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Showing 24 posts in Debt Collection.

Consumer Plaintiff Avila Sues Using the Safe Harbor Precedent She Established in Avila Decision—and Loses

Following the Second Circuit's 2016 decision in Avila v. Riexinger & Associates (Avila I), consumer plaintiff Annmarie Avila returned to court in Avila v. Reliant (Avila II) to sue for violations of the Fair Debt Collection Practices Act (FDCPA) under the so called "safe-harbor" provision she helped establish in her previous successful appeal. More ›

Debt Collection Industry Achieves Important Federal Court Wins

In a recent client alert, Hinshaw's Consumer Financial Services team recounted a series of notable federal court decisions they secured on behalf of debt collector clients in recent months. These included multiple wins at the Third and Seventh Circuit Court of Appeals, as well federal districts in Florida and Illinois.

The decisions included affirmation of the need to stay within the scope and original intent of the Fair Debt Collection Practices Act (FDCPA), a personal jurisdiction ruling in favor of an officer of a debt collection company, and expiration dates for settlement offers, along with a memorable win via a successful Rule 11 motion that sought attorneys' fees and costs due to bad faith actions by prolific and familiar plaintiff's counsel.

With the kind permission of Hinshaw's clients, the alert describes in detail seven of these decisions, several of which establish important new precedent favorable to the industry.

Read the alert on the Hinshaw website

Eighth Circuit Joins Five Other Circuits in Applying a Materiality Requirement to FDCPA Claims

In Hill v. Accounts Receivable Services, LLC, a consumer sued a collection agency for violations of § 1692e of the Fair Debt Collection Practices Act (FDCPA) on allegations that the collection agency's exhibits submitted in a state court action—which proved the assignment of the debt from the creditor—were false, misrepresented the legal status of the debt, and threatened actions the agency did not intend to take. The FDCPA action followed the state court's decision to grant judgment in favor of the consumer. The district court granted the collection agency's motion for judgment on the pleadings, concluding that the complained of actions were not material. The consumer appealed. More ›

Seventh Circuit Rules in Favor of a Debt Collector Regarding Steps to be taken in Compliance with the FDCPA and FCRA when a Debtor Disputes a Debt

Hinshaw obtained a significant ruling in the Seventh Circuit in Walton, which involved claims under both the FDCPA and the FCRA. The Defendant sent Deborah Walton a dunning letter, which stated she owed delinquent debt on an AT&T account. But the letter listed an invalid account number—the first three digits of the account number were transposed with the middle three digits. Walton called Defendant to dispute that the debt belonged to her, she acknowledged that her name and address were correct, but falsely denied that the last four digits of her social security number matched those given by the representative. Walton also sent a letter to Defendant asserting that she did "not own [sic] AT&T any money under the account number listed above." Defendant checked the information it had received from AT&T and sent Walton a letter reporting that, based on a records review, it had verified Walton's name, address, social security number, and the amount of the debt. Defendant also reported Walton's debt as disputed with two credit reporting agencies. Walton then disputed the debt to the credit reporting agencies, which triggered an ACDV[1] report to Defendant about Walton's dispute. The notice simply stated that the debt did not belong to her. More ›

Second Circuit Resolves Uncertainty Surrounding "Reverse Avila" Claims

The Court of Appeals seems to have halted much uncertainty surrounding "reverse Avila" claims by unanimously affirming the New York federal court's decision in Taylor v. Financial Recovery Services, Inc., No. 17-1650, 2018 U.S. Dist. LEXIS ------- (2d Cir. March 29, 2018) (found here). In the wake of Avila v. Riexinger & Assocs., LLC, 817 F.3d 72 (2d Cir. 2016), savvy plaintiffs have argued that the failure to disclose that a debt is no longer accruing interest is false and misleading in violation of Section 1692e of the Fair Debt Collection Practices Act (FDCPA). The Second Circuit disagreed and held that "a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading " when the letter correctly states a consumer's balance when the letter was issued.

Distinguishing Avila, the Second Circuit explained that the collection letter in Avila was misleading because a consumer could pay the full amount listed on the letter but such payment would not settle the debt. Under the facts of Avila, a consumer who paid the amount due on the collection letter would still be on the hook for an unpaid balance because interest and fees "accumulated after the notice was sent but before the balance was paid." In Taylor, the creditor instructed the collector not to accrue interest or fees on the underlying debt. Thus, because a consumer could have satisfied their debt by "making reasonably prompt payment" of the balance stated on the collection letter, it was not misleading notwithstanding the creditor's right to accrue post-placement interest on that same debt. The Second Circuit noted that the worst "harm" to plaintiffs in Taylor would be to pay sooner rather than later in order to avoid interest or fees accruing, but acceleration of payment "falls short of the obvious dangers facing consumers in Avila." More ›

California Appellate Court Permits Debt Collection Suit against Mortgage Loan Servicer

Acknowledging a split of authority among the many federal courts reviewing whether a mortgage loan servicer falls within the FDCPA's definition of a "debt collector," one California appellate court has revived a putative class action dismissed at the trial court through which borrowers pursued fair debt claims under the Rosenthal Act. The decision issued in Davidson v. Seterus is significant because borrowers could not pursue these claims under the more restrictive FDCPA. More ›

Maine Ups the Ante on Debt Collection Licensing

The State of Maine recently enacted legislation that greatly expands those entities required to obtain a debt collection license. Previously, a debt collector needed to obtain a license if it was attempting to collect a debt incurred by a Maine resident to a Maine creditor. A debt collector also needed a license if it engaged in the "face-to-face" solicitation of creditor clients in Maine. These conditions have now been expanded. More ›

Read Before You Leap: Providing Telephone Number To Communicate With Collector Does Not Overshadow Validation Rights

The New Jersey federal court has rejected a claim that providing a debtor with a telephone number and other options to communicate with a collector does not overshadow required language that the debtor must dispute the debt in writing within thirty days. The court found that the validation language concerning a consumer's right to dispute the debt under the Fair Debt Collection Practices Act (FDCPA) must be construed by considering as a whole the letter to the debtor. More ›

Hinshaw's Dave Schultz Addresses Massachusetts Supreme Court in Debt Collection Licensing Dispute

The Massachusetts Supreme Court recently heard oral argument about whether a passive debt buyer is required to be licensed. An active and engaged panel questioned the attorneys on the issues, earlier this month. The debt buyer defendant was represented in oral argument by Hinshaw partner David Schultz. More ›

New Jersey Federal Judge Dismisses RICO suit against FDCPA Plaintiff Law Firms

Late last year, a debt collection agency went on the offensive and filed a RICO lawsuit against three FDCPA Plaintiff Law Firms, alleging that the Plaintiff Firms filed frivolous class action lawsuits under the FDCPA as a way to generate a quick settlement from them. Last week, Judge Michael Vazquez, in a sometimes scathing opinion, dismissed the suit, siding with the Plaintiff Firms. Judge Vazquez ultimately concluded that the filing of numerous class action lawsuits violates no laws, but is actually "standard practice." He found that the Amended Complaint was both factually and legally deficient, and the allegations that the Plaintiff Firms engaged in frivolous litigation were baseless. Moreover, Judge Vazquez concluded that filing litigation cannot form a basis for mail or wire fraud under RICO.  More ›

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