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From Banking and Finance Law Daily, September 11, 2013

Attorney’s consumer debt collection demand overshadowed notice of right to dispute debt

By Richard A. Roth, J.D.

An attorney’s effort to encourage a consumer to pay a debt quickly would have left “the least sophisticated consumer” confused as to her right to demand that the debt be validated and thus violated the Fair Debt Collections Practices Act, a federal district court judge has decided. The judge also decided that the attorney’s dunning letter might have misrepresented that the attorney was meaningfully involved in reviewing the consumer’s liability (Pollard v. Law Offices of Mandy L. Spaulding, Sept. 9, 2013, Stearns, U.S. District Judge).

According to the consumer, the original dispute concerned $611.84 the attorney claimed was owed to her client. The attorney’s initial letter to the consumer included the notices the FDCPA requires, such as a description of the consumer’s right within 30 days to demand a verification of the debt (see 15 U.S.C. §1692g).

The letter also included language intended to induce the consumer to pay the debt quickly. For example, the letter noted that the original creditor and a debt collection agency had attempted to contact the consumer and said that “I am not inclined to use further resources attempting to collect this debt before filing suit.” It added if the consumer did not cooperate, “I am obligated to my client to pursue the next logical course of action without delay.”

The consumer alleged that the attorney violated the FDCPA in three ways:

  • she engaged in harassing, oppressive, or abusive conduct in violation of 15 U.S.C. §1692d;
  • she made false, deceptive, or misleading representations in violation of 15 U.S.C. §1692e; and
  • her dunning letter overshadowed or contradicted the required notice of the consumer’s 30-day validation right in violation of 15 U.S.C. §1692g.

The attorney asked the court to enter judgment on the pleadings—essentially requesting that the judge rule that even if all of the consumer’s factual allegations were true, the FDCPA had not been violated. Applying the standard that FDCPA claims are to be considered from the point of view of the least sophisticated consumer, the judge ruled in favor of the attorney on the first of the claims and in favor of the consumer on the third, but he said he could not yet decide the second claim.

Harassment. The FDCPA prohibits the use of harassing or abusive debt collection tactics. Nothing the attorney did crossed that line, the court said.

A single letter was the only communication initiated by the attorney, the court pointed out, and a letter is one of the least intrusive methods of communication that is available. The attorney never used any profane or obscene language and never threatened the use of force.

The threat of a collection suit alone is not harassing or abusive, the court added.

Misrepresentations. The use of false, deceptive, or misleading representations also is prohibited by the act, the court noted. According to the consumer, the attorney violated that prohibition by falsely representing that she, as an attorney, had personally reviewed the consumer’s file and the dunning letter.

Such a misrepresentation would be a violation of the FDCPA, the court said. It is prohibited for a debt collector to send a letter that appears to be from an attorney if the attorney had no role in generating that letter, since using the word “attorney” suggests that legal action is a stronger possibility. The facts that the attorney signed this letter and that the letter implied that litigation was imminent would violate the FDCPA if the attorney had not actually been involved.

However, the extent of the attorney’s professional involvement was not clear, the court said. The attorney asserted that she reviewed “the form” of the letter. The judge decided that he could not decide that claim based only on the pleadings.

Overshadowing. The judge was able to determine, however, that the letter’s payment demand overshadowed the statutorily required notice that the consumer could demand the debt be verified. Under the FDCPA, it was not enough simply to provide the notice, the court said; it also was important that the remainder of the letter not overshadow or contradict the notice in a way that would leave the least sophisticated consumer unsure as to her rights.

A debt collector could urge a consumer to make a quick payment, the court agreed. However, in such a case, the debt collector was obligated to include language making clear that the validation right was not affected. This attorney’s letter failed that test.

It was irrelevant that the letter did not set a specific deadline, the judge continued, because words such as “today” or “immediately” did not have “talismanic significance.” The clear implication of the letter was that the attorney had decided to sue and only immediate payment of the debt would prevent that suit.

The judge also noted that several appellate courts had provided sample language that a debt collector could use to explain to a consumer that the right to demand a validation of the debt remained despite a threatened collection suit. However, the attorney had chosen not to use that sample language. “Debt collectors who elect to stray from these judicially approved examples do so at their own risk,” the judge warned.

The case is No. 12-12184-RGS.

Attorneys: Sergei Lemberg (Lemberg & Associates) for Kevin Pollard and Robbie Pollard. Scott D. Burke (Morrison Mahoney LLP) for Law Office of Mandy L. Spaulding.

Companies: Law Office of Mandy L. Spaulding

LitigationEnforcement: DebtCollection MassachusettsNews

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