9 7 4 Negligence 646 9 7 5 Misrepresentation and Civil Conspiracy 647 9 7 6 Framing a Criminal Law Violation As a Tort Claim;

Prima Facie Tort 648 9 7 7 Other Potential Tort Claims 649 9 7 8 Tort Claims Against Governmental Entities 650 9 8 Attorney’s Liability to Third Parties for Collection Negligence and Other Torts 650 9 9 Liability of Principals, Officers 651

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Contents

Chapter 10 Other State Remedies 10 1 Introduction 653 10 1 1 Benefits of State Statutory Claims 653 10 1 2 Preemption Issues 653 10 1 3 Litigation Privilege 655 10 1 4 State Governmental Immunity 656 10 1 5 Special Issues in Utility Collection Cases 656 10 2 Consumer Protections Under State Debt Collection Statutes and Regulations 656 10 2 1 Overview 656 10 2 2 Constitutionality of State Debt Collection Statutes 657 10 2 3 Scope of State Debt Collection Statutes 657 10 2 3 1 Types of Debts Covered 657 10 2 3 1 1 “Claim” vs “debt”; “credit” 657 10 2 3 1 2 Must the debt arise from a “transaction”? 658 10 2 3 1 3 Is the statute limited to consumer debts? 659 10 2 3 1 4 Other state provisions regarding particular

types of debts 660 10 2 3 2 Types of Activities Covered 660 10 2 3 3 Types of Collectors Covered 660 10 2 3 3 1 Creditors collecting their own debts 660 10 2 3 3 2 Entities not in the business of debt

collection 663 10 2 3 3 3 Attorneys 664 10 2 3 3 4 Repossessors 666 10 2 3 3 5 Child support collectors 666 10 2 3 3 6 Out- of- state collectors 666 10 2 3 3 7 Other specific entities 666 10 2 3 3 8 Servicing, billing, and mortgage foreclosure 667 10 2 3 4 Persons Who Do Not Owe the Debt 669 10 2 4 State Debt Collection Statutes’ Protections 669 10 2 4 1 General Standards 669 10 2 4 2 Privacy Protections 670 10 2 4 2 1 General 670 10 2 4 2 2 Credit reporting 671 10 2 4 2 3 Workplace calls 671 10 2 4 2 4 Third- party contacts 672 10 2 4 3 Abusive Collection Activities 672 10 2 4 3 1 Telephone harassment 672 10 2 4 3 2 Threatening or filing unfounded criminal charges 674 10 2 4 3 3 Contacting represented debtors 674 10 2 4 4 Unfair and Deceptive Debt Collection Activities 675 10 2 4 4 1 General standards 675 10 2 4 4 2 Deception regarding the existence or

amount of a debt 675 10 2 4 4 3 Deception regarding collection remedies

and in collection suits 678 10 2 4 4 4 Deception regarding the identity of the

collector or the owner of the debt 680 10 2 4 4 5 Validation notices and documentation

requirements 681 10 2 4 4 6 Wrongful garnishment 682 10 2 4 4 7 Other unfair or deceptive tactics 682

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10 2 4 5 Unlicensed Collection Activity 683 10 2 5 State Debt Collection Statutes’ Remedies 684 10 2 5 1 Is There a Private Cause of Action? 684 10 2 5 2 Relief Available 685 10 2 5 2 1 Actual damages 685 10 2 5 2 2 Statutory damages 686 10 2 5 2 3 Punitive damages 687 10 2 5 2 4 Attorney fees 688 10 2 5 2 5 Other relief under state debt collection

statutes 688 10 2 5 3 Defenses 689 10 3 General State Consumer Protection Statutes Prohibiting Unfair and

Deceptive Acts and Practices (UDAP) 690 10 3 1 Nature and Advantages of a UDAP Claim 690 10 3 2 Validity and Interpretation of State UDAP Statutes in

the Debt Collection Context 691 10 3 3 UDAP Coverage of Debt Collection Activities 691 10 3 3 1 General 691 10 3 3 2 Debt Collection Is in Trade or Commerce 691 10 3 3 3 Coverage Under Statutes Requiring a “Consumer

Transaction” or Acts in Connection with the Sale of Merchandise 692

10 3 3 4 Types of Creditors, Collectors, and Debts Covered 692 10 3 3 5 What Consumers Are Protected? 694 10 3 3 6 State- by- State Survey of UDAP Statute’s Coverage

of Debt Collection 695 10 3 4 Deceptive Debt Collection Activities 701 10 3 5 Unfair and Unconscionable Debt Collection Activities

Under UDAP Statutes 704 10 3 6 Violation of Another Debt Collection Statute As UDAP Violation 706 10 3 7 CFPB Examples of Unfair, Deceptive, or Abusive Debt

Collection Practices 708 10 3 8 UDAP Remedies for Debt Collection Violations 708 10 4 State Credit Repair Organization Statutes 710 10 4 1 Introduction 710 10 4 2 Scope 710 10 4 3 Substantive Prohibitions 711 10 4 4 Private Remedies 711 10 5 Unauthorized and Unethical Practice of Law by Creditors,

Lawyers, and Collection Agencies 711 10 5 1 Unauthorized Practice of Law by Creditors 711 10 5 2 Unauthorized Practice of Law by Collection Agencies 711 10 5 3 Unethical Practice of Law by Lawyers Engaging in Debt Collection 714 10 5 4 Attorneys’ Unethical Practices When Collecting Their Own Fees 715 10 5 5 Remedies 716 10 5 5 1 Remedies for Unauthorized Practice of Law 716 10 5 5 2 Remedies for Ethical Violations 717 10 6 State Criminal Statutes 718 10 7 Enjoining Abusive Debt Collection Practices 718 10 8 Other State Limitations on Debt Collection 719 10 8 1 State Laws Governing Specific Businesses 719 10 8 2 Usury Laws 719 10 8 3 Privacy Laws 719

xxxiii

Contents

10 8 4 State Loan Broker Laws 719 10 8 5 State Laws Regulating Telemarketing, Autodialing,

and Artificial Voice Messages 719

Index 721

Volume 2

Appendix A Text of the Fair Debt Collection Practices Act A 1 Cross- Reference Table of Public Law 95- 109 Section Numbers

with 15 U S C Section Numbers 747 A 2 Fair Debt Collection Practices Act 747 A 3 Senate Report No 95- 382 on the Fair Debt Collection Practices Act 753

Appendix B Federal Trade Commission Advisory Opinions and Staff Letters Regarding the Fair Debt Collection Practices Act

B 1 Federal Trade Commission Advisory Opinions 759 B 1 1 Introduction 759 B 1 2 Federal Trade Commission FDCPA Advisory Opinion,

June 23, 2009 759 B 1 3 Federal Trade Commission FDCPA Advisory Opinion,

March 19, 2008 760 B 1 4 Federal Trade Commission FDCPA Advisory Opinion,

October 5, 2007 761 B 1 5 Federal Trade Commission FDCPA Advisory Opinion,

March 31, 2000 762 B 1 6 FTC Denial of Request for

Advisory Opinion, July 28, 2006 765 B 2 FTC Informal Staff Letters 766

Appendix C Federal Trade Commission Staff Commentary on the Fair Debt Collection Practices Act 787

Appendix D Summary of State Debt Collection Statutes 801

Appendix E Practice Aids E 1 General Interview Checklist for Debt Collection Harassment 813 E 1 1 General Questions 813 E 1 2 Client’s General Objectives 813 E 1 3 Contacts by Letter 813 E 1 4 Contacts by Telephone or Personal Visit 814 E 1 5 General Questions on Damages 814 E 1 6 Third Party Contacts 815 E 1 7 Miscellaneous Collection Abuses 815 E 1 8 General Questions on Underlying Debts 815 E 1 9 Current Debts 815 E 2 Chronology of Debt Collection Contacts 816

xxxiv


E 3 Fair Debt Collection Act Violations Checklist (15 U S C §§ 1692 to 1692p) 816 E 3 1 Coverage 816 E 3 2 Notice Violations 816 E 3 3 False or Misleading Representations 817 E 3 4 Unfair Practices 818 E 3 5 Harassment or Abuse 819 E 3 6 Communications with the Consumer and Third Parties 819 E 3 7 Other Violations 820 E 3 8 Damages 821 E 3 9 Documents 821 E 4 Abbreviations Commonly Used by Collectors 821

Appendix F Sample Complaints F 1 Complaint Including Both Federal and State Causes of Action 823 F 2 Complaint Under Fair Debt Collection Practices Act 825

Appendix G Sample Discovery G 1 Sample Interrogatories 827 G 1 1 Version One 827 G 1 2 Version Two 828 G 2 Sample Requests for Production 830 G 2 1 Version One 830 G 2 2 Version Two 831 G 3 Sample Requests for Admissions 832 G 3 1 Version One 832 G 3 2 Version Two 833 G 4 Sample Class Discovery 833 G 4 1 Interrogatories 833 G 4 2 Requests for Admissions 833 G 4 3 Requests for Production of Documents 834

Appendix H Sample Trial Documents H 1 Sample Brief in Support of Motion for Partial Summary Judgment 835 H 2 Sample Jury Voir Dire Questions, Instructions, and Proposed Verdict Sheet 839 H 2 1 Sample Plaintiff’s Request for Voir Dire Questions 839 H 2 2 Sample Proposed Jury Instructions 840 H 2 3 Sample Verdict Sheet 844 H 3 Pretrial Order 845 H 4 Trial Brief 847 H 5 Motion in Limine 849 H 5 1 Plaintiff’s Character 849 H 5 1 1 Motion 849 H 5 1 2 Memorandum in Support of Motion in Limine 849 H 5 2 Attorney Fees 850

Appendix I Sample Documents for Award of Attorney Fees I 1 Sample Motion for Award of Attorney Fees 851 I 2 Sample Declaration in Support of Motion for Attorney Fees 852 I 3 Sample Order for the Award of Attorney Fees 852 I 4 Sample Memorandum in Support of Award of Attorney Fees 852

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Contents

Appendix J Fair Debt Collection Practices Act Case Summaries J 1 Coverage 859 J 1 1 “Debt,” 15 U S C § 1692a(5) 859 J 1 1 1 General Principles 859 J 1 1 2 Rent, Condo Fees, and Co- op Fees 860

J 1 1 2 1 Covered 860 J 1 1 2 2 Not covered 861

J 1 1 3 Dishonored Checks 862 J 1 1 3 1 Covered 862 J 1 1 3 2 Not covered 863 J 1 1 3 3 Check diversion exemption, 15 U S C § 1692p 864

J 1 1 4 Torts and Insurance Debts 864 J 1 1 4 1 Covered 864 J 1 1 4 2 Not covered 864

J 1 1 5 Other Types of Debts 864 J 1 1 5 1 Covered 864 J 1 1 5 1 1 Utility bills 864 J 1 1 5 1 2 Student loans 865 J 1 1 5 1 3 Other 865 J 1 1 5 2 Not covered 866 J 1 1 5 2 1 Tax bills 866 J 1 1 5 2 2 Child support 866 J 1 1 5 2 3 Shoplifting, fines, and crimes 867 J 1 1 5 2 4 Other 868

J 1 1 6 Whether Debt Is a Consumer Debt 869 J 1 1 6 1 Consumer debts covered 869 J 1 1 6 2 Business debts not covered 872

J 1 2 “Debt Collector,” 15 U S C § 1692a(6) 876 J 1 2 1 General Definition 876

J 1 2 1 1 Regularly collects [See also J 1 2 2 1, Attorneys] 876

J 1 2 1 2 Not regularly collecting 876 J 1 2 1 3 Mere messengers, location services, and

others as debt collectors 877 J 1 2 1 4 Other issues 877

J 1 2 2 Coverage of Specific Types of Collectors 880 J 1 2 2 1 Attorneys [See also J 1 2 2 3, Foreclosure,

mortgage companies] 880 J 1 2 2 2 Repossession 887 J 1 2 2 3 Foreclosure, mortgage companies [See also

J 1 2 3 8, Debts obtained before default, 15 U S C § 1692a(6)(F)(iii)] 889

J 1 2 2 3 1 May be covered 889 J 1 2 2 3 2 Not covered 896 J 1 2 2 3 3 FDCPA claim stated 901 J 1 2 2 3 4 No FDCPA claim stated 902 J 1 2 2 4 Printing and mailing services 903 J 1 2 2 5 Check guaranty companies 904 J 1 2 2 6 Debt buyers [See also J 1 2 3 8, Debts

obtained before default] 904 J 1 2 2 7 Debt collectors’ employees 905 J 1 2 2 8 Check diversion collectors 907

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J 1 2 3 Scope of Specific Exclusions 907 J 1 2 3 1 Creditor, 15 U S C § 1692a(6)(A) 907 J 1 2 3 1 1 Creditor exempt 907 J 1 2 3 1 2 Creditor covered 919 J 1 2 3 2 Affiliated corporations, 15 U S C

§ 1692a(6)(B) 922 J 1 2 3 3 State and federal officials, 15 U S C

§ 1692a(6)(C) 923 J 1 2 3 4 Legal process servers, 15 U S C

§ 1692a(6)(D) 925 J 1 2 3 5 Nonprofit credit counselors, 15 U S C

§ 1692a(6)(E) 926 J 1 2 3 6 Fiduciaries and escrows, 15 U S C

§ 1692a(6)(F)(i) 927 J 1 2 3 7 Originators, 15 U S C § 1692a(6)(F)(ii) 928 J 1 2 3 8 Debts obtained before default, 15 U S C

§ 1692a(6)(F)(iii) [See also J 1 2 2 3, Foreclosure, mortgage companies; J 1 2 2 6, Debt buyers] 929

J 1 2 3 9 Certain secured parties, 15 U S C § 1692a(6)(F)(iv) 940

J 1 2 4 Derivative Liability of Defendants 940 J 1 3 Flat Rate Debt Collection, 15 U S C § 1692j 946 J 1 4 Persons Protected; Standing Issues 948 J 1 5 Communications Covered, 15 U S C § 1692a(2) 954 J 1 6 Miscellaneous 962 J 1 7 General Validity and Interpretation of FDCPA 964 J 1 7 1 Purposes and General Interpretation, 15 U S C § 1692 964 J 1 7 2 Federal Trade Commission Authority and Expertise 967 J 1 7 3 Consumer Financial Protection Agency Authority

and Expertise 968 J 1 7 4 Preemption and Relation to Other Laws [See also J 3 7 5,

Bankruptcy Court Issues] 969 J 2 Violations 971 J 2 1 Acquisition of Location Information, 15 U S C § 1692b 971 J 2 2 Communication in Connection with Debt Collection,

15 U S C § 1692c 973 J 2 2 1 Time and Place of Communications, 15 U S C

§ 1692c(a)(1) 973 J 2 2 2 Communicating with Represented Consumer, 15 U S C

§ 1692c(a)(2) 975 J 2 2 3 Communications at Workplace, 15 U S C

§ 1692c(a)(3) 981 J 2 2 4 Communications with Third Parties, 15 U S C

§ 1692c(b) 982 J 2 2 5 Ceasing Communications, 15 U S C § 1692c(c) 989 J 2 2 6 Other 993 J 2 3 Harassment or Abuse, 15 U S C § 1692d 994 J 2 3 1 Abusive Language, 15 U S C § 1692d(2) 994 J 2 3 2 Repeated or Continuous Telephone Calls, 15 U S C

§ 1692d(5) 996 J 2 3 3 Meaningful Telephone Identification, 15 U S C

§ 1692d(6) 1003

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Contents

J 2 3 4 General Standard: Harass, Oppress, or Abuse, 15 U S C § 1692d 1007

J 2 3 4 1 General standard violated 1007 J 2 3 4 2 General standard not violated 1011

J 2 3 5 Other 1015 J 2 4 False or Misleading Representations, 15 U S C § 1692e 1016 J 2 4 1 Least Sophisticated Consumer and Other

General Standards 1016 J 2 4 1 1 Least sophisticated and unsophisticated

consumer 1016 J 2 4 1 2 Materiality of deceptive statement 1022 J 2 4 1 3 Strict liability 1024 J 2 4 1 4 Communications to consumer’s lawyer 1025 J 2 4 1 5 Other 1027

J 2 4 2 Deceptive Threat of Legal Action 1029 J 2 4 3 Other Deceptive Threats 1042 J 2 4 4 Deceptive Implication of Attorney Involvement,

15 U S C § 1692e(3) 1046 J 2 4 5 Unlicensed Collection Agencies 1053 J 2 4 6 Use of “Credit Bureau” in Name 1056 J 2 4 7 Use of Telegrams and Simulated Telegrams 1056 J 2 4 8 Communicating False Credit Information,

15 U S C § 1692e(8) 1057 J 2 4 9 Providing 15 U S C § 1692e(11) Notices 1063 J 2 4 10 Disclosing the Amount of the Debt, 15 U S C

§§ 1692e(2)(A), 1692g(a)(1) [See also J 2 2 6, Other] 1072 J 2 4 11 False Representation of Character or Legal Status

of the Debt, 15 U S C § 1692e(2)(A) 1089 J 2 4 12 Deceptive Practices in Debt Collection Suits 1094 J 2 4 13 False Impression of Communication’s Source,

Authorization, or Approval, 15 U S C § 1692e(9) 1105 J 2 4 14 Use of True Business Name, 15 U S C § 1692e(14) 1106 J 2 4 15 Misrepresenting Collector As Credit Reporting Agency,

15 U S C § 1692e(16) 1108 J 2 4 16 Debt Settlement Offers 1109 J 2 4 17 Time- Barred Consumer Debts 1111 J 2 4 18 Deceptive Statements About Urgency 1115 J 2 4 19 State Required Notices 1116 J 2 4 20 Deceptive Foreclosure Practices 1117 J 2 4 21 Other Deceptive Acts 1120 J 2 5 Unfair Practices, 15 U S C § 1692f 1129 J 2 5 1 General Unfairness Standards 1129 J 2 5 2 Collection of Unauthorized Amounts 1133 J 2 5 3 Postdated Checks 1142 J 2 5 4 Unfair Nonjudicial Foreclosure and Repossession

Practices, 15 U S C §§ 1692f, 1692f(6) [See also J 1 2 2 3, Foreclosure, mortgage companies] 1143

J 2 5 4 1 Unfair nonjudicial foreclosure practices 1143 J 2 5 4 2 Unfair repossession and other practices 1145

J 2 5 5 Postcards and Envelopes 1146 J 2 5 6 Garnishment, Execution, Exempt Property 1147 J 2 5 7 Unlicensed Collection 1148

xxxviii


J 2 5 8 Time- Barred Debts 1149 J 2 5 9 Unfair Practices in Debt Collection Suits 1151 J 2 5 10 Other Unfair Practices 1154 J 2 6 Verification of Debts, 15 U S C § 1692g 1158 J 2 6 1 Least Sophisticated Consumer and Other General Standards 1158 J 2 6 2 Duns Overshadow Verification Notice 1160 J 2 6 3 Oral Verification Requests and Disputes 1176 J 2 6 4 Proper Verification of the Debt 1178 J 2 6 5 Proper Debt Verification Rights Notice [See also

J 2 6 2, Duns Overshadow Verification Notice] 1184 J 2 6 6 Amount of Debt [See also J 2 4 10, Disclosing the

Amount of the Debt] 1199 J 2 6 7 Ceasing Collection of Unverified Debt 1201 J 2 6 8 Other 1205 J 2 7 Distant Forums, 15 U S C § 1692i 1208 J 2 8 Furnishing Deceptive Forms, 15 U S C § 1692j [See also

J 1 3, Flat Rate Debt Collection] 1211 J 2 9 Miscellaneous 1212 J 3 Remedies and Litigation 1213 J 3 1 Damages 1213 J 3 1 1 Actual Damages 1213 J 3 1 2 Statutory Damages in Individual Actions 1222 J 3 1 3 Other Damages Issues 1234 J 3 2 Class Actions 1236 J 3 3 Consumer’s Attorney Fees and Costs 1257 J 3 3 1 Standards for Award of Attorney Fees 1257 J 3 3 2 LSC Programs 1267 J 3 3 3 Examples of Attorney Fee Awards 1267 J 3 3 4 Costs, 15 U S C § 1692k(a)(3) 1285 J 3 4 Injunctive or Declaratory Relief (Including Class Actions) 1285 J 3 4 1 Allowed 1285 J 3 4 2 Not Allowed 1286 J 3 4 3 Other 1288 J 3 5 FDCPA’s Statute of Limitations 1288 J 3 6 Debt Collector’s Defenses and Counterclaims 1303 J 3 6 1 Bona Fide Error Defense, 15 U S C § 1692k(c) 1303 J 3 6 2 Other Defenses and Counterclaims 1322 J 3 6 3 Offers of Judgment and Settlement 1329

J 3 6 3 1 Individual actions 1329 J 3 6 3 2 Class actions 1334

J 3 6 4 Debt Collector’s Claim for Attorney Fees and Costs, 15 U S C § 1692k(a)(3) 1337

J 3 6 5 Arbitration 1346 J 3 6 6 Litigation Privilege, Witness and Other Immunity 1349 J 3 7 Jurisdiction and Venue 1351 J 3 7 1 Removal and Federal/State Jurisdiction Issues 1351 J 3 7 2 Collector’s Counterclaims and Ancillary Jurisdiction 1354 J 3 7 3 Consumer’s State Claims and Supplemental Jurisdiction 1356 J 3 7 4 Long- Arm Jurisdiction and Venue 1362 J 3 7 5 Bankruptcy Court Issues 1365 J 3 7 6 Other Jurisdictional Issues 1374 J 3 7 7 Rooker- Feldman Issues 1375

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Contents

J 3 8 Pleadings and Motions Practice 1380 J 3 9 Discovery 1391 J 3 10 Trials 1396 J 3 11 Res Judicata and Claim Preclusion 1397 J 3 12 Miscellaneous 1401

Appendix K Debt Collection on the Web 1403

Appendix L Online Companion Material for This Treatise L 1 Introduction 1407 L 2 About the Online Companion Material 1407 L 3 Locating Documents 1407 L 4 Downloading and Using Documents 1407 L 5 Finding Additional Pleadings 1407

Summary Contents - National Consumer Law Center · 23.06.2009 · 1 1 3 Co-Counseling with NCLC 1...

Documents

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