Fair Debt Collection Practices Act NAA Legal Symposium Florida - - PowerPoint PPT Presentation

Fair Debt Collection Practices Act

NAA Legal Symposium

Florida 2018

Presented by

Mark N. Tschetter, Tschetter Hamrick Sulzer Kirk A. Cullimore, The Law Offices of Kirk A. Cullimore

Applicability of the FDCPA

The Fair Debt Collection Practices Act Applies to Debt Collectors

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Debt Collector

The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

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15 U.S.C.A. § 1692a(6)

Owners & Third Party Fee Managers Are Exempt from FDCPA

(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity

(i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such a person; (iii) concerns a debt which was not in default at the time it was

• btained by such person;

(iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

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15 U.S.C.A. § 1692a(F)

Courts Have Routinely Upheld This Exemption

The Act excludes not only the original creditor but also any person who tries to collect a debt that “was not in default at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F)(iii)

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Carter v. AMC, LLC, 645 F.3d 840, 843 (7th Cir. 2011)

Law firms that regularly collect money are subject to the Fair Debt Collection Practices Act

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The Exemption Can Be Lost, If:

Owner/Management Company - Uses Another Name

(. . . Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. . .)

15 U.S.C.A. § 1692a(6) (in pertinent part)

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Management Attempts to Collect Debt that was already in Default before management begins.

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The Exemption Can Be Lost, If:

“Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice”

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15 U.S.C.A. § 1692g

FDCPA Required Disclosures

(1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity

• f the debt, or any portion thereof, the debt will be

assumed to be valid by the debt collector;

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15 U.S.C.A. § 1692g(a)(1)(2)(3)

FDCPA Required Disclosures (Cont’d)

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

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15 U.S.C.A. § 1692g(a)(4)

FDCPA Required Disclosures (Cont’d)

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

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15 U.S.C.A. § 1692g(a)(5)

FDCPA Required Disclosures (Cont’d)

Specific Legally Required Disclosures are also contained in §1692(e), and must be made in the initial written or

• ral communication
• that the debt collector is attempting to collect a debt
• any information obtained will be used for that purpose
• Subsequent communications must indicate that they are from a

debt collector

• But formal pleading made in connection with a legal action are

not considered a “communications”

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15 U.S.C.A. § 1692e(11)

FDCPA Required Disclosures (Cont’d)

If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt

• r a copy of a judgment, or the name and address of the
• riginal creditor, and a copy of such verification or judgment, or

name and address of the original creditor, is mailed to the consumer by the debt collector.

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15 U.S.C.A. § 1692g(b)(in part)

FDCPA Requirements When Debts Are Disputed

Application of the FDCPA to Eviction Cases has been Inconsistent and Problematic

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A History of FDCPA Case Law

• Back rent is debt
• Rent demands are a communication triggering

FDCPA

• Attorneys who are debt collectors & sign rent

demands are subject to FDCPA

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Romea v. Heiberger & Associates, 163 F.3d 111 (2d Cir. 1998)

• Back Rent is Not Debt (clear minority position now)
• FDCPA only applies to lawyers regularly engaged in

debt collection

• Eviction complaint in non-compliance case is not a

“communication”

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Cook v. Hamrick, 278 F. Supp. 2d 1202 (D. Colo. 2003)

• Reaffirmed that attorneys are liable under FDCPA

if they sign rent demand

• FDCPA violation makes the eviction notice

defective

• But the defective holding turns out to be short

lived

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Eina Realty v. Calixte, 679 N.Y.S.2d 796 (N.Y. Civ. Ct. 1998)

• FDCPA violation is not a defense to eviction

(doesn’t make notice defective)

• If attorney drafts or advises client regarding rent

demand not FDCPA violation

• Pleading is not a communication

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Missionary Sisters of Sacred Heart, Inc. v. Dowling, 703 N.Y.S.2d 362 (N.Y. Civ. Ct. 1999)

The narrow question before us in this appeal is whether a law firm representing a landlord in a summary dispossess action is a “debt collector” subject to the FDCPA. We find that it is if the firm regularly engages in a practice prosecuting summary dispossess actions.

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Hodges v. Feinstein, Raiss, Kelin & Booker, LLC, 893 A.2d 21, 23 (N.J. Super. Ct. App. Div. 2006)

• Debt collectors (Eviction Law Firm) found liable for

making false representation of character, amount, and legal status of consumer's debt, in violation of FDCPA

• The eviction law firm was deemed to have made

the false representation because the amount of the rent demand was incorrect.

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Lee v. Kucker & Bruh, LLP , 958 F. Supp. 2d 524 (S.D.N.Y. 2013)

• Possession Action Subject To FDCPA
• Except for §1692e(11) & §1692g(d), the FDCPA

applies to all litigation activities including formal pleadings

• Misrepresentations made in eviction pleadings

created FDCPA liability

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Lipscomb v. The Raddatz Law Firm, P .L.L.C., 109 F. Supp. 3d 251, 260 (D.D.C. 2015)

• Comply with FDCPA if obtaining money

judgments in evictions

• Evaluate if obtaining partial money judgments

in evictions

• Evaluate if just obtaining possession

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Best Practices

• Falsely representing character, amount, or

legal status

• Communicating credit information which is

known or which should be known to be false

• Collection of any amount unless such amount

is expressly authorized by agreement

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Potential Move-Out Statement/ Balance Liability

• Eviction Attorneys’ Fees
• Collection Fees
• Liquidated Damage (Lease Break Not

Supported by Lease)

• Piling on of Notice and Breakers

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Problematic Items on Move-Out Statements

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Partial Money Judgments

• Not being addressed
• Creates significant FDCPA exposure

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Presentation Materials