“Least sophisticated consumer” standard under the FDCPA

December 27, 2013

The Eleventh Circuit and the majority of federal circuit courts have adopted the “least-sophisticated consumer” standard in analyzing claims brought under the Fair Debt Collection Practices Act (FDCPA).   The least-sophisticated consumer standard is consistent with FDCPA’s goal of expanding the consumer protections originally provided by the Federal Trade Commission Act.   The purpose of the least-sophisticated-consumer standard, here as in other areas of consumer law, is to ensure that the FDCPA protects the gullible as well as the shrewd.   No requirement of proof of actual deception of the consumer is necessary. 

Courts apply this objective standard in order to implement the FDCPA’s dual purpose: to protect consumers against deceptive debt collection practices and to protect debt collectors from unreasonable constructions of their communications to consumer.    The least sophisticated consumer will be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care.    However the test also has an objective component in that while protecting naive consumers, the standard also prevents liability for bizarre or idiosyncratic interpretations of collection communications by preserving a quotient of reasonableness.  


Nationstar Mortgage pursues consumers after discharge

April 24, 2013

On March 18, 2013, a lawsuit was filed by James Dooley under the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act in United States District Court, Orlando, Florida, alleging that Dooley had a mortgage with Bank of America which eventually went into default. In August of 2011, Mr. Dooley filed for bankruptcy and received a discharge in January of 2012. The mortgage with Bank of America was listed on the bankruptcy schedules. Notwithstanding the discharge of the note, Nationstar Mortgage continued collection activities against Mr. Dooley attempting to collect the discharged debt.

In an unrelated case, another lawsuit was filed in April of 2013 also under the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act in United States District Court, Orlando, Florida, alleges that consumers took out a mortgage with MorEquity. In August of 2010, consumers filed for bankruptcy and received a discharge in November of 2010. The mortgage with MorEquity was listed on the bankruptcy schedules. Notwithstanding the discharge of the note, Nationstar Mortgage continued aggressive collection activities against the consumers including collection calls and collection letters attempting to collect the discharged debt.

Both the Fair Debt Collection Practices Act and Florida Consumer Collection Practices Act make it unlawful for any person, in attempting to collect a debt, to: “Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist.”

Plaintiffs in both lawsuits are seeking statutory and emotional damages against Nationstar Mortgage, LLC and have demanded a trial by jury.


Ocwen Loan, Udren Law Offices, sue consumer after Bankruptcy Discharge

April 18, 2013

A lawsuit filed in April of 2013 under the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act in United States District Court, Orlando, Florida, alleges that in November of 2006, the consumer took out a mortgage with the predecessor in title of Ocwen Loan Servicing, LLC. In November of 2009, consumer filed for bankruptcy and received a discharge in April of 2010. The mortgage with Ocwen was listed on the bankruptcy schedules. Notwithstanding the discharge of the note, on March 13, 2013, Ocwen and Udren Law Offices sued the consumer for foreclosure in Osceola County, Florida, on the discharged note and mortgage.

Both the Fair Debt Collection Practices Act and Florida Consumer Collection Practices Act make it unlawful for any person, in attempting to collect a debt, to: “Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist.”

The consumer is being represented by N. James Turner of Orlando, FL.


Wrong Number” Calls from Debt Collectors

November 25, 2012

Have you ever received calls from debt collectors for a person completely unknown to you? These “wrong number” calls are usually the result of collection calls being made to the person who owned the telephone number immediately prior to you. What do you do about these wrong number calls? My advice is to tell the debt collector that you are not the person that she/he is trying to contact and ask them to stop calling. However, this common sense approach often does not work because the debt collector does not believe the person that she/he spoke with. The collecting caller may believe that the person called is actually the true debtor and is trying to avoid the call by saying that it was a “wrong number.” If the debt collector keeps calling after being told that they have the wrong number, in this author’s opinion, the continued calls constitute harassment under the Fair Debt Collection Practices Act.

In addition, the “wrong number” calls could be in violation of the Telephone Consumer Protection Act (TCPA). The TCPA prohibits calls using a pre-recorded or artificial voice to deliver a message to a consumer unless there is a previous business relationship or consent for the call by the consumer. With most calls made by the debt industry to a consumer, the previous business relationship between the creditor and the consumer is sufficient to allow the debt collector to utilize a pre-recorded message. However, with wrong number collection calls, such a previous business relationship is lacking. Bringing suit under the TCPA premised on wrong number debt collection calls can result in substantial claimed damages. The TCPA provides for a statutory penalty of $500.00 per call and that amount increases to $1500.00 per intentional violation.

For more information, visit us at Stop Debtor Harassment or Consumer Rights Orlando.


Consumer Protection from Unwanted Cellphone Calls

November 15, 2012

Recent headlines have drawn attention to a prevalent consumer complaint – unwanted cell phone calls. A class action lawsuit against Papa John’s involves franchises that sent customers a total of 500,000 unwanted text messages in early 2010 offering deals for pizza. Some of these texts were sent during the middle of the night. The lawsuit is based upon the Telephone Consumer Protection Act of 1991 (TCPA).

The TCPA was enacted into law to “protect the privacy interests of residential telephone subscribers” by placing certain restrictions on the use of unsolicited, automated phone calls made by telemarketers who were “blasting” out advertising by the use of both “facsimile machines and automatic dialers. An essential requirement of a TCPA claim is that the phone call be sent to a cell phone by use of auto dialing technology which either (1) utilizes a so-called “random or sequential number generator” or (2) automatically leaves a prerecorded, as opposed to a live, message.

In the context of debt collection practices, creditors have contacted consumers by cell phones on a regular basis. If a debt collector is found to have violated the TCPA, the consumer is entitled to recover statutory damages of $500 per call, and up to $1500 per call if the violation is willful, without any cap on damages. Claims under the TCPA by consumers against debt collectors are frequently joined with actions brought under the Fair Debt Collection Practices Act.

For more information, visit us at Consumer Rights Orlando.


Claim for $50 in attorney’s fees violates FDCPA (in Ohio)

October 18, 2012

Consumer, Mary, Moxley, entered into a consumer loan agreement with Cash Stop in order to borrow $279.96. The loan Agreement contained an attorney fee shifting provision. The provision purported to allow Cash Stop to charge Plaintiff attorney fees incurred to collect under the contract in the event of Plaintiff’s default. When the consumer defaulted, Cash Stop hired attorney Pfundstein to collect the debt under the loan agreement. Pfundstein filed a complaint against consumer to collect the debt. The complaint requested judgment in the amount of $319.96, which included default charges and other fees. In addition, the complaint sought $50.00 for attorney fees. The complaint stated: “In addition, whereas the defendant(s) agreed in the contract to pay reasonable attorneys’ fees, the plaintiff requests $50.00.”

Consumer filed a complaint in federal court against Pfundstein claiming that was guilty of violating the Fair Debt Collection Practices Act (FDCPA) by making a false, misleading and deceptive statement in the lawsuit that he filed on behalf of Cash Stop against her with regard to the claim for recovery of attorney’s fees. The consumer then moved for summary judgment on her claim.

The unique aspect of this case is that under Ohio law, creditors are not permitted to recover attorney fees incurred in connection with debt collection suits involving personal, family, or household debt.

Defendant/attorney claimed that the request for attorney’s fees was a good faith mistake of law.

The Court granted the consumer’s motion for summary judgment noting that because the FDCPA has been generally recognized as a strict-liability statute, even a good-faith error can give rise to liability. The Court found that attorney Pfunstein had violated the FDCPA by seeking to recover $50 in attorney’s fees in the underlying action, when such fees were not permitted by Ohio law.

Moxley v. Pfundstein, 2012 U.S. Dist. LEXIS 146868 (N.D. Ohio Oct. 11, 2012)


Plaintiff Accused by Court of Intentionally Defaulting on Debts to Create FDCPA Claims

September 24, 2012

The Fair Debt Collection Practice Act (FDCPA), enacted in 1977, aimed to “eliminate abusive debt collection practices.” Among many other reforms, the FDCPA prohibits harassing or oppressive conduct on the part of debt collectors, and it requires debt collectors to provide notice to debtors of their right to require verification of a debt. Both the text of the FDCPA and its legislative history emphasize the intent of Congress to address the previously common and severe problem of abusive debt collection practices and to protect unsophisticated consumers from unscrupulous debt collection tactics. The Act, as a U.S. District court recently stated, was not intended to enable plaintiffs to bring serial lawsuits against different debt collector defendants alleging various and often insignificant deviations from the Act’s provisions.

In Ehrich v. Credit Prot. Ass’n, 2012 U.S. Dist. LEXIS 134142 (E.D.N.Y. Sept. 19, 2012), accused the plaintiff in that case of abusing the FDCPA by, among other things, filing a total of nine complaints, including the present case, over the past seven years. The court stated that the record suggests that the plaintiff may be deliberately defaulting on his debts in order to provoke collection letters which are then combed by his lawyer for technical violations of the FDCPA.

The facts of this unique case are that Ehrich filed a complaint against Credit Protection Association, L.P., alleging violations of the FDCPA. Ehrich alleged that CPA sent him a collection note seeking to recover a debt owed to Time Warner Cable Company. Ehrich did not dispute the validity of the debt CPA sought to collect, nor did he claim that the primary text of the letter violates the FDCPA. Rather, Ehrich based his claim on two Spanish sentences at the top and bottom of the letter.

Printed at the top of the letter is the phrase “aviso importante de cobro,” which Ehrich, relying on a Google translation, translated as “important collection notice.” At the bottom of the collection notice were three Spanish phrases: “Opciones de pago,” “Llame” followed by a phone number, and “Envíe MoneyGram,” which Ehrich translated as “Payment options,” “Call” and “Send MoneyGram.” Ehrich, who does not speak Spanish, claimed that the notice’s inclusion of these Spanish phrases without a Spanish translation of the FDCPA-mandated disclosures and notices provided in English could mislead Spanish-speaking consumers and cause them to inadvertently waive their rights under the FDCPA.

CPA moved for summary judgment which was granted by the court based on lack of standing. The basis for the Court’s ruling was that the collection notice contained all disclosures required by the FDCPA and that Ehrich fully understood it. Therefore, he suffered no injury sufficient to support standing.