CFPB Sues Ohio Law Firm for Illegal Debt Collection Practices

The Consumer Financial Protection Bureau filed a lawsuit April 17, 2017 against Ohio law firm Weltman Weinberg & Reis Co., LPA for allegedly engaging in illegal debt collection practices in violation of the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. The case is Consumer Financial Protection Bureau v Weltman Weinberg & Reis Co, LPA, case number 1:17-cv-00817, in the U.S. District Court for the Northern District of Ohio.

The CFPB alleged that Weltman sent collection letters and made phone calls falsely implying that lawyers had reviewed a consumer’s account to determine that the debt was actually owed. The letters were sent on firm letterhead that included the phrase “ATTORNEYS AT LAW,” and included Weltman Weinberg & Reis on the signature line along with a detachable slip indicating that payments should be sent directly to the firm. The CFPB argued that these representations gave the false impression that the debt was being reviewed by an attorney, despite the vast majority being created through an automated process. According to CFPB director Richard Cordray, “Debt collectors who misrepresent that a lawyer was involved in reviewing a consumer’s account are implying a level of authority and professional judgement that is just not true.” The CFPB also alleged that this misrepresentation was occurring when Weltman identified itself as a law firm while making collection calls.

Weltman Weinberg & Reis disagree that any of their practices are in violation of the FDCPA or Dodd-Frank. Scott Weltman, the law firm’s managing partner, was quoted in a legal publication as saying that the lawsuit “is the result of our firm’s refusal to be strong-armed into a consent order.” “We are a law firm that is legally allowed, under federal and state law, to provide collection and legal services,” Weltman said in a press release. “We are being truthful with consumers and factually accurate when we use our name and our company’s letterhead for proper debt collection activity.”

The National Creditors Bar Association (“NARCA”) has issued the following statement regarding the CFPB’s lawsuit against the Weltman firm: “The absence of clear rules by the Bureau that align with state bar and judiciary requirements creates inherent conflicts between what we are required to do as attorneys and what the CFPB believes the rules should be. Regulation of the practice of law through enforcement activities ineffectively addresses the improvement of communications between consumers and attorneys”.

At Messer Strickler, Ltd. we agree that the CFPB’s practice of rulemaking through litigation is unreasonable and unfair.  We commend the Weltman firm for taking a stand and defending their collection practices.  Contact Joe Messer with any questions or comments.

Federal District Court in Illinois Applies “Discovery Rule” to FDCPA Claim

On March 27, a Federal District Court in Illinois denied a motion to dismiss a Fair Debt Collection Practices Act (FDCPA) case in which the defendant argued that the lawsuit had been filed after the expiration of the FDCPA's one year statute of limitations.  In the case Skinner v. Midland Funding, LLC (Case No 16-4522, U.S. District Court, ND, IL) the Court held that the “Discovery Rule” applied and that the statute of limitations didn't begin to run until the plaintiff “discovered” the alleged violation, rather than from the date the activity which was alleged to have violated the FDCPA had occurred. A copy of the Memorandum and Order can be found here.

Plaintiff, Lisa Skinner, filed a complaint against Midland Funding, LLC and Midland Credit Management, Inc. on April 21, 2016. Skinner alleged that her debt had been sold to Midland Funding. Between March 2014 and January 2015 Midland charged interest on the debt. Beginning in February 2015, Midland stopped charging interest, but continued to charge for the interest that it had previously applied. Skinner alleged that Midland had violated the FDCPA by charging interest, and that it misrepresented the amount and character of the debt to credit reporting agency Equifax.

Midland argued that Skinner’s claims were barred by the FDCPA's one-year statute of limitations because the interest charges had been appliedin 2014 and early 2015. Skinner responded by arguing that she didn’t discover the FDCPA violations until August 2015, less than a year prior to filing of the suit.

Judge Alonso of the U.S. Court for the Northern District of Illinois found there was no precedent indicating that the discovery rule did not to apply to claims brought under the FDCPA. Judge Alonso found that although there is no explicit evidence of when Skinner became aware of the alleged inaccurate debt reporting, it could be inferred from an August, 2015 credit report that she became aware of the report then. Accordingly Judge Alonso denied the motion to dismiss by Midland Funding, LLC and Midland Credit Management.

Collection Law Firm Which Served Consumer Represented by Attorney Does Not Qualify For FDCPA Bona Fide Error Defense

A Federal District Court ruling on March 24, 2017 barred a debt collection law firm from raising the bona fide error defense when it served legal documents on a consumer whose attorney had not filed a notice of representation with the court.  The case is Holcomb v. Freedman Anselmo Lindberg, LLC (U.S. Dist. Ct. N.D. IL Case # 15 C 1129).  The consumer’s attorney had written a letter informing the debt collection law firm that he represented the consumer; appeared twice in court on behalf of the consumer; and was noted in the debt collection law firm’s notes as the consumer’s attorney. The court held that the debt collection law firm knew the consumer was represented by an attorney and intentionally sent the court filings to the consumer. 

This decision shows how important it is for collectors to have systems in place to flag the accounts of consumers represented by attorneys and to thereafter only communicate with those consumer's attorneys.  For more information or to discuss FDCPA compliance contact Joe Messer at (312) 334-3440 or 

7th Circuit Rules Collector Misled Consumer About Time Barred Debt

On March 29, 2017, the Seventh Circuit Court of Appeals in Pantoja v. Portfolio Recovery Associates, LLC (case number 15‐1567) affirmed a ruling that debt collector Portfolio Recovery Associates had violated the Fair Debt Collection Practices Act in its efforts to collect an old consumer debt, finding the letter it sent to the debtor failed to clearly communicate that the debt was time barred (i.e., past the statute of limitations). 

In this precedential ruling, the three-judge appellate panel found that the lower court was correct to grant summary judgment in favor of Manuel Pantoja, who sued Portfolio Recovery Associates after receiving a collection letter seeking payment on a 20-year-old debt which Portfolio Recovery had purchased from Capital One.  The FDCPA prohibits collectors of consumer debts from using any “false, deceptive, or misleading representation to collect debts,” including those like the one incurred by Pantoja, which had a statute of limitations for recovery that had long since expired.

In January of 2015 an Illinois district judge ruled that the letter sent by the debt collector was deceptive or misleading because it did not tell Pantoja that the company could not sue on the time‐barred debt, and it didn’t inform the consumer that if he made or agreed to make a partial payment on the debt he could restart the clock on the expired statute of limitations.  The Seventh Circuit panel agreed. 

“This letter is an example of careful and deliberate ambiguity,” the panel ruled. “The carefully crafted language, chosen to obscure from the debtor that the law prohibits the collector from suing to collect this debt or even from threatening to do so, is the sort of misleading tactic the FDCPA prohibits.”  The only reason to use such “carefully ambiguous language,” the panel continued, “is the expectation that at least some unsophisticated debtors will misunderstand and will choose to pay on the ancient, time‐barred debts because they fear the consequences of not doing so.”

The panel also faulted Portfolio Recovery for not making it clear to Pantoja that if he agreed to settle the debt by paying a portion of it off  he would lose the protection of the statute of limitations. "We assume that a few consumer debtors, even if they know the debt can never be collected in a lawsuit, might choose to pay an asserted debt based on a sense of moral obligation," the panel stated. "But we believe the FDCPA prohibits a debt collector from luring debtors away from the shelter of the statute of limitations without providing an unambiguous warning that an unsophisticated consumer would understand."

Although the Seventh Circuit did not prescribe exact language for debt collectors to use when writing such letters, the panel did advise that the language should be "clear, accessible, and unambiguous to the unsophisticated consumer," a standard that it concluded that Portfolio Recovery had not met. 

In his lawsuit, Pantoja alleged that he had applied and was approved for a credit card from Capital One in 1993, but he never activated the account or used it for any purpose. Despite the lack of action, Capital One still assessed annual fees, late fees and activation fees against Pantoja’s account, which Pantoja never knew about and never paid.

Portfolio Recovery Associates purchased the debt from Capital One and unsuccessfully attempted in 1998 to collect the debt by phone. Portfolio Recovery renewed these efforts in April 2013, when it sent a collection letter to Pantoja claiming he owed $1,903.15. The letter, which offered several partial payment options that would settle the debt "for good,"  included the disclosure that "because of the age of your debt, we will not sue you for it and we will not report it to any credit reporting agency."

The debt collector claimed that this disclosure was enough to put Pantoja on notice that his debt had expired and he would not be brought to court. But the Seventh Circuit ruled that the language was deceptive and misleading because "it gives the impression that Portfolio Recovery has only chosen not to sue, not that it is legally barred from doing so." The panel noted that the "carefully worded sentence" appeared to have come from a 2012 consent decree between the Federal Trade Commission and debt collector LVNV Funding. Under this decree Portfolio Recovery was required to say “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it.”  But while the second sentence was included in Portfolio Recovery's letter, the panel pointed out that the first wasn't, making its disclosure "vaguer" and ultimately misleading. 

The panel ruled: "The reader is left to wonder whether Portfolio has chosen to go easy on this old debt out of the goodness of its heart, or perhaps because it might be difficult to prove the debt, or perhaps for some other reason." 

This decision creates new law for the states covered by the 7th Circuit (i.e., Illinois, Indiana and Wisconsin) and makes clear how important it is for collectors to have a qualified attorney review their collection letters for compliance before putting them to use.  For further information or have your collection letters reviewed contact Joseph Messer of Messer Strickler, Ltd. at (312) 334-3440 or

Northern District of Illinois Judge Allows Lawsuit Against Vitamin Manufacturer Nature’s Way to Proceed

An Illinois federal judge ruled Tuesday that a class action lawsuit filed against vitamin manufacturer Nature’s Way could proceed. Angel McDonnell alleges that she suffered damages from Nature’s Way misrepresentation of its product as “made in the USA” although the pills contain Vitamin C from primarily foreign sources. The case is McDonnell v. Nature’s Way Products LLC, case number 1:16-cv-05011, in U.S. District Court for the Northern District of Illinois.

District Judge Sara L. Ellis found McDonnell’s claim that she paid a premium for the “made in the USA” label because she is a “patriotic American” was enough to proceed on charges of violations of Illinois’s Consumer Fraud and Deceptive Business Practices Act. Although she did throw out the claim under Illinois’s Uniform Deceptive Trade Practices Act because the law requires proof of continuing harm. This is highly unlikely due to McDonnell now being aware of the alleged misrepresentation by Nature’s Way. Judge Ellis also tossed the claim by McDonnell that Nature’s Way misrepresented other products because she didn’t actually purchase any of those products.

The suit was filed in May after McDonnell says she became aware of the false advertising on Nature Way’s “Alive! Women’s Energy Supplement.” She had purchased the pills in 2013 and 2014, in part because of the “made in the USA” label. The complaint cites a 2015 survey by Consumer Reports that concludes nearly “80 percent of Americans are willing to pay more for American-made goods.” Nature’s Way moved to have the case dismissed in December, arguing that her allegations were overly broad and she suffered no actual damages. Judge Ellis found enough proof was provided by McDonnell, and she has agreed to let the case proceed with a jury trial.

California Fair Employment and Housing Council Rule on the "Consideration of Criminal History in Employment Decisions"

The California Fair Employment and Housing Council (FEHC) has finalized the "Consideration of Criminal History in Employment Decisions" regulation (the "Rule"). The Rule, which is scheduled to take effect on July 1, 2017, will impact employers and consumer reporting agencies. You can review the Rule on the Council's website

The Rule expands items employers are prohibited from considering. Existing prohibitions include:

  • an arrest or detention that did not result in conviction;
  • referral to or participation in a pre-trial or post-trial diversion program;
  • a conviction that has been judicially dismissed or ordered sealed, expunged or statutorily eradicated pursuant to law;
  • arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while a person was subject to the process and jurisdiction of a juvenile court law;
  • any non-felony conviction for possession of marijuana that is older than two years;

The Rule also states that if an employer is considering adverse action, prior to taking final adverse action (i.e. during pre-adverse action) the "employer must give the impacted individual notice of the disqualifying conviction and a reasonable opportunity to present evidence that the information is factually inaccurate." This requires the employer to list the specific criminal conviction(s) that was the disqualifying item(s), differing from the FCRA requirement. This notice is mandated regardless of whether the employer has a bright line assessment, in which there is a specific policy stating that a certain conviction history automatically disqualifies all candidates, or an individualized assessment, in which the employer considers the criminal background of a candidate in concert with all other aspects of the candidate. 

As noted above, the final rule is expected to take effect on July 1. In the meantime, FEHC has scheduled a hearing on March 30 on proposed regulations related to use of criminal background checks in the context of tenant screening.

U.S. Supreme Court To Decide If Debt Buyers Are Considered Debt Collectors Under the FDCPA

Are debt buyers which regularly attempt to collect the debts they purchase after the debts have fallen into default considered “debt collectors” subject to the Fair Debt Collection Practices Act?  On January 13, 2017, the U.S. Supreme Court took an appeal from the Fourth Circuit U.S. Court of Appeals which should answer this question.  The case is Henson v. Santander Consumer USA, Inc., S.C. Case  No. 16-349

Ricky Henson defaulted on a retail installment sale contract secured by a vehicle. A deficiency remained after Henson's creditor repossessed and sold his car and applied the sale proceeds to the balance. The creditor subsequently sold Henson's deficiency to Santander Consumer, USA, Inc., which attempted to collect the deficiency. Henson then sued Santander under the FDCPA. Santander filed a motion to dismiss arguing that it was not a debt collector under the FDCPA because it was collecting the debt on its own behalf, and not on behalf of a third party. Santander argued that because it owned the debt, under the FDCPA it was a "creditor" as opposed to a "debt collector." The U.S. District Court for the District of Maryland agreed with Santander and granted the motion.  Henson appealed.

The Fourth Circuit Court of Appeals Court of Appeals affirmed the district court's decision. The Court first considered the definitions of "creditor" and "debt collector." The Court held that an entity could be considered a "debt collectors" if: (a) the principal purpose of the entity is to collect debts; (2) the entity regularly collects or attempts to collect debts owed or due or asserted to be owed or due to another; and (3) the entity is a creditor that, in the process of collecting its own debts, uses a name other than its own. Henson never alleged that Santander's principal purpose was debt collection. Further, the record established that Santander had used its own name to collect, and therefore was not a creditor collecting under a different name. Accordingly, the Court noted that the only way Santander could be a "debt collector," was if it "regularly collect[ed] debts owed to another."

The court found the material distinction between a "debt collector" and a "creditor" to be whether the entity "regularly collects" on behalf of a third party. The court found Santander to be a creditor as opposed to a debt collector because it was collecting debts on its own behalf, and because its regular business included activities other than debt collection, including origination and non-default servicing activities.   

As a result of this decision the Fourth Circuit joined the appellate courts of the Ninth and Eleventh Circuits. Appellate courts in the Third, Fifth, Sixth, and Seventh Circuits, and the District of Columbia Court of Appeals hold opposing views, having found purchasers of defaulted debts to be "debt collectors" under the FDCPA. The Consumer Financial Protection Bureau and Federal Trade Commission also consider debt buyers are FDCPA regulated "debt collectors."

Hopefully the Supreme Court will resolve this conflict and bring much needed clarity to this area of the law.

7th Circuit Court of Appeals Rule Plaintiffs Fail to State FDCPA Claims Against Law Firms Which Brought Foreclosure Action in Violation of FHA Policy

On February 17, 2017 the 7th Circuit Court of Appeals ruled In Heng v. Heavner, Beyers & Mihlar, (Nos. 16-1668 et al. Cons.) that the District Court had not erred in dismissing for failure to state cause of action plaintiffs' Complaints alleging that two law firms had violated provisions of FDCPA by filing foreclosure actions in state court against plaintiffs under circumstances where the defaulted mortgages were backed by Federal Housing Authority (FHA) and the FHA did not authorized the law firm to bring foreclosure actions and had a policy prohibiting the firms from doing so in circumstances where plaintiffs had suffered financial hardship. Although the plaintiffs argued FDCPA violation occurred because the firms had not obtained the FDA's authorization to bring foreclosure actions, the 7th Circuit found that an FDCPA claim didn’t exist because the applicable FHA regulations did not require FHA authorization prior to bringing the foreclosure actions and did not prohibit the law firms from filing the foreclosure actions.

Messer Strickler Makes the Cover of Collection Advisor Magazine

Messer Strickler is excited to report that it was chosen to grace the January/February 2017 cover of Collection Advisor Magazine. MS was also featured in the “Law Firm Spotlight”, where MS partner, Nicole Strickler, discussed recent trends and compliance concerns in collection litigation.  Check out to view a copy of the issue. And, for more information regarding the article, contact me at or by phone at (312) 334-3442

Are Debt Buyers Regulated As Debt Collectors Under the FDCPA? U.S. Supreme Court to Decide

The U.S. Supreme Court on Friday agreed to decide whether firms which buy debt for pennies on the dollar can be held liable in Fair Debt Collection Practices Act lawsuits brought by the debtors they target. The Court agreed to review a lower court's decision to dismiss a consumer class action lawsuit against Santander Consumer USA Holdings Inc (SC.N) over allegations it violated the Fair Debt Collection Practices Act. Debt buyers are a fast-growing segment of the multibillion-dollar debt collection industry. This case could have a major impact on these firms. The decision hinges on the definition of "creditor" and "debt collector" since in general creditors are not subject to the FDCPA.

Four Maryland residents who defaulted on car loans filed a proposed class action lawsuit against Santander in 2012 in federal court alleging violations of the debt collection law, such as misrepresenting debt loads and bypassing debtors' lawyers.  The debts had been sold to Santander, a vehicle-financing and lending company owned in part by a subsidiary of Banco Santander (SAN.MC), the euro zone's second-largest bank by market value.  The 4th U.S. Circuit Court of Appeals in Richmond, Virginia dismissed the lawsuit last March after determining the law applied only to debt collectors, and Santander was a creditor since it purchased the loans.

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


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 or at 312-334-3442.


The Fourth Circuit recently held that a debt’s default status does not automatically qualify a debt purchaser as a “debt collector” subject to the Fair Debt Collection Practices Act (“FDCPA”).  In Henson v. Santander Consumer USA, Inc., four consumers alleged that a purchaser of their defaulted automobile loans violated the FDCPA by engaging in prohibited collection practices.  The district court granted the purchaser’s motion to dismiss on the ground that the complaint did not allege facts showing that the defendant qualified as a “debt collector” under the FDCPA.  The court concluded that the complaint only demonstrated that the defendant was a consumer finance company that was collecting debts on its own behalf as a creditor and that the FDCPA generally does not regulate creditors collecting debts owed themselves.  The Fourth Circuit affirmed. In arguing that the defendant constituted a debt collector, plaintiffs relied heavily on § 1692a(6)(F)(iii) of the FDCPA which excludes from the definition of debt collector “any person collecting or attempting to collect any debt . . . owed or due another to the extent such activity . . . concerns a debt which was not in default at the time it was obtained.”  Plaintiffs maintained that because the provision excludes persons collecting debts not in default, the definition of debt collector must necessarily include persons collecting defaulted debt that they did not originate.  Essentially, plaintiffs argued that the default status of a debt determines whether a purchaser of debt, such as defendant, is a debt collector or a creditor.

The Fourth Circuit disagreed, concluding that the default status of a debt has no bearing on whether a person qualifies as a debt collector under the threshold definition set forth in § 1692a(6).  Such a determination is generally based on whether a person collects debt on behalf of others or for its own account, the main exception being when the “principal purpose” of the person’s business is to collect debt.  Section 1692a(6) defines a debt collector as (1) a person whose principal purpose is to collect debts; (2) a person who regularly collects debts owed to another; or (3) a person who collects its own debts, using a name other than its own.  Because the complaint did not allege that defendant’s principal business was to collect debt, instead alleging that defendant was a consumer finance company, nor allege that defendant was using a name other than its own in collecting the debts, defendant clearly did not fall within the first or third definitions of debt collector.  Moreover, because the debts that defendant was collecting were owed to it and not another, defendant was not a person collecting a debt on behalf of another so as to qualify as a debt collector under the second definition.

For more information on the Fourth Circuit decision or the FDCPA generally, contact Katherine Olson at (312) 334-3444 or

Second Circuit Adopts FDCPA Least Sophisticated Consumer Safe Harbor Approach Established by the Seventh Circuit

In Avila, et al. v. Riexinger & Associates, LLC, et al., Case No. 15-1584(L), the Second Circuit Court of Appeals applied the least sophisticated consumer standard of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”) to conclude that a consumer cannot be expected to know that a total debt provided in a given statement continues to increase interest or other fees.  The Second Circuit held that when a debt collector issues a notice to a borrower that includes a statement of the complete amount of their debt, the debt collector must either accurately inform the consumer that the amount of the debt stated in the notice will increase over time based upon interest or other fees, or clearly state that the holder of the debt will accept payment of the amount set forth in full satisfaction of the debt if payment is made by a specified date. In Avila, a consumer brought a putative class action against a debt collector for violation of § 1692e of the FDCPA alleging that the practice of disclosing in a collection notice only the “current balance” of the amount owed amounts to “false, deceptive, or misleading” collection practices under the statute.  The consumer alleged that the notice led them to believe that the amount owed was not increasing.  The Second Circuit agreed and held that the least sophisticated consumer could believe that payment in full of the current balance provided in the notice would satisfy the entire debt owed, and that a failure to mention the ongoing accrual of interest and fees was misleading. Further, the Court held that “the FDCPA requires debt collectors, when they notify consumers of their account balance, to disclose that the balance may increase due to interest and fees.”

The Second Circuit also held that Section 1692e requires additional disclosures to ensure that consumers are not misled into thinking that simply paying the “current balance” as listed on the collection notice will always result in full satisfaction of the amount owed. Accordingly, the Second Circuit adopted the “safe harbor” approach established by the Seventh Circuit in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000).  The “safe harbor” doctrine allows a debt collector to prevent liability under Section 1692e “if the collection notice either accurately informs the consumer that the amount of the debt stated in the letter will increase over time, or clearly states that the holder of the debt will accept payment of the amount set forth in full satisfaction of the debt if payment is made by a specified date.”

Although the Second Circuit declined to establish the exact language of any disclosure that a debt collector must use to sidestep a possible FDCPA violation, the Court expressed that the language proposed in Miller, 214 F.3d, at 876, would certainly qualify a debt collector for treatment under the newly-created safe-harbor.

Debt collection agencies, or those that act as debt collectors, should pay particular attention to the language of Miller that the Second Circuit suggests will satisfy the newly-recognized safe harbor provision. For information on revising statements to consumers to comply with the safe harbor language, or for other information regarding this topic, contact Stephanie Strickler at 312-334-3465 or at


The Seventh Circuit recently issued its decision in

Bridgeview Health Care Ctr., Ltd. v. Clark

, Case Nos. 14-3728 &15-1793 (March 21, 2016), holding that agency rules apply in determining whether a fax is sent “on behalf” of a principal in violation of the Telephone Consumer Protection Act (“TCPA”).  The appeal arose out of unsolicited fax advertisements which were blasted across multiple states in violation of the TCPA. While the parties agreed that the TCPA was violated, they disputed who was responsible for sending the faxes -- the company advertised in the faxes or the marketing company that actually sent the faxes.  The district court determined that the defendant was only liable for those faxes it authorized the marketing company to send.  The Seventh Circuit affirmed.

A fax sender is defined in federal regulations as either the person “on whose behalf” the unsolicited ad is sent or the person whose services are promoted in the ad.  The Seventh Circuit found the district court correctly rejected strict liability as applicable to junk faxes and held that “[i]n applying the regulatory definition of a fax sender . . . agency rules are properly applied to determine whether an action is done ‘on behalf’ of a principal.”  After analyzing each of the three types of agency (express actual authority, implied actual authority, and apparent authority) in the context of the case, the Court found that none of them applied to faxes sent outside a 20-mile radius of defendant’s business.

Notably the Court took the appeal as an opportunity to criticize the current state of TCPA litigation, noting:

[W]hat motivates TCPA suits is not simply the fact than an unrequested ad arrived on a fax machine.  Instead, there is evidence that the pervasive nature of junk-fax litigation is best explained this way: it “has blossomed into a national cash cow for plaintiff’s attorneys specializing in TCPA disputes.”. . . We doubt that Congress intended the TCPA, which it crafted as a consumer-protection law, to become the means of targeting small business.  Yet in practice, the TCPA is nailing the little guy, while plaintiffs’ attorneys take a big cut. . . . Nevertheless, we enforce the law as Congress enacted it.

The Bridgeview opinion is a clear indication of the Seventh Circuit’s displeasure with the TCPA plaintiffs’ bar.  Indeed, the Court even took a shot at plaintiff’s attorneys, noting the attorneys “currently have about 100 TCPA suits pending” and used the marketing company’s hard drive to find plaintiffs.

For more information on the Bridgeview opinion or the TCPA generally, contact Katherine Olson at  or (312) 334-3444.

Express Consent under the TCPA Extends from the Creditor to its Collectors

A United States District Court judge in the Northern District of California recently granted a motion for summary judgment in favor of a debt collector on a TCPA claim where the consumer had provided a cell phone number as part of an in-store application for a store credit card.  In Schwartz-Earp v. Advanced Call Center Technologies, LLC (Case No. 15-cv-01582), the judge determined that when the consumer provided her telephone number at the time she applied for the store credit card, which gave rise to the underlying debt, she consented to being contacted at that number by the credit card issuer and collection companies acting on its behalf. The Plaintiff had applied in-store for a JC Penney-branded credit card, and she provided her telephone number as part of the application process.  Plaintiff did not specify that the number she provided was her cell number.  She was approved for a credit card, and subsequently used the credit card to make purchases.  Plaintiff stopped making payments on the credit card, thus Synchrony, the creditor, placed the account with Defendant, Advanced Call Center Technologies, LLC (“ACCT”) for collection.

The case, Schwartz-Earp v. Advanced Call Center Technologies, LLC, from the United States District Court for the Northern District of California (Case No. 15-cv-01582-MEJ) involved claims for violation of the FDCPA, California’s Rosenthal Fair Debt Collection Practices Act, the TCPA, and invasion of privacy.

Between January 17, 2015 and February 22, 2015, ACCT placed at least 134 calls to Plaintiff at the number she provided. ACCT maintained it never intentionally left voicemails for Plaintiff. However, ACCT’s dialing software uses a voice recognition algorithm to distinguish live people from answering machines, and in the event that the algorithm mistakes an answering machine for a live person, a brief message may be left unintentionally.

While it is ACCT’s position that Plaintiff did not answer a majority of the phone calls placed to Plaintiff’s phone number, Plaintiff claims she would answer the call, but a live agent would not respond so she eventually hung up.  It is undisputed that Plaintiff answered a call placed on February 13, 2015.  The last call from ACCT to Plaintiff was placed on February 22, 2015.

On February 22, 2015, Plaintiff called ACCT and agreed to a payment plan to bring her credit card account current. On February 23, 2015, Plaintiff called ACCT and asked to modify the payment plan she had previously agreed to. On February 25, 2015, Plaintiff again called ACCT and asked to cancel the payment plan. During that February 25, 2015 call, Plaintiff also asked for ACCT to stop calling her, and the agent stated that the calls would cease.

Plaintiff filed a Complaint on April 7, 2015, alleging four causes of action:

  1.  violations of two sections of the Fair Debt Collection Practice Act (“FDCPA”), 15 U.S.C. §§ 1692(d) and (f);
  2. violation of California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code §§ 1788-1788.32;
  3. violation of the Telephone Consumer Protection Act (“TCPA”); and
  4. invasion of privacy.

ACCT moved for summary judgment on all claims.

United States Magistrate Judge Maria-Alena James denied ACCT’s Motion for Summary Judgment as to Plaintiff’s § 1692d FDCPA and Rosenthal Act claims, but granted their Motion as to Plaintiff’s § 1692f FDCPA, TCPA, and invasion of privacy claims.

Judge James’ decision as to the TCPA claim is beneficial for debt collection agencies in that the decision approved of an indirect way for collection agencies to obtain prior express consent from consumers.

Judge James’ determined that by providing a cell phone number on an in-store application for a credit card when asked for a telephone number constituted “prior express consent.”  Furthermore, this prior express consent is in relation to the creditor, in this case Synchrony, and not the store itself.

“No reasonable consumer could believe that consenting to be contacted for a store credit card requires that all communications be made by direct employees of the store, but never by the company that issued the card.  When a consumer provides a cellular telephone number to a creditor as part of the underlying transaction, the provision of the number constitutes express consent for the creditor to contact the consumer about the debt.”

The court further stated that the “prior express consent” given to the creditor was also considered prior express consent to the agents of the creditor.  The court wrote:

“An individual may indirectly provide a third party with express consent to be called under TCPA. …calls placed by a third-party debt collector on behalf of the creditor are treated as if the creditor itself placed the call.

For more information on this topic, please contact Stephanie Strickler at or 312-334-3465.

Class Actions Seeking Meaningless Relief Are Not Appropriate For Class Certification

The Second Circuit recently opined that a low-value class settlement is not appropriate for class certification.  In Gallego v. Northland Group, Inc., plaintiff filed a class action under the Fair Debt Collection Practices Act (FDCPA) against a debt collector for allegedly sending consumers a demand letter which failed to identify the name of the person to call back.   Because the FDCPA does not incorporate state or local-law standards of conduct, the plaintiff’s claim seemingly lacked merit.  Notwithstanding same, the defendant debt collection agency agreed to settle the lawsuit on a class-wide basis.  The parties then jointly moved for approval of the class-wide settlement and to certify the settlement class consisting of 100,000 class members.  Notably, the settlement agreement provided for class members to release their claims against the defendant, not only under the FDCPA, but also under state law and New York City law (including the New York City Administrative Code).   The agreement also called for a class fund of $17,500, of which the named plaintiff would receive $1,000 with the remainder distributed pro-rata amongst the class members – meaning that if all 100,000 class members were to submit claims, each would only receive 16.5 cents.  The district court denied class certification, concluding that the class action was “neither the superior nor fairer method for litigating the issues in the Complaint.”  The Second Circuit affirmed the district court’s ruling, finding that class members’ interest would not be best served by a settlement that required them to release any and all claims in exchange for as little as 16.5 cents.

The Gallego decision recognizes that many FDCPA cases are ill-suited for class certification.  Specifically, class certification should be denied where class members will only receive meaningless or trivial relief.  The Gallego decision is also a reminder that courts will not rubber-stamp class-action settlements reached by the parties, but rather will examine them to determine whether class members are giving up too much.

For more information on the Gallego decision, defense of class actions or the FDCPA, contact Katherine Olson at (312) 334-3444 or

Debt Collector Succeeds with FDCPA Bona Fide Error Defense

The United States District Court for the Southern District of Alabama recently granted a Motion for Summary Judgment in favor of a defendant debt collection agency.  In Robert L. Arnold v. Bayview Loan Servicing, LLC, et al., the plaintiff filed suit against the collection agency for multiple FDCPA violations.  Arnold fell behind on his mortgage payments and declared bankruptcy in 2012, under which the judge granted a discharge for the mortgage.  In January 2013, Arnold received written notification that the mortgage loan servicing had been transferred to Bayview.  Bayview was well aware of the default and that the debt had been discharged in bankruptcy.  Upon receipt of the account, Bayview started the foreclosure process, and purchased the property for most of the amount of the outstanding principal on Arnold’s loan.  While the account was properly coded in Bayview’s system upon transfer, and no billing statements were produced, in December 2013, ten months after the transfer, two billing statements were sent to Arnold.  The statements reflected the outstanding balance; they did not reference the bankruptcy discharge, and they did not reference a credit for the foreclosure sale.

Bayview sought summary judgment based solely on the bona fide error defense.  To succeed on this defense, Bayview must show “a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such an error.”  This defense is not available for mistakes of law or misinterpretations of the FDCPA, but instead “to protect against liability for errors like clerical or factual mistakes.”  See Edwards v. Niagara Credit Solutions, Inc.

The court found Bayview sufficiently demonstrated that the December 2013 mailings were unintentional based on the following:

  1. Arnold’s loan had been coded with a foreclosure man code when Bayview assumed servicing responsibilities, effectively suppressing all billing statements;
  2. Bayview sent no billing statements to Arnold between February 2013 and November 2013;
  3. The Bayview employee who performed a pre-foreclosure review of Arnold’s loan was bound to follow a Bayview checklist that did not call for changing the man code or issuing billing statements;
  4. Nothing in the checklist or employee comments suggested that this individual intended to change the man code or reactivate Arnold’s loan;
  5. The man code was changed anyway, even though Bayview had no reason to do so in its pre-foreclosure review;
  6. Bayview ceased communications to Arnold when it discovered the error; and
  7. Bayview provides extensive, ongoing training to employees in the area of FDCPA compliance.

The Court also concluded that Bayview’s violation was in good faith in that it properly relied on the foreclosure code to suppress monthly statements to Arnold, and that it had no reason to believe that the man code would be changed during the pre-foreclosure review process.  Furthermore, Bayview had provided appropriate training and checklists to its employees concerning pre-foreclosure review.

Finally, the Court also concluded that Bayview maintained policies and procedures to avoid readily discoverable errors.  Bayview had general training procedures and specific procedures for pre-foreclosure review.  It also had ongoing FDCPA compliance training for its employees.

This case demonstrates the importance for debt collection agencies to have clear policies and procedures for FDCPA compliance, as well as ongoing training to reinforce the implementation of these policies and procedures.

For more information on this topic or questions regarding your FDCPA policies and procedures, please contact Stephanie Strickler at or at 312-334-3465.


The Sixth Circuit recently joined the Federal Communications Commission (FCC) and Eleventh Circuit in holding that “prior express consent” can be obtained and conveyed via intermediaries. In Braisden v. Credit Adjustments, Inc., plaintiffs filed a putative class action contending that defendant violated the Telephone Consumer Protection Act (“TCPA”) when it placed calls to their cell phone numbers using an automatic telephone dialing system and artificial or prerecorded voice in an attempt to collect a medical debt. Defendant did not dispute that it placed the calls or that it used an autodialer. Rather, defendant maintained that by virtue of giving their cell phone numbers to the hospital where they received medical care, plaintiffs gave their “prior express consent” to receive such calls. The district court entered summary judgment for defendant on this basis and the Sixth Circuit affirmed.

Specifically, plaintiffs had received medical care from a hospital which utilized the services of a third party anesthesiologist. When the anesthesiologist did not get paid, the anesthesiologist transferred the delinquent accounts to defendant for collection. Defendant contacted plaintiffs at the numbers provided by the anesthesiologist, which had received the numbers from the hospital. Notably, the plaintiffs had signed admission forms permitting the hospital to release their “health information” to third parties for purposes of “billing and payment” or “billing and collecting monies due.” Plaintiffs argued that because they had not given their numbers to defendant or the creditor on whose behalf it was calling, plaintiffs had not provided prior express consent to be called at those numbers. The Sixth Circuit disagreed, finding that the FCC held in a 2014 Declaratory Ruling that consent can be obtained and conveyed by intermediaries. The Sixth Circuit further found that cell phone numbers fell within the definition of “health information” under a logical reading of the admission forms and rejected plaintiffs’ narrow interpretation of a 2008 FCC Declaratory Ruling which stated that a number must be “provided during the transaction that resulted in the debt owed.” Relying on its own prior ruling on the matter, the Sixth Circuit found that “during the transaction that resulted in the debt owed” was to be read as only applying to the “ ‘initial transaction’ that creates the debt.” Thus, “consumers may give ‘prior express consent’ . . . when they provide a cell phone number to one entity as part of a commercial transaction, which then provides the number to another related entity from which the consumer incurs a debt that is part and parcel of the reason they gave the number in the first place.”

For more information on the Sixth Circuit’s decision, “prior express consent” or the TCPA generally, contact Katherine Olson at (312) 334-3444 or

FTC to Help Consumers Report and Recover from Identity Theft

On January 28th, the Federal Trade Commission (“FTC”) updated with personalized information and tools for consumers to report and recover from identity theft. This change comes after consumers submitted 47% more identity fraud complaints to the FTC in 2015 than in 2014.  As a result, the FTC has made a form letter available for victims to better communicate with debt collectors about debts incurred due to theft. Additionally, the FTC has recommended victims contact credit bureaus to block information on their credit reports in regards to any fraudulent debts. For more information about the FTC’s new identity theft tools, please contact Joseph Messer at 312-334-3440 or at

When a Creditor is a “Debt Collector” Under the FDCPA


The Federal Trade Commission (“FTC”) recently released a statement that the meaning of “debt collector” may be more expansive under the Fair Debt Collection Practices Act (“FDCPA”) than previously thought. A “debt collector” is defined under the FDCPA as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” §803(6). With this definition, it has long been assumed that creditors who collect their own debts are not covered by the FDCPA. However, Section 803(6) goes on to say “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.”

The FTC has asserted FDCPA claims against companies using other names to collect their own debts, characterizing them as “debt collectors” under the FDCPA. The FTC has issued a warning toremind creditors that the FDCPA can in fact apply to creditors who collect on their own behalf. Creditors should regularly review their policies to ensure their practices and procedures follow all applicable laws and regulations.

View the FTC’s Original Post Here

To learn more about the FTC’s warning and how to avoid FDCPA violations please contact Joseph Messer at 312-334-3440 or