Federal Courts Hold that Standard Validation Notice Violates FDCPA. Now What?!

Collectors frequently point to contradictory language among the FDCPA and other statutes as proof that standardized debt collection rules are needed in this industry.  However, even in an industry where consumer attorneys frequently make “creative” arguments, it is rare to see a claim that the FDCPA itself contains contradictory language. In a number of recent cases, consumer attorneys are arguing that the validation language from the statute – the same language collectors have been using since the FDCPA was enacted in 1977 — is now somehow unclear and confusing.   Specifically, consumer attorneys argue that the first sentence of the validation notice (relating to disputes), which does not contain an “in writing” requirement, contradicts the second sentence of the notice, which does require a written request from the consumer to receive verification.  Unfortunately, two Courts in New Jersey within the past year sided with the consumers in denying debt collectors’ motions to dismiss on this issue.  Two more cases on the issue – on which the debt collectors prevailed – are pending before the Third Circuit Court of Appeals.

In this episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman and Mike Poncin examine the recent cases alleging that the standard validation language violates the FDCPA and provide guidance for debt collectors seeking to avoid liability on this issue.

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New Federal Court of Appeals Rulings Favor Debt Collectors

Debt collectors were given clarity regarding two thorny FDCPA issues recently by decisions issued from the Seventh Circuit Court of Appeals.  In the case of Portalatin v. Blatt, the Court held that a consumer was entitled to a single recovery of an FDCPA statutory penalty rather than multiple recoveries for the same alleged violation from each Defendant.  This issue of Plaintiffs seeking to “stack” recoveries for the same alleged violations from multiple Defendant is now finally resolved in favor of the debt industry.  The Seventh Circuit also held in Dunbar v. Kohn that that sentence “This settlement may have tax consequences.” did not violate the FDCPA, thus joining the numerous other Court that held this language complies with the law.

In the latest episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman and Mike Poncin discuss the Portalatin and Dunbar decisions in addition to strategies for debt collectors to avoid FDCPA on debt collection communications regarding interest and out-of-statute disclosures.  Links to the Seventh Circuit Court of Appeals rulings in Portalatin and Dunbar can be found below.

http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2018/D08-13/C:16-1578:J:Manion:aut:T:fnOp:N:2201521:S:0

http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2018/D07-19/C:17-2134:J:Sykes:aut:T:fnOp:N:2189247:S:0

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New Consumer Strategy for Baiting FDCPA Violations And Use of Text Messages in Debt Collection

Consumers using scripts to bait debt collectors into FDCPA violations is certainly nothing new.  InsideARM has been publishing articles about this issue for years:
https://www.insidearm.com/news/00006606-five-signs-that-a-debtor-is-trying-to-ent/

While the practice of consumers baiting collectors into FDCPA violations is well-established, the specific techniques and scripts used continue to change and evolve.  A new script and technique for baiting collectors into FDCPA violations is sweeping across the country about which all debt collectors should be aware.

In the latest episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman http://www.lawmoss.com/john-rossman/ and Mike Poncin http://www.lawmoss.com/michael-s-poncin/ discuss this latest call baiting strategy and provide specific steps debt collectors can take to avoid an FDCPA violation when faced with a consumer using this script.  Attorneys Rossman and Poncin also discuss the “new frontier” of debt collectors using text messages and how to potentially overcome the regulatory and legal hurdles with use of this technology.

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Collectors Finally Winning FDCPA Cases: Is the Tide Turning or is Something Lurking

Just a few years ago, many in the collection industry were wringing their hands in frustration: the Douglass decision on innocuous information appearing in the windows of envelopes spawned hundreds of class action lawsuits; claims regarding the tax implications of settlements, voicemail message content and call frequency were on the rise; and, lawsuits with collection calls “scripted” by consumer attorneys were being filed nearly every day. Today, all of these issues are (mostly) in the past as debt collectors focus even more heavily on compliance and a number of positive Court decisions put to rest questionable legal theories upon which these FDCPA cases relied. However, it is only a matter of time before new theories arise.

In the latest episode of the Debt Collection Drill, Moss & Barnett attorneys John Rossman http://www.lawmoss.com/john-rossman/ and Mike Poncin http://www.lawmoss.com/michael-s-poncin/ explore how the FDCPA landscape shifted and identify ways in which collectors can avoid being caught in the inevitable next wave of FDCPA lawsuits.

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Radical Law Changes for Collection Letters in 2018

Consumer attorneys subjected debt collectors to a barrage of FDCPA lawsuits, especially in New York and New Jersey, on collection letters in 2017.  This trend will continue, and likely accelerate, in 2018.  Debt collectors hoping for relief from the Courts on the latest consumer attorney claims regarding collection letters may get some clarity in the near future.  The Second Circuit Court of Appeals recently considered oral arguments on the issue of whether a debt collector must disclose when interest is not accruing on an account in the Taylor case.  A decision is expected in the Taylor case within the next year.  Also, a recent decision from New Jersey held that validation language in a collection letter that tracks verbatim the wording of the FDCPA somehow violates the FDCPA.  An appeal to the Third Circuit Court of Appeals in that case is expected.  In addition, the Third Circuit Court of Appeals recently issued an opinion on whether use of the word “settlement” in a collection letter violates the FDCPA.

In the latest episode of the Debt Collection Drill podcast, Moss & Barnett attorneys John Rossman http://www.lawmoss.com/john-rossman/ and Mike Poncin http://www.lawmoss.com/michael-s-poncin/ discuss these recent cases affecting debt collection letters and specific strategies that agencies can implement today.

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