Nicole Strickler

Nicole Strickler and Joe Messer Speak at 2019 NCBA Conference

Nicole and Joe spent the week in the great state of Minnesota at the bi-annual National Creditors’ Bar Association’s conference. Nicole spoke with NCBA Government Affairs Officer Nathan Willner giving an update as to the CFPB’s latest and greatest, including a summary of the new CFPB proposed debt collection rules that were released on May 8, 2019. Nicole also participate in NCBA’s first “CRED Talks”, a TED talk style presentation on those issues affecting collection attorneys. Joe rounded out the week with a discussion of the latest developments in TCPA litigation. The conference, as usual, was a valuable networking and education opportunity for those in the credit and collection industry.

Victory in the Seventh Circuit in Bona Fide Error Case

Appellate decisions on the FDCPA’s bona fide error defense are rare. Even rarer are those upholding a grant of summary judgment on the bona fide error defense to a law firm.. Messer Strickler is pleased to report another total defense victory in the case of Abdollahzadeh v. Mandarich Law Group, 2019 U.S. App. LEXIS 12887 (7th Cir April 29, 2019).

In Abdollahzadeh, a law firm inadvertently filed a collection lawsuit against a consumer that was outside of the statute of limitations as a result of an inaccurate last payment date transmitted to it from the original creditor through its client. Specifically, the date of last payment reflected a bounced payment, as opposed to a payment that had cleared. When the consumer moved to dismiss, Mandarich Law Group defended consistent with its ethical obligations to argue in good faith that the consumer’s intent to pay extended the statute of limitations. The trial court disagreed and dismissed the matter with prejudice.

Abdollahzadeh, represented by Mario Kasalo, then sued Mandarich in federal court blaming it not only for filing suit but also for defending his motion to dismiss. Mandarich held strong and pointed to its policies and procedures for scrubbing out and closing time barred accounts. Ultimately, it prevailed at the district court level at summary judgment by invoking the bona fide error defense. The consumer appealed.

The Seventh Circuit was “not persuaded” by the consumer’s arguments for reversal. The consumer argued that in order to succeed on the defense, the law firm should have abandoned its client’s claims in response to the consumer’s motion to dismiss. The consumer also insisted that Mandarich should have engaged in independent efforts to valid the debt prior to suit and refrained to relying on its client’s data. Ultimately, the Circuit rejected all of the consumer’s arguments and affirmed the judgment of the district court.

This case is important for two reasons. First, this case affirms that a law firm cannot be faulted for a good-faith argument in a state court collection suit merely because it was ultimately unsuccessful. Second, the simplistic nature of procedures does not lead to the conclusion that the procedures utilized were insufficient. This case will likely provide a road map which can be used by other law firms developing policies and procedures for time-barred debts.

Messer Strickler thanks its client, Mandarich Law Group, LLP, for its resolve and positive contribution to Seventh Circuit precedent.. A copy of the decision can be found here: https://law.justia.com/cases/federal/appellate-courts/ca7/18-1904/18-1904-2019-04-29.html

Messer Strickler Defeats Serial FDCPA Filer in Jury Trial

The team at Messer Strickler, Ltd. is pleased to report a complete defense verdict in favor of its client, Federated Law Group, PPLC (“Federated”), in a case filed by serial FDCPA filer, Michael Savino, Jr. Mr. Savino, represented by prolific consumer attorney Donald Yarborough, filed an action against Federated, a creditors rights law firm, after receipt of a single collection letter. That letter presented Mr. Savino with various options to potentially settle a debt owed to its client.

Specifically, Plaintiff claimed that the statement in the letter stating that Federated “may resolve [Mr. Savino’s account] for $525.98 [was] false, deceptive or misleading” in violation of both §1692e and e(10) of the Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq. (the FDCPA) because Federated could indeed settle the debt for $525.98. According to Plaintiff, Federated’s letter was merely a ruse made in attempt to collect the debt or obtain information about Mr. Savino. Instead of using the word “may”, according to Savino, Federated should have disclosed that it “could” settle the account for $525.98.

In contrast, Federated argued that its letter merely stated the truth concerning a potential option to resolve the account. While Federated could, under certain circumstances, settle the account for $525.98, it was not forced to do so. Of course, while a collector may have settlement authority, nothing in the law requires it to offer or disclose the lowest amount it may take to resolve an account. The FDCPA is  designed to prevent overreaching and egregious debt collection practices, not to deny creditors the right to recover as much as it can on a valid balance.

Notably, Messer Strickler was able to enter into evidence Mr. Savino’s expansive history of suing collection agencies and law firms with the help of Mr. Yarborough. At the time of trial, Mr. Savino had been the plaintiff in no less than three (3) cases filed against debt collectors in the Southern District of Florida. Mr. Savino also admitted on the stand that he had been subject to extensive collection efforts by debt collectors, including a prior collection lawsuit.

Unsurprisingly, a jury of 6 was not fooled by Mr. Savino’s theory. On February 19, 2019, the jury rendered a complete defense verdict in favor of Federated. Messer Strickler congratulates Federated on staying the course and vindicating itself at trial!

MS Obtains Unanimous Jury Verdict in Favor of Clients in FDCPA Case

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On April 8, 2015, a jury of seven sitting in the Southern District of California determined that a law firm and its asset purchaser client did not violate the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”) by including a request for 10% interest in the prayer for relief of a state court collection complaint.  In Hadsell v. Mandarich Law Group, LLP and CACH, LLC, a consumer filed an FDCPA claim against the two companies alleging a myriad of false claims, including that the companies had disclosed the debt to third parties and failed to abide by a request to cease and desist. After success on motions to dismiss and summary judgment, the case proceeded to a jury trial on one sole issue: whether a request for 10% statutory interest in the prayer for relief of a state court complaint violates the FDCPA where the credit card contract in question provided for an 8.9% interest rate. Like many consumer law claims against law firms, this complaint was spurred from a state court collection action on the debt. In late 2011, Mandarich Law Group, LLP filed a state court complaint on behalf of CACH, LLC to collect on a defaulted Bank of America account.  The state court complaint had two counts, breach of contract and account stated.  In the prayer for relief, the complaint requested that the court find that a 10% interest apply under the account stated theory.

Approximately 30 days after the state court suit was filed, the consumer filed suit in the U.S. District Court for the Southern District of California, claiming that the collection action, among other activity, violated the FDCPA. Plaintiff was represented by the San Diego law firms of Hyde & Swigart and Kazerouni Law Group.

The Plaintiff’s focal point during the jury trial was that the defendants intentionally violated FDCPA § 1692(f) and (f)(1) by requesting 10% interest when they were aware of the 8.9% interest rate that was set by the initial contract between the consumer and creditor.  Defendants argued, in contrast, that there was a valid factual basis to pursue the account stated claim and for the Court to assess 10% interest--- the default rate under the California Code---- based on the final charge-off statement on the account.  Further, Defendants’ argued that asking the state court to decide the question of interest was not an attempt to collect an authorized amount as the court had the legal ability to award it under the facts.  The jury unanimously agreed and found that no violation of the FDCPA occurred.

Lead trial counsel for Defendants was Nicole M. Strickler of MS&S. For more information on this case or any other FDCPA related issues, contact her at nstrickler@messerstrickler.com or at 312-334-3442.

Time Barred Debt: Can We Even Collect?

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After the Seventh Circuit’s opinion in McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1020 (7th Cir. 2014), many collectors rightfully wondered whether time barred debt could ever be lawfully collected. In McMahon, the Seventh Circuit slammed a debt collector for a seemingly innocuous dunning letter that sought to “settle” a time barred debt as improperly implying that the debt was legally enforceable. The Circuit’s reasoning was questionable, to say the least. The Court explained that if a consumer received an “offer of settlement” and then “searched on Google to see what is meant by ‘settlement,’ she might find the Wikipedia entry for ‘settlement offer’” and learn that the term is often used in a civil lawsuit.”

This analysis seemed to depart from long-standing unsophisticated consumer standard used to assess debt collector communications. In the past, the Circuit has described the unsophisticated consumer as “not a dimwit”, Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 642, 645 (7th Cir. 2009), and as objectively “reasonable”, Turner v. J.V.D.B & Assocs., Inc., 330 F.3d 991, 995 (7th Cir. 2003). After McMahon, the unsophisticated consumer is also apparently armed with google, Wikipedia, and a bank of common legal terms at her disposal.

Putting aside questionable analysis, however, the question remains: If the Seventh Circuit can take a seemingly innocuous “settlement offer” on a time barred debt and turn it into a potentially misleading communication, can we even collect on time barred debt anymore? The short answer is: Yes, but carefully.

The language in a letter concerning a time barred debt must be carefully scrutinized by client and counsel. Using the right terminology can be key in drafting a proper dunning letter on a time barred debt. Such a letter was recently examined by the Northern District of Illinois in the case of Sorenson v. Rozlin Financial Group. In Rozlin, a consumer filed an action claiming that a letter he received on a time barred debt violated the FDCPA. The collector filed a motion to dismiss arguing that the language in the letter would not lead the unsophisticated consumer to be misled by the communication. The court agreed.

The court explained that the letter at issue did not use language of “settling” the debt but instead spoke of “clearing” and “payment” of a “financial burden”, which did not “carry the same common use in legal circles.” More importantly, the letter explicitly noted the issue of a time bar and stated that the recipient “will not be sued and the obligation will not be reported to credit agencies.” In sum, with proper phrasing and disclaimers, the letter could properly collect on a time barred debt.

For more information about time barred debts or collection letter language, contact the author, Nicole M. Strickler of Messer Strickler, Ltd., who represented the defendant in Rozlin, at (312) 334-3442 (direct) or nstrickler@messerstrickler.com

VIEW THE ORDER HERE

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Faced with a FDCPA Claim Based on a Failed State Court Collection Act? MS&S Provides a Road Map for Success Based on Its Most Recent Win

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In the U.S. District Court for the Eastern District of Missouri, collection law firms have faced a surge of litigation concerning failed state court collection actions.  Intent on finding a way to recover their attorneys’ fees from defending collection actions when they are unavailable under state law, consumer attorneys’ have turned to the fee-shifting provisions found in the FDCPA. According to the theory advanced by consumer attorneys, any time a collection plaintiff dismisses its suit prior to trial, or misses a procedural deadline, a FDCPA claim results, which entitled them to collect their defense fees from the action.

In Layton v. CACH, LLC, a consumer attorney filed just such a claim. Layton alleged that the asset purchaser filed a collection lawsuit against him without the intent or ability to prove that the debt was owed. Instead of filing a motion to dismiss, the asset purchaser filed an answer to the complaint, attaching the very documents that Layton claimed the asset purchaser could not obtain: the bill of sale and twenty-eight pages of credit card statements.  It then moved for judgment on the pleadings.

The court explained unlike with a motion to dismiss a motion for judgment on the pleadings allows the court to consider materials attached to the answer to the complaint that are “necessarily embraced by the pleadings.” Because the asset purchaser attached the very documentation that Layton alleged it could not produce, he could not state a plausible cause of action for relief.

Layton’s arguments concerning an affidavit used in the state court collection action were similarly flawed. While he argued that an affidavit from the asset purchaser in the collection action was misleading because it was intended to give the appearance to the consumer that the asset purchaser had “personal knowledge” regarding all aspects of the purchaser’s collection action, the court found otherwise. The court concluded that the language used by the asset purchaser in the affidavit was not misleading in any fashion.

While the court mentioned that cases based on improper conduct in a collection action must be evaluated on a case-by-case basis, the opinion in Layton provides a road map for consumer litigation defense attorneys to use in defeating such claims.

Nicole M. Strickler represented the defendant in the Layton case and has defended countless claims based on the same, or similar theories. Contact her at nstrickler@messerstrickler.com or (312) 334-3442 for more information.

View the Memorandum and Order Here.

Middle District of Florida Denies Class Certification in Time Barred Debt FDCPA Case Based on Ascertainability & Predominance

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The facts of the case were simple. Plaintiff received a collection letter offering to “settle” her time-bared debt for a reduction in the balance. She filed sued alleging 15 U.S.C. §1692 et seq. (“FDCPA”) violations as the letter did not disclose the debt’s time-barred nature. Plaintiff moved for class certification seeking to represent a class of similarly situated letter recipients. However, despite the simple nature of the alleged violation, complexities nevertheless prevented class certification.

The court first discussed the class action ascertainability prong that must be satisfied as part of Federal Rule of Civil Procedure (“FRCP”) 23(a). The court noted that only letters seeking to collect “consumer” debts (i.e. those incurred for personal, family, or household purposes) could be included in a class seeking relief under the FDCPA.  As such, an initial question that must be answered is whether plaintiff could ascertain whether the debts at issue were “consumer debts.” The court explained that a plaintiff could not establish ascertainability, a necessary requirement for a class action, simply by asserting that class members could be identified using defendant’s records. Plaintiff must actually establish that the records are in fact useful for identification purposes and that identification would be administratively feasible.

The issue for plaintiff was that she relied on her bare assertion that certain records would reveal the nature of the proposed class members’ debts without actually explaining those records. In contrast, defendants provided actual evidence to controvert this conclusion in the form of declarations attesting to the fact that defendant’s records did not show the reasons for which each proposed class member’s debt was incurred. Moreover, Plaintiff introduced no evidence that demonstrated how the original creditor’s records showed the nature of the debt or even whether the original creditor still possessed transactional information for the accounts.

The second barrier to class certification was in establishing the predominance prong of FRCP 23(b)(3). The court agreed that the debts of persons meeting the proposed class definition were not necessarily time-barred and such a determination would require an individualized inquiry into the statute of limitations on each debt.  The court explained that many factors must be considered when determining the expiration of a limitations period, such as the char-off date, tolling issues, revival issues, and any actions between the debtor and creditor that may have modified their original agreement. In short, the court found these inquiries too individualized and detailed to meet the predominance prong.

Recently, time-barred debt has been a “hot topic” with not only the consumer bar but also with federal and state agencies tasked with consumer financial regulation. For more information on this topic, and other consumer financial issues, contact Nicole Strickler at nstrickler@messerstrickler.com or direct at 312-334-3442.

33% Attorney’s Fee Award Reduced to Lodestar Calculation in FLSA Settlement

Marshall v. Deutsche Post DHL, decided September 21, 2015 involved a collective action against DHL and DHL Express (USA) Inc. The plaintiffs represented a class of DHL agents working at airports in New York, Miami and Los Angeles who were “undercompensated through defendants’ alleged unlawful rounding of time, automatic deductions for meals, and requests that employees work off-the-clock.” Plaintiffs, through class counsel, obtained a settlement of $1,500,000 for the 242 class members involved. In approving the settlement, the district court stated that it had no issues with the settlement amount for the class members, but took issue with the calculation of class counsel’s attorney’s fees pursuant to that settlement. Although class counsel appeared to have billed a total of 1,325 hours on the case for a total lodestar figure of $591,571.25, class counsel requested $500,000 in fees, or one third of the settlement amount, and sought to be reimbursed for $33,371.39 for costs. The magistrate judge approved the proposed settlement and no class member or other interested party made any objection. Fast forward to the settlement approval by the district court – as stated above, the court took no issue with the settlement amount as to the class stating “the settlement is substantively fair and adequate and therefore is approved.” The court next evaluated class counsels’ request for an award equal to 1/3 of the total settlement amount. The court stated a “court may calculate a reasonable attorneys’ fee either by determining the so-called “lodestar” amount or by awarding a percentage of the settlement. “See McDaniel v. Cnty. Of Schenectady, 595 F.3d 411, 417 (2d Cir. 2010). The court also acknowledged that “the trend in this Circuit is toward the percentage method,” but either approach is appropriate. McDaniel, 595 F.3d at 417 (quoting Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 121(2d Cir. 2005). Even so, the court, citing to McDaniel, 595 F.3d at 417, stated “the percentage-of-the fund method”…“create[s] perverse incentives of its own, potentially encouraging counsel to settle a case prematurely once their opportunity costs begin to rise.”

The district court ultimately disagreed with the magistrate’s finding that the 1/3 award was reasonable stating that “there is reason to be wary of much of the case law awarding attorney’s fees in FLSA cases in this circuit” citing to Fujiwara v. Sushi Yasuda Ltd., 58 F.Supp. 3d 424, 436 (S.D.N.Y. 2014). Therefore, the district court followed several other New York federal district judges partial to Fujiwara and applied the lodestar method but refused to apply a multiplier. In doing so, the court reduced the award to $370,236.50, approximately 25 percent of the total settlement, stating “[w]hile counsel urge the use of a lodestar multiplier, the various considerations that might justify a multiplier have already been factored into the determination of counsel’s reasonable hourly rate. I decline to add a multiplier to the fee award.” See Goldberger v. Integrated Res., Inc., 209 F.3d 43, 51-57 (2d Cir. 2000).

The Marshall decision could present a concern for mid-size or larger firms, who generally bill at much higher rates, who are considering taking on the risk of employment common fund class or collective actions.

For more information on the FLSA, class or collective actions or any other employment law issue, please contact Dana Perminas at 312-334-3474 or dperminas@messerstrickler.com.

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Seventh Circuit: FDCPA Not An Enforcement Mechanism for State Law

On July 27, 2015, the Seventh Circuit Court of Appeals ruled that the Southern District of Indiana was correct in granting defendant’s motion for summary judgment in a Fair Debt Collection Practices (“FDCPA”) case.  In Bentrud v. Bowman, Heintz, Boscia & Vician, P.C., the issue at hand was not that the debt itself that was disputed but rather the manner in which the firm hired by Capital One, the owner of the account, attempted to collect the debt. Bentrud took issue with the firm’s conduct after the invocation of an arbitration provision contained in the original credit agreement.  Specifically, Bentrud argued that the firm unfairly filed a second motion for summary judgment after Bertrud had elected arbitration in violation of the arbitration clause. The Seventh Circuit found nothing impermissible about the firm’s request in light of the state court’s prior orders and deadlines.

Most important, however, was the Court’s continued affirmance that not every action or inaction in a collection action implicates the FDCPA.  While limiting its discussion to the particular facts before it, the Circuit confirmed once again that that it would “not transform the FDCPA into an enforcement mechanism for matters governed by state law.” In this case, failing to comply with the terms of an arbitration provision in the underlying contract did not trigger the FDCPA’s protections. This decision should be particularly helpful to those currently litigating FDCPA actions premised on state law and procedural issues occurring in prior collection litigation.

Interestingly, the decision also discussed the sometimes conflicting ethical decisions faced by FDCPA regulated collection counsel in light of an attorney’s general ethical obligations to its own clients. While the Seventh Circuit stopped short of providing a safe haven to collection attorneys facing such an ethical debacle, it is at least refreshing to see an Appellate Court recognize it.

For more information about this case or the Fair Debt Collection Practices Act generally, contact Nicole M. Strickler at nstrickler@messerstrickler.com or (312) 334-3442.

FCC 2015 Rulemaking Highlights

On July 10, 2015, the FCC issued its long-awaited rulemaking on the Telephone Consumer Protection Act (the “TCPA”). Undoubtedly, the rulings are heavily consumer centric offering little help to those businesses which have long complained of TCPA litigation abuse. Interestingly, the order resulted in two scathing dissents from FCC commissioners. Regardless as to the “side” taken, the ruling does offer valuable help in resolving issues that have been heavily litigated since the last FCC order. A highlight of the FCC’s determinations is contained herein: Interpretation of a dialer:  If the dialer is not “currently” or “presently” dialing random or sequential phone numbers, this condition does not exempt the equipment used from the TCPA’s definition of “dialer.”

Consent:

  • The following does not constitute “consent” for purposes of the TCPA:
    • Being on an acquaintance’s phone contact list.
    • Receiving consent from a prior subscriber or user of the telephone number.
  • Consumers may revoke consent at any time and through any reasonable means.
  • 2012 “Prior Express Written Consent” Rule for certain parties waived temporarily to allow gathering of updated consent.
  • Certain free, pro-consumer financial and health care-related messages are exempted from consent requirement.

Text messages:

  • Internet-to-phone text messages require consumer consent.
  • Text messages are “calls” subject to the TCPA
  • “On demand” text messages sent in response to a consumer request are not subject to the TCPA.

VoIP:

  • Carriers and Voice over Internet Protocol (VoIP) providers can implement call-blocking technology to help consumers stop unwanted robocalls.

Software:

  • Application providers that play a “minimal role” in sending text messages are not per se liable for unwanted robocalls.
  • Collect-call services are not liable for making unwanted robocalls when providing “call set-up” information.

For more information on the new ruling, please contact Nicole M. Strickler at 312-334-3442 or nstrickler@messerstrickler.com for more information.

Request for Fees Not Yet Incurred In Complaint Violation of FDCPA

The Third Circuit Court of Appeals recently concluded that a demand for a specific amount of attorneys’ fees in a complaint before the fees have actually been incurred is an “actionable misrepresentation under the Fair Debt Collection Practices Act” (“FDCPA”).  In Dale Kaymark et al. v. Bank of America and Udren Law Offices PC, the plaintiff claimed that an itemized list of total debt in the foreclosure complaint improperly included $1,650 in attorneys’ fees, not all of which had been incurred. The district court dismissed the FDCPA claim on the grounds that legal pleadings were not subject to the section of the FDCPA at issue. On appeal, the Third Circuit was not persuaded that formal pleadings filed by attorneys are exempt from the FDCPA’s requirement that debt collectors must not use any "false, deceptive or misleading representation or means in connection with the collection of any debt." Instead, subject to very limited and express exceptions, "all litigation activities, including formal pleadings, are subject to the FDCPA." When drafting demand letters and complaints, creditors must be cautious when demanding fees from the debtor which the creditor has not yet incurred.  Although creditors are not barred from listing an estimate of anticipated fees in their demand letter or complaint, they must do so explicitly. Otherwise, the debtor might assume that the amounts listed as “due” are, in fact, due as of a particular date.

For more information on this topic, contact Stephanie Strickler at 312-334-3465 or sstrickler@messerstrickler.com.

Messer Strickler, Ltd. Obtains Unanimous Jury Verdict in Favor of Clients in FDCPA Case: Request for Statutory Interest in “Prayer for Relief” Not an Attempt to Collect an Unauthorized Amount

On April 8, 2015, a jury of seven sitting in the Southern District of California determined that a law firm and its asset purchaser client did not violate the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”) by including a request for 10% interest in the prayer for relief of a state court collection complaint.  In Hadsell v. Mandarich Law Group, LLP and CACH, LLC, a consumer filed an FDCPA claim against the two companies alleging a myriad of false claims, including that the companies had disclosed the debt to third parties and failed to abide by a request to cease and desist. After success on motions to dismiss and summary judgment, the case proceeded to a jury trial on one sole issue: whether a request for 10% statutory interest in the prayer for relief of a state court complaint violates the FDCPA where the credit card contract in question provided for an 8.9% interest rate. Like many consumer law claims against law firms, this complaint was spurred from a state court collection action on the debt. In late 2011, Mandarich Law Group, LLP filed a state court complaint on behalf of CACH, LLC to collect on a defaulted Bank of America account.  The state court complaint had two counts, breach of contract and account stated.  In the prayer for relief, the complaint requested that the court find that a 10% interest apply under the account stated theory.

Approximately 30 days after the state court suit was filed, the consumer filed suit in the U.S. District Court for the Southern District of California, claiming that the collection action, among other activity, violated the FDCPA. Plaintiff was represented by the San Diego law firms of Hyde & Swigart and Kazerouni Law Group.

The Plaintiff’s focal point during the jury trial was that the defendants intentionally violated FDCPA § 1692(f) and (f)(1) by requesting 10% interest when they were aware of the 8.9% interest rate that was set by the initial contract between the consumer and creditor.  Defendants argued, in contrast, that there was a valid factual basis to pursue the account stated claim and for the Court to assess 10% interest--- the default rate under the California Code---- based on the final charge-off statement on the account.  Further, Defendants’ argued that asking the state court to decide the question of interest was not an attempt to collect an authorized amount as the court had the legal ability to award it under the facts.  The jury unanimously agreed and found that no violation of the FDCPA occurred.

Lead trial counsel for Defendants was Nicole M. Strickler of Messer Strickler, Ltd. For more information on this case or any other FDCPA related issues, contact her at strickler@messerstrickler.com or at 312-334-3442.

Message Left for Payroll Department Not a “Communication”

In an Order entered on January 16, 2015, Judge Victoria A. Roberts of the United States District Court for the Eastern District of Michigan issued a favorable ruling for debt collectors. In the case of William Brown III v. Van Ru Credit Corporation, the Plaintiff alleged the Defendant violated the Federal Debt Collection Practices Act (“FDCPA”) as well as two state laws by leaving a single telephone message at Brown’s place of business. The alleged violation occurred on April 14, 2014 when a representative at Van Ru called and left the following message in the general voicemail box at Brown’s business.

“Good morning, my name is Kay and I’m calling from Van Ru Credit

Corporation. If someone from the payroll department can please

return my phone call my phone number is (877) 419-**** and the

reference number is *****488; again my telephone number is

(877) 419-5627 and reference number is *****488.”

This message was heard by an employee, who was aware of Van Ru’s status as a debt collector. For this reason, Brown argued Van Ru violated 15 U.S.C. §1692c(b) declaring they communicated with an unauthorized third party about a debt owed by Brown.

However, this message does not constitute a communication. As defined by the FDCPA, a communication is “the conveying of information regarding a debt directly or indirectly to any person through any medium.” Since Van Ru only sought to contact the business’s payroll department and did not directly reference a debt, they did not violate the FDCPA.  This decision is a great victory for the collection industry, especially those agencies collecting federal student loan debt.

Judge Roberts granted Defendant’s Motion for Judgment on the Pleadings while denying Plaintiff’s Motion to File his First Amended Complaint. As such, Plaintiff’s FDCPA claims were dismissed with prejudice and the Court declined to retain jurisdiction over the state claims.

For more information on the decision of this case or any other consumer law related matters, please contact Dana Perminas at 312-334-3474 or dperminas@messerstrickler.com.

View the Order Here: Order in favor of Van Ru

 

Window to Apply for FCC’s Retroactive Solicited Fax Opt-Out Waiver Closing

On October 30, 2014, the Federal Communications Commission (“FCC”) released an Order requiring opt-out notices to be presented on all fax advertisements, conforming to the rules outlined in the FCC’s 2006 Junk Fax Order. To be in compliance with the Order, senders must satisfy all components listed within:

(1)       be clear and conspicuous and on the first page of the ad;

(2)       state that the recipient may make a request to the sender not to send any

           future ads and that failure to comply, within 30 days, with such request is

           unlawful; and

(3)       contain a domestic contact telephone number and fax number for the

           recipient to transmit an opt-out request. Fax ads sent pursuant to an

           established business relationship must also contain this opt-out information.

The opt-out notice must be included in all faxed ads, even those sent with prior express consent. However, the FCC is granting retroactive waivers for those who sent such solicited advertisements up until April 30th, 2015. These waivers are intended to provide temporary relief from past offenders and allow for more time for waiver recipients to come into full compliance with the Order.

Even if your company does not qualify for such a waiver, there are still numerous defenses that can be asserted in a lawsuit such as this. Contact Nicole Strickler at 312-334-3442 or nstrickler@messerstrickler.com for more information about applying for the FCC’s waiver and other consumer litigation compliance issues.

View the Order Here.

Hang Up That Telephone: The Importance of Training Collectors to Properly Receive Attorney Information

Recently, United States Magistrate Judge David D. Noce created an important teaching moment for collectors in Istre v. Miramed Revenue Group, LLC et al, a case pending in the U.S. District Court for the Eastern District of Missouri. In Istre, after collection attempts, the plaintiff allegedly placed a call to the collection agency to inform it that he had retained counsel regarding his debts. At the beginning of the call, plaintiff told the agency that he had retained counsel. Instead of ending the call, however, the agency allegedly asked, “Why are you having a lawyer involved in this?” and, “So how are you going to go about this?” Only after plaintiff again stated that he had retained counsel regarding his debt did the agency request the attorneys’ contact information, which plaintiff immediately provided.

Upon these alleged facts, plaintiff alleged various violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692c(a)(2), d, e and f. Defendants filed a motion to dismiss, arguing that by initiating the call, plaintiff consented to the ensuing discussion about his debt. The court, however, agreed with plaintiff that the mere fact that plaintiff initiated the phone call was not conclusive that he thereby consent to the debt collector to the collection attempt. The court further held that without that consent, once notified of legal representation, defendants may only ask for the attorney’s contact information before ending the call. As a result, the court found that plaintiff properly stated a cause of action under 1692c(a)(2), d, and f. However, it granted the motion with respect to 1692e, finding that no misleading statement had been alleged in the complaint.

The decision shows the importance of dissuading collectors from continuing a telephone call after receipt of attorney information. For a full copy of the opinion, see http://scholar.google.com/scholar _case?case=14559722534209738563&q=istre+v.+miramed+revenue+group&hl=en&as_sdt=400006&as_vis=1.

For more information on this subject, and other consumer litigation compliance information, contact Nicole Stricler, 312-334-3442, nstrickler@messerstrickler.com.

Bill to Exclude Law Firms and Licensed Attorneys from the FDCPA Definition of “Debt Collector” Introduced in Senate

On May 13, 2014, S. 2328 was introduced into the Senate by Senator Pat Toomey (R-PA). The legislation seeks to amend the Fair Debt Collection Practices Act (“FDCPA”) to preclude law firms and licensed attorneys from the definition of a debt collector when taking certain actions. The bill is identical to that of House Bill HR 2892- the “Fair Debt Collection Practices Technical Clarification Act of 2013,” which was introduced last summer by Representative Ed Perlmutter (D-CO) with a co-sponsor Representative Spencer Bachus (R-AL). 

Both initiatives seek to amend the FDCPA definition of “debt collector” by excluding any licensed attorney or a law firm who is:

1)  Serving, filing, or conveying formal legal proceedings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or

2)  Communicating in, or at the direction of, a court of law or in depositions or settlement conferences, in connection with a pending legal action to collect a debt on behalf of a client.

Several consumer groups, including the National Consumer Law Center, sent correspondence to Members of the Banking Committee urging them to oppose S. 2328 alleging it would open “the floodgates” of abusive debt collection practices by attorneys. The bill has gained significant support in the collection industry, however, including support from the National Association of Retail Collection Attorneys (“NARCA”), which has encouraged attorneys and law firms involved in debt collection to support the S.2328 bill by sending letters to their respective Senators.

For more information on the legislation, FDCPA and debt collection related matters you may contact Nicole Strickler of Messer Strickler, Ltd. at (312) 334-3442 or at nstrickler@messerstrickler.com

Bank of America to Pay $727 Million for Illegal Credit Card Practices

Last month, the Consumer Financial Protection Bureau (“CFPB”) issued a consent order to Bank of America, N.A. and FIA Card Services, N.A. (“BOA”) instructing them to pay an estimated $727 million in relief to consumers harmed by deceptive marketing of credit card add-on products.  According to the CFPB, the relief will spread to approximately 1.4 million consumers. Additionally, BOA will pay $20 million to the CFPB as a civil money penalty.

BOA marketed two credit card payment protection products, “Credit Protection Deluxe” and “Credit Protection Plus” from 2010 through 2012.  According to the CFPB, these products were marketed as an opportunity to reduce incurred debt if certain hardships occurred in the future, such as disability or involuntarily unemployment. Allegedly, the bank misled its customers about the enrollment process for the credit protection products, the cost of the first 30-day coverage, and the benefits of credit protection products. 

The CFPB also ordered BOA to submit a compliance plan to the CFPB concerning these products and services and prohibited the bank from marketing any credit monitoring or credit protection add-on products in the interim. CFPB Director Richard Cordray commented:

“Bank of America both deceived consumers and unfairly billed consumers for services not performed.  We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market.”

This enforcement action originally arose as a result of an investigation began by the Office of Controller of the Currency (“OCC”) in connection with the unfair billing practices of the identity protection credit card products. The OCC has also ordered BOA to pay $25 million in civil money penalties for unfair billing practices. 

For more information regarding this enforcement action, the CFPB or CFPB compliance, you may contact Nicole Strickler at (312) 334-3442 or at nstrickler@messerstrickler.com.

Joseph Messer and Nicole Strickler Appointed ACA International Sanctions Panel

In June 2013, ACA International, the Association of Credit and Collection Professionals, established a formal program to implement initiatives designed to protect the long term viability of the credit and collection industry. As a part of this program, ACA created a panel of experienced consumer law defense counsel coined the “Sanctions Panel Attorney Review Program”. The Panel will be charged with counseling, representing and assisting members of the industry in pursuing appropriate and available sanctions against both consumers and attorneys engaging in misconduct or unlawful litigation practices against ACA members.

Joseph Messer and Nicole Strickler of Messer Strickler, Ltd. were recently honored with appointment to this panel.  Ms. Strickler and Mr. Messer have earned national reputation for defending individual and class action lawsuits brought under the FDCPA, FCRA, TCPA and other federal and state consumer protection laws.  Mr. Messer and Ms. Strickler have been active members of the ACA for years, presenting at conferences and seminars, and participating in discussion panels. 

You may contact Joseph Messer (jmesser@messerstrickler.com or (312) 334-3440) or Nicole Strickler (nstrickler@messerstrickler.com or (312) 334-3442) with any questions relating to this new ACA initiative. 

New Compliance Resource: Fair Debt Collection Statutes by State

We know that our clients, as well as many other professionals in debt collection industry, are diligent in their efforts to comply with the Fair Debt Collection Practices Act (“FDCPA”) as well as state fair debt collection regulations.  However, while the FDCPA is familiar to many since it is applicable in all states, not everyone is aware that most of states also have their own fair debt collection statutes.

To aid our clients, friends and website visitors in their compliance needs, we have created a list of fair debt collection statutes by state (and U.S. territory) which is conveniently located on our website.   Our list contains the citations to state-specific debt collection laws and easy to use links to the statutes themselves.   However, while reviewing the state fair debt collection statutes, please remember that each U.S. state and territory is subject to the FDCPA, a federal regulation.  Even if state does not have its own state fair debt collection statute, the FDCPA is still applicable.

We hope this resource will serve you and your business well.  Messer Strickler, Ltd. partners Nicole Strickler & Joseph Messer are seasoned litigators and compliance advisors on the FDCPA, state fair debt collection regulations, and other consumer laws.  They have multiple years of experience representing their clients in consumer law litigation and compliance and also regularly present before the industry’s most recognized trade organizations.

Please keep in mind these state law resources are for informational purposes only and do not constitute legal advice. If you have any question regarding state and federal consumer laws, contact Nicole Strickler (nstrickler@messerstrickler.com, (312) 334-3442) or Joseph Messer (jmesser@messerstrickler.com, (312) 334-3440).

How to Survive a CFPB Audit: Upcoming Webinar by Nicole Strickler

Is your organization ready for the Consumer Financial Protection Bureau (“CFPB”) audit?  Does your Compliance Management System comply with the new CFPB exam requirements?  If you can’t confidently answer “yes” to these questions, we are here to help!

The CFPB has continued to develop and hone its audit process over the past year. Prepare your organization for the audit process before the CFPB knocks on your door. Messer Strickler, Ltd. partner Nicole Strickler has paired with InsideArm to help prepare you for your organization’s first CFPB audit.

On February 25th, 2014, Ms. Strickler will present a webinar entitled “How to Survive a CFPB Audit”, where she will provide you with step-by-step guidance on what to expect and how to prepare for your upcoming exam.  She will explain the CFPB’s policies and give real-life examples of how the CFPB measures accountability. 

To register for the webinar, please follow this link. You may also contact Ms. Strickler directly at (312) 334-3442 or by e-mail nstrickler@messerstrickler.com.

Ms. Strickler is a partner at Messer Strickler, Ltd. Ms. Strickler concentrates her practice in the defense of corporations in civil matters but particularly focus on the defense of consumer litigation throughout the country. This includes representing clients in both individual and class actions involving state and federal consumer laws, including the Fair Debt Collection Practices Act, Fair Credit Reporting Act, Telephone Consumer Protection Act and the Illinois Collection Agency Act. Her clients include corporations, lending institutions, collection agencies, asset purchasers, lawyers as well as individuals. Ms. Strickler is an active member of ACA International, NARCA, NAPBS and the Consumer Financial Division of the American Bar Association, where she holds a liaison position for Compliance Management.