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IT’S A JUNGLE OUT THERE!
How to be nice to your collection attorneys and keep them (and maybe you) from
being sued
David Melcer,, Esq.
q
Improving lives through financial education.
www.MoneyManagement.org
The collection industry and
collection attorneys are under a
microscope
Franken moves to
curb abusive debt
collection
13901 total lawsuits for 2010 (2009 was 10,337)
10914 FDCPA (Fair
(F i D
Debt
bt C
Collection
ll ti P
Practices
ti
A
Act)
t)
1299 FCRA (Fair Credit Reporting Act)
529 TILA (Truth in Lending Act)
234 TCPA (Telephone Consumer Protection Act)
Number of Unique Plaintiffs: 454 (including multiple
plaintiffs in one suit
*Statistics taken from WebRecon.com February, 2011
The Same Cast of Characters*:
Representing 412 Consumers: Jack Dennis Card, Jr.
(Rosenberg & Rosenberg)
Representing 353 Consumers: Sergei Lemberg
Representing 318 Consumers: Brent F. Vullings
(Warren & Vullings)
Representing 293 Consumers: Todd Michael Friedman
Representing 270 Consumers: David Michael Larson
Representing 213 Consumers: Donald A. Yarbrough
Representing 198 Consumers: Lara Ruth Shapiro
Representing 187 Consumers: David J. Philipps
Representing 176 Consumers: Ryan Scott Lee
(Krohn & Moss)
Representing 175 Consumers: Nicholas J. Bontrager
(Krohn & Moss)
*Statistics taken from WebRecon.com, February, 2011
Is it Easing? Not Hardly
2224 total lawsuits for 2011*, including:
2120 FDCPA
236 FCRA
103 TILA
102 TCPA
Number of Unique Plaintiffs: 2254 (including multiple plaintiffs in one
suit)
The most active consumer attorneys of the year:
Representing 61 Consumers: David Michael Larson
Representing 58 Consumers: Craig Thor Kimmel
Representing 37 Consumers: Lara Ruth Shapiro
Representing 34 Consumers: Jack Dennis Card
Card, Jr
Jr.
Representing 32 Consumers: John Thomas Steinkamp
*Statistics taken from WebRecon.com April, 2011
Usual Tactics
Law firm files same papers using different
names
Initial demand is to settle suit for $4500
(separate checks of $1000 for client and $3500
fees)
How can this happen?
•FDCPA is a Strict Liability Statute (for the most part)
•Strict liability means no excuses
•FDCPA is an often imprecise statute, allowing judges to
stretch it
•FDCPA is an old statute, not anticipating technological
changes
Example
p – Foti
“Communication” means the conveying of information regarding a debt directly or indirectly
to any person through any medium.
Is this a communication?
Good day,
y, we are calling
g from ABC Company
p y regarding
g
gap
personal business matter that
requires your immediate attention. Please call back 1-866-701-1275 once again please call
back, toll-free, 1-866-701-1275, this is not a solicitation.
Court – YES!
“Defendant's voicemail message, while devoid of any specific information about any
particular debt,, clearlyy p
p
provided some information,, even if indirectly,
y, to the intended
recipient of the message. Specifically, the message advised the debtor that the matter
required immediate attention, and provided a specific number to call to discuss the matter.
Given that the obvious purpose of the message was to provide the debtor with enough
g
how the voicemail message
g is not
information to entice a return call,, it is difficult to imagine
a communication under the FDCPA.”
“Meaningful Involvement”
Avila v. Rubin, 84 F.3d 222, 229 (7th Cir.
1996):
An unsophisticated consumer, getting a letter from an “attorney,”
knows the price of poker has just gone up. And that clearly is the
reason why the dunning campaign escalates from the collection
agency, which might not strike fear in the heart of the consumer,
to the attorney, who is better positioned to get the debtor’s knees
knocking…. Thus, if a debt collector (attorney or otherwise) wants
to take advantage of the special connotation of the word
‘attorney’ in the minds of delinquent consumer debtors to better
effect collection of the debt, the debt collector should at least
ensure that an attorney has become professionally involved in the
debtor’s file.
Miller v. Upton, Cohen, & Slamowitz, 2009 WL
3212556 (USDC, E. Dist. NY, Sept. 30, 2009)
The creditor, Lord & Taylor, placed Miller’s account with Wolpoff &
Abramson.
Miller had disputed the debt with L&T and disputed it again with Wolpoff.
Wolpoff never responded, but instituted legal action.
Wolpoff
W
l ff iis nott llocated
t d iin NY
NY, so th
they referred
f
d th
the fil
file tto U
Upton
t th
through
h th
the
National Attorney Network (NAN).
Through NAN, Wolpoff sent Upton Miller’s name, address, SSN, telephone
number,, L&T account number,, the amount of the debt,, and a notation that
Miller was an attorney.
Upton sent Miller an initial letter and validation notice and then filed suit.
The suit ultimately settled
settled, and Miller then sued Upton in this action.
action
Miller v. Upton, Cohen, & Slamowitz, 2009 WL
3212556 (USDC, E. Dist. NY, Sept. 30, 2009)
(cont.)
The suit alleged
g that Upton’s
p
letter was sent without meaningful
g
attorney involvement.
Upton said that it was relying on Wolpoff’s review at that point.
Testimony by Wolpoff was that Upton’s referrals were the most
accurate they got. Additionally Wolpoff performed their own
review using the information from L&T’s systems regarding the
account. And the judge was “impressed” with the thoroughness of
their review.
That didn’t matter, because Upton didn’t do their OWN review,
there was no meaningful involvement and they were found liable
for violating the FDCPA.
Lesher v. Law Offices of Mitchell Kay, 724
F.Supp.2d 503 (M.Dist. PA 2010)
•Attorney
Attorney sent a collection letter to a debtor asking
the debtor to visit their website and “resolve the
debt privately.”
•Letter contained a disclosure that no attorney has
reviewed the account.
•Attorney
A
was not llicensed
d in the
h d
debtor’s
b ’ state,
therefore could not sue.
Lesher – The Court’s Conclusion
Although
g an attorney
y may
y be acting
g solely
y in the capacity
p
y
of a debt collector and may not be communicating any
explicit representation of a future course of action, when
the attorney acting as a debt collector uses law firm
letterhead the attorney acting as a debt collector plainly is
communicating to the debtor in his or her capacity as an
attorney. Therefore, since it is an attorney’s
communication, the implication is not avoidable that a
threat of litigation is being presented to the debtor.
A law firm’s letter does bear an implied threat of litigation,
and does connote that it is a communication from an
attorney.
ROBO - SIGNING
Midland Funding, LLC v. Brent, 2009 WL 2437243
(N.D.Ohio, August 11, 2009)
Midland referred their purchased debt to Javitch, Block & Rathbone for suit.
Brent answered and counterclaimed for FDCPA violations based on an affidavit
that
h was attached
h d to the
h suit
i ((the
h “Jimenez
“Ji
affidavit).”
ffid i ) ” Sh
She claimed
l i d that
h iit
was a false affidavit and that she did not recognize the seven year old debt.
Jimenez swore in his affidavit that he was personally familiar with Brent’s
account, that he knew the account was delinquent, that he had personal
knowledge of Midland’s purchase of the account, that he retained the attorneys
to sue on the account, that the balance was accurate, etc. etc. etc.
In his deposition, Jimenez was unable to verify pretty much everything that was
in the affidavit,
affidavit and admitted that most of it wasn’t true.
true He also testified
that his job consisted of pulling 200-400 affidavits off of a printer each day,
signing them, and sending them on to a notary. He only checked a handful for
accuracy.
As a result, the affidavit was found to be false and misleading and thus violated
the FDCPA.
Wirth v. Cach, LLC, 2009 Ga. App. LEXIS 1200
(O t b 15
(October
15, 2009)
Cach bought Wirth’s credit card debt from WaMu. It had originated with
Providian and came to WaMu when they bought Providian.
Providian
Cach sued and attached an affidavit where the employee swore that the
debt was purchased from Providian. Wirth defended and counterclaimed,
stating that the affidavit did not prove that Cach was the owner. The
trial court found in favor of Cach.
The appeals court reversed. They noted that in discovery, Cach produced
the bill of sale for the account which stated it was sold to Cach by WaMu,
not Providian as appeared in the affidavit.
affidavit They said that no documents
proved the transfer from Providian to WaMu, and thus the chain of title
was broken. Cach could not prove it owned the account.
How to keep your collection attorney from being on the
receiving
ece v g e
end
do
of o
one
eo
of tthose
ose su
suits:
ts:
1 Documents,
1.
Documents Documents,
Documents Documents!
2. Keep accurate account records and communicate
them to your attorney
g
before sending
g out the file
3. Do yyour due diligence
for suit and before signing any documents
Credit Reporting Issues
•Governed
Governed by the Fair Credit Reporting Act
•Requires accurate reporting
•Sets out dispute process and obligations of
reporters who receive notices of dispute from credit
bureaus.
•Allows disputes
p
to be made directlyy to the reporter
p
as well.
•Requires reporting the “date of first delinquency.”
Reporting Disputes as Disputes
•Litigation –
•Answer
A
to
t a fil
filed
d complaint
l i t iin a collection
ll ti suit
it th
thatt
contains a denial of responsibility
•Motion to Dismiss
•Dispute raised in discovery
•Payment accompanied by a dispute letter
•Dispute as to settlement of account
•AG/BBB Complaint
•“Validation” request
•Partiall Dispute – admission
d
that
h some portion is owed
d
Bankruptcy
•Tell your attorney/agency about notices of
bankruptcy that you receive IMMEDIATELY! (And
that
h should
h ld b
be vice
i versa).
)
•And don’t ignore
g
bankruptcy
p y filings
g – yyour debt
isn’t as secure as you might think (Espinosa v.
United Student Aid Funds, Inc.)
E i i the
Exiting
h JJungle
l
•Communication with your
collections counsel or agency is key
•Don’t have unrealistic expectations
if yyou don’t have the horses
•Communicate with your account
holders
• Be nice
Questions?

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Transcription

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