Defendant was not a “debt collector” under the FDCPA

May 31, 2012

Plaintiff secured a line of credit with Defendant to purchase computer equipment.  Thereafter, Plaintiff became delinquent in her payments to Defendant, and Defendant began calling Plaintiff’s mobile phone with prerecorded messages regarding the debt.  Plaintiff sent Defendant a letter asking Defendant to cease calling her which was received by Defendant.  Plaintiff asserts that this “letter revoked her consent that she had previously given to the Defendant to place calls to her cellular telephone number.”   Plaintiff maintains, however, that Defendant continued to place an additional “forty calls to her cellular phone in less than three weeks.

 Defendant filed a Motion to Dismiss the Complaint.  The Court held that Defendant did not qualify as a “debt collector” under the FDCPA.   Creditors who collect in their own name and whose principal business is not debt collection . . . are not subject to the [FDCPA]. . . . Because creditors are generally presumed to restrain their abusive collection practices out of a desire to protect their corporate goodwill, their debt collection activities are not subject to the [FDCPA] unless they collect under a name other than their own.  “Creditors—as opposed to debt collectors—generally are not subject to the FDCPA.”   “A ‘debt collector’ is broadly defined as one who attempts to collect debts ‘owed or due or asserted to be owed or due to another.'”   A “creditor,” on the other hand, is one who “offers or extends to offer credit creating a debt or to whom a debt is owed.”  One cannot be both a “creditor” and a “debt  collector” as defined under the FDCPA because the terms are mutually exclusive.

 Motion to Dismiss was granted.

 Gager v. Dell Fin. Servs., 2012 U.S. Dist. LEXIS 73752 (M.D. Pa. May 29, 2012).

For more information about the Fair Debt Collection Practices Act, ot, its state law counterpart, the Florida Consumer Collection Practices Act, visit us at:

Fair Credit Billing Act

May 31, 2012

The Fair Credit Billing Act (FCBA) was passed to protect consumers from unfair billing practices, such as being billed for merchandise that was never received or failure to post credits in a timely manner.  It also sets a consumer’s responsibility for unauthorized charges or ways to seek clarification of items on a bill.

Anytime you dispute a charge, you are using the provisions of the Fair Credit Billing Act.   It is designed to help consumers when erroneous charges or fees appear in their credit card statement.


In order to use the provisions of this law, you must send a letter to the creditor within 60 days of the first incorrect bill mailing.  The creditor must acknowledge your dispute in writing within 30 days of receiving it, and must have settled the matter within two billing cycles of receiving the dispute letter.

Supreme Court Grants Certiorari in FDCPA Case on Awarding Costs

May 31, 2012

On May 29, 2012, the U.S. Supreme Court announced it would hear a case in which a debt collection agency was awarded costs in a Fair Debt Collection Practices Act (FDCPA) lawsuit pursuant to Federal Rule of Civil Procedure 54(d). The question before the Supreme Court is whether a prevailing defendant in an FDCPA case is entitled to costs, regardless of whether the plaintiff brought the suit in bad faith and for the purpose of harassment.

The case, Marx v. General Revenue Corp., No. 11-1175, was originally brought by a consumer who defaulted on her student loan and alleged that a debt collection agency violated the FDCPA by sending a fax to her workplace that requested information about her employment status. The district court dismissed the consumer’s claim and concluded the collection agency’s fax did not violate the FDPCA because it was not a “communication” as defined by the Act. The district court awarded the collection agency costs pursuant to Federal Rule of Civil Procedure 54(d) and did not find that the consumer’s action was not brought in bad faith and for the purpose of harassment. The consumer appealed.

Although Federal Rule of Civil Procedure 54(d) allows a prevailing party to recover costs, the consumer argued the FDCPA’s cost provision, § 813(a)(3), makes clear that a court may award costs to a successful defendant only if the court finds that the plaintiff brought the action in bad faith and for the purpose of harassment.

The U.S. Court of Appeals for the Tenth Circuit affirmed the district court’s decision and held that the FDCPA’s cost provision does not supersede Rule 54(d). The appellate court reasoned that although the FDCPA’s cost provision only provides for an award to the defendant when a court finds the plaintiff brought the case in bad faith and for the purpose of harassment—which was not the case here—it does not specifically prohibit a court from awarding costs to a prevailing defendant in other instances.

The Supreme Court’s decision will determine whether a debt collector who prevails in an FDCPA action may recover the costs incurred in defending the action, even when a court does not find that the consumer brought the action in bad faith and for the purpose of harassment. ACA will continue to monitor this appeal and update the membership of new developments.




Can you sue for mistakes in collection letters?

May 30, 2012

The plaintiff debtor in Jerman sued a law firm and an attorney for FDCPA violations, committed while they were acting as debt collectors. The FDCPA has a notice provision that requires debt collectors to send written notice to the debtor that the debt will be assumed valid unless the debtor disputes it. 15 U.S.C. § 1692g(a). The collection attorney’s notice letter in Jerman stated that the mortgage debt at issue would be assumed valid unless the debtor disputed that debt in writing.
The Jerman plaintiff debtor contended that the collection attorney violated the FDCPA by imposing a requirement that the debtor dispute the debt in writing, when the FDCPA required only that the debtor dispute the debt and did not specify that it be in writing. Observing that authority was split on the issue, the district court ultimately agreed with the plaintiff debtor that this writing requirement in the collection attorney’s notice letter constituted an FDCPA violation. ). In a later proceeding, however, the district court held that the collection attorney was entitled to the bona fide error defense.

The Supreme Court ruled that the FDCPA’s bona fide error defense does not encompass mistakes of law or misinterpretations of the requirements of the Act itself. Instead, the seven-member majority concluded that § 1692k(c)’s requirement that debt collectors maintain procedures reasonably adapted to avoid any bona fide errors referred only to measures designed to avoid errors like clerical or factual mistakes.

Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. , 130 S. Ct. 1605, 176 L. Ed. 2d 519 (2010).


Post-Discharge Debt Collection Activities

May 30, 2012

Many debtors who file for bankruptcy and obtain a discharge still receive collection letters or calls from creditors.  This is a clear violation of the FDCPA.  It is anticipated that most debt collectors will claim as a defense to a FDCPA that the collection activities were a result of a bona fide error in that they had no actual knowledge of the bankruptcy.

Hyman v. Tate,  362 F.3d 965, 968 (7th Cir. 2004) holds that (a) an understanding with creditor-clients that they will not knowingly refer accounts subject to a bankruptcy filing and will notify the debt collector if they afterwards discover the fact together with (b) prompt cessation of collection efforts upon notification of a bankruptcy filing are procedures reasonably adapted to avoid errors of this kind.

In Bacelli v. MFB, Inc., 729 F. Supp. 2d 1328 (M.D. Fla. 2010), the debt collector claimed that it had no actual knowledge of the debtor’s bankruptcy which fact was undisputed.   However, the Court denied summary judgment on the bona fide error defense because the debt collector/defendant presented no evidence of an agreement or understanding with the original creditor that it would not to refer accounts in bankruptcy and no evidence that its reliance on the original creditor had proved effective in avoiding errors in the past.   Lastly, the Court stated that the debt collector/defendant presented no evidence whatsoever to show that its reliance on the original creditor about knowledge of the plaintiff’s bankruptcy discharge was reasonable.

Calling debtor at home and at work 82 times attempting to collect debt is not harassment

May 30, 2012

Yalitza Valle sues National Recovery Agency (“National”) alleging violations of the Fair Debt Collection Practices Act by calling Valle at home and at work eighty-two times in an attempt to collect debt incurred from emergency medical service. The parties dispute no fact. The telephone log confirms that between December 30, 2009, and September 7, 2010, National telephoned Valle at home and at work for a total of eighty-two calls, twenty-two of which occurred in February, 2010. On seventeen occasions, National called both Valle’s home telephone number and work telephone number during the same day. National never called the same number more than once per day. Valle never answered. National never left a voice message. Speaking with National for the first and only time, Valle telephoned National on September 9, 2010, and National stopped calling Valle. Valle produces no other evidence of potentially harassing conduct. National never called Valle twice at the same phone number during the same day. National conversed with Valle only once and only when Valle called National, who never again called Valle. National never threatened Valle; never called Valle at an odd hour; never contacted a friend, employer, co-worker, or family member; and never engaged in other conduct “naturally” resulting, or intending to result, in harassment, oppression, or abuse. Valle never disputed the debt, never demanded cessation of the calls, and never answered the phone. Judgment for Debt Collector, National.

Valle v. Nat’l Recovery Agency, 2012 U.S. Dist. LEXIS 69564 (M.D. Fla. May 18, 2012).