Another Court Rules That Voice-Mail Message Does Not Violate FDCPA

voicemailThe U.S. District Court for the Eastern District of New York recently decided that a debt collector did not violate the FDCPA by leaving a voicemail message containing the caller’s name and identifying the caller as a debt collector with an important message. Zweigenhaft v. Receivables Performance Management, LLC. The court reached this conclusion because it determined that, under the circumstances, the voice-mail message was not a “communication” under the FDCPA.

Arguably, this decision conflicts with Foti v. NCO Fin. Sys., Inc., No. 04-CV-707 (S.D.N.Y. Mar. 25, 2006) and its precedential value is limited. The decision is noteworthy, however, because the court observed that even though the “FDCPA is clearly out of touch with modern technology,” in light of the overall purpose of the FDCPA to protect consumers from abusive debt collection practices, without placing unnecessary restrictions on debt collectors, no violation occurred.

Texas Court Holds that the FDCPA Does Not Require Debt Collectors to Read Minds

In determining whether the consumer effectively notified the debt collector that she did not want to receive calls at work, “[t]he question is not what [the consumer] thought she was communicating to [the debt collector] … [r]ather, the question is what [the debt collector] knew or should have known regarding [her employer’s] policy regarding permitting employees to receive calls at work.” Karp v. Financial Recovery Servcs., Inc., United States District Court, Western District of Texas, Case No. A-12-CA-985 LY (December 18, 2013).

House Bill Would Exempt Collection Attorneys Engaged In Litigation From The FDCPA

A bill that was recently introduced in the House of Representatives would exempt debt collection attorneys from the Fair Debt Collection Practices Act (FDCPA) “when taking certain actions.” The Bill, which was introduced by Rep. Ed Perlmutter (D-Colo.) and co-sponsored by Rep. Spencer Bachus (R-Ala.), is described as a technical fix that does not erode the consumer protections afforded by the FDCPA. Continue reading

Mortgage foreclosure is debt collection under the FDCPA

Last June, the Sixth Circuit decided that a law firm could be liable, under the Fair Debt Collection Practices Act (“FDCPA”), for stating the wrong identity of the mortgage owner, in a foreclosure complaint. In effect, the Sixth Circuit held that a pre-assignment foreclosure filing could violate the FDCPA. Earlier this month, the same court decided another case involving the application of the FDCPA to judicial foreclosure proceedings. This latest case strongly suggests that misstatements in a foreclosure complaint, and presumably other court filings, subject not only the plaintiff’s attorney to to FDCPA, but the loan servicer client as well. Continue reading

Pre-assignment foreclosure filing may violate the Fair Debt Collection Practices Act

The Sixth Circuit Court of Appeals, in Wallace v. Washington Mutual, recently announced that filing a foreclosure complaint, before the note and mortgage have been transferred and assigned to the Plaintiff, may violate the Fair Debt Collection Practices Act. (the “FDCPA”). More importantly, the court noted that the FDCPA may be violated even if state law permits the Plaintiff to cure a real-party in interest defect after the complaint is filed. Finally, although the defendant in this case was the law firm that represented the foreclosure plaintiff, depending on the circumstances, a servicer may be liable under the same theory that was announced by this court.Sometime in 1999, Betty Wallace purchased a home that she financed with a mortgage loan from Norwest Mortgage. Norwest later merged with Wells Fargo who, in March or April of 2008, sent Ms. Wallace notice of default.On July 22, 2008, Washington Mutual (“WAMU”) filed a complaint against Ms. Wallace. The complaint claimed that she was in default under the Norwest Note and Mortgage and that WAMU was the “holder of the note and the mortgage.” However, for the purposes of Ms. Wallace’s appeal, at the time the complaint was filed, WAMU was not the holder of the note or the mortgage. Ultimately, Ms. Wallaces home was foreclosed.

In July 2009, Ms. Wallace sued WAMU, Wells Fargo, and the foreclosure firm, for violations of the FDCPA. Specifically, Ms. Wallace alleged that the foreclosure firm made false and deceptive representations in connection with the collection of a debt because at the time the foreclosure complaint was filed WAMU was not the holder of the note or the mortgage. The district court dismissed Ms. Wallace’s complaint because it concluded that “failure to record an assignment of mortgage before filing a foreclosure action is not a deceptive practice under the [FDCPA]. Ms. Wallace appealed.

The Sixth Circuit Court of Appeals reversed the judgment of the district court. The Sixth Circuit found that a law firm makes a “false, deceptive and misleading representation” when it files a complaint that falsely alleges that the plaintiff is the owner and holder of the note and mortgage. The court, however, did not stop there.

The court determined that a violation can occur even if, as a matter of state procedural law, a lender can cure a real-party in interest defect by making the necessary transfers and assignments at any time before judgment. Stated another way, if the complaint contains factually inaccurate statements that tend to “mislead or confuse,” for the purposes of the FDCPA the lender’s ability to fix the problem after the fact is immaterial. In essence, this decision has the potential to render the “can I file before the paperwork is in order” debate that is raging before the Ohio Supreme Court moot and irrelevant.

Finally, it is noteworthy to point out that while this case involved a suit brought against the law firm, the prohibition against false and misleading representations applies to anyone that is considered to be a “debt collector” under the FDCPA. In turn, the definition of a “debt collector” includes a servicer or assignee if the loan was in default at the time of the transfer. Accordingly if the plaintiff, or the servicer, are considered to be “debt collectors” they may be vicariously liable for any false or misleading statements in the complaint.