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Who Must Comply and What Debts are Covered?
The FDCPA applies to debt collectors seeking to recover debts from consumers. Consumer debts are debts incurred “primarily for personal, family, or household purposes,” and a “debt collector” is “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C.A. § 1692a (emphasis added). Courts routinely find that attorneys and law firms qualify as “debt collectors” under the FDCPA when it is alleged that they regularly perform debt collection activities for clients. See e.g., Crawford v. Senex Law, 259 F. Supp. 3d 464 (W.D. Virginia 2017) (law firm that sent collection notices for unpaid rent on landlord’s letterhead qualified as “debt collector” under FDCPA); In re Holyfield, 740 Fed. Appx. 695 (11th Cir. 2018) (allegations that law firm represented loan servicers and lenders in foreclosures and had appeared on the docket in a significant number of foreclosure cases plausibly alleged that firm was a “debt collector” within meaning of FDCPA); Bassett v. Credit Management Services, 326 F. Supp. 3d 862 (D. Nebraska 2018) (the FDCPA applies to a lawyer who regularly, through litigation, tries to collect consumer debts).
Mandatory Disclosures by a Debt Collector under the FDCPA
Section 1692g requires specific written disclosures be provided either in the debt collector’s initial communication with the consumer or within five (5) days of the initial communication.. In addition to these disclosures, § 1692e of the FDCPA prohibits false or misleading representations stating in subsection (11): “failure to disclose in the initial written communication with the consumer . . . that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose. . .” is a violation of § 1692e. As the FDCPA is a strict liability statute and “a consumer need only prove one violation to trigger liability, attorneys must ensure strict compliance with these mandatory disclosure requirements to avoid facing potential liability for a claimed FDCPA violation.
Prohibited Conduct by a Debt Collector under the FDCPA
Sections 1692d-f of the FDCPA generally prohibit: (1) “conduct the natural consequences of which is to harass, oppress, or abuse any person in connection with the collection of a debt;” (2) the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt;” and (3) the use of “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C.A 1692d-f. These sections also list numerous specific acts that constitute violations of the FDCPA, such as the use of threats, repeated phone calls, the false representation of the character, amount, or legal status of a debt, the threat to take any action that cannot legally be taken or that is not intended to be taken, and the collection of any amount not expressly authorized by the agreement creating the debt. Id. However, these enumerated acts are expressly non-exclusive. Id. Therefore, attorneys who engage in debt collection activities must not only be aware of the litany of specifically prohibited acts but must also consider whether an intended action falls into one of the FDCPA’s broad prohibitions against conduct that is harassing, misleading, or unconscionable. Courts view potential violations of the FDCPA through the objective lens of an unsophisticated consumer. Smith v. Simm Associates, Inc., 926 F. 3d 377, (7th Cir. 2019). Therefore, attorneys should view any proposed debt collection activity not expressly prohibited by the Act from the viewpoint of a consumer that is “uniformed, naïve, and trusting,” to ensure the action cannot be viewed as harassing, misleading, or unconscionable. Id.
Recommendation to Attorneys who Collect on Debts Subject to the FDCPA
Attorney debt collectors, simply by virtue of their profession, are especially susceptible to claims under the FDCPA’s general prohibitions against using false, misleading, and unconscionable means to collect a debt. There have been a number of recent complaints in and around the 7th Circuit against attorney debt collectors, which allege violations of §1692e and § 1692f by sending “form” debt collection letters that falsely imply the attorney has meaningfully reviewed the case. See e.g., Knack-Toms v. Meyer Njus Tanick, PA 345 F. Supp. 3d 1033 (N.D.I.L Nov. 2018), see also, Bucholz v. Meyer Njus Tanick, PA, 2018 WL 4625740 (W.D. Mich. Sept. 2018). These plaintiffs cite Avila v. Rubin for the proposition that “a delinquency letter from an attorney conveys authority and implies that the attorney supervised or actually controlled the procedures by which the letter was sent.” 84 F.3d 222, 228-29 (7th Cir. 1996). Instead of challenging the substance of the attorney debt collector letter, the plainiff’s attorney generally allege that because (1) the letter was sent by an attorney debt collector on attorney letterhead that the attorney must have meaningfully reviewed/analyzed the debt and (2) because the collection letter is a mass-produced template letter which has an indiscernible signature that no meaningful attorney review has occurred which makes the letter a false, misleading, and/or unconscionable attempt to collect the debt in violation of §1692e and § 1692f of the FDCPA.
Nielsen v. Dickerson, 307 F.3d 623 (7th Cir. 2002), is instructive regarding how attorneys can protect themselves against similar claims. In Nielson, the plaintiffs brought a class action against an attorney debt collector who sent a collection letters. Id. The plaintiffs did not allege that the substance of the letters violated the FDCPA but argued that an attorney letter, by its very nature, creates an implication of meaningful attorney review and involvement in the underlying case. Id. The court held, “[a] letter like [defendant]'s suggests that the attorney writing the letter is familiar with the facts of the case and is prepared to pursue the case himself . . . In fact, [defendant] lacked this level of involvement with the debt: [bank] did not forward debtor files to [defendant], but only so much information as [defendant] needed to complete his form letter to each debtor; that letter directed the debtor to contact [bank], not [defendant]; and [defendant] had not even created the letter specifically for [bank], but simply had employed a customizable form created before [bank] became his client. Id. Moreover, [defendant]'s “review” of the information supplied by [bank] was superficial: [defendant] and his staff merely proofread the data for incorrect amounts and typographical errors; they did not independently analyze contracts or any other information regarding the debtor . . . In other words, none of the information that [defendant] reviewed enlightened him as to the particular circumstances of a debtor and his account before he sent a delinquency letter to that debtor . . . In short, [defendant] was not exercising “independent, trained legal judgment on the validity of a claim.” Id. at 632.
Importantly, the Nielson Court concluded that the letters themselves were objectionable in that the attorney debt collector merely sent each debtor a form letter “modified to reflect the meager information provided” which were auto-signed and then mailed out by a third party. Id. The Nielson Court noted that in Clomon v. Jackson, 988 F.2d 1314, 1321 (2nd Cir.1993), “the Second Circuit suggested that mass mailings prepared in this manner will frequently be false to the extent that they suggest that an attorney was directly involved in the process by which the letter was prepared and sent and that she had formed a professional opinion as to how the individual debtor's case should be handled.” Id. “For this reason, there will be few, if any cases in which a mass-produced collection letter bearing the facsimile of an attorney's signature will comply with the restrictions imposed by § 1692e.” Id.
In short, debt collector attorneys must not only ensure that their communications strictly adhere to the requirements of the FDCPA but must also ensure that they are meaningfully reviewing each and every debt collection file before engaging in such communications. Attorneys must also be cognizant of the implications created by the debt collection letters they send as well as the court’s potential skepticism of the use of debt collection form letters. In this regard, attorneys must walk a fine line as § 1692 g and § 1692e(11) of the FDCPA which require the disclosures enumerated therein be made in writing, which necessarily creates a type of “form” letter. Attorneys should try to avoid using templates where possible and ensure that each collection letter is legibly signed, by hand, by the reviewing attorney – as indiscernible, stamped, facsimiled, or otherwise duplicated signatures indicate someone other than the attorney has signed the letter. Attorneys should never act as a rubber stamp or simply defer to their client’s determination that a debt is ripe for collection. Rather, attorney debt collectors must ensure they are receiving the client’s entire file in each case so they can analyze the contract and any other available information regarding the debtor and the alleged debt in order to come to an independent and trained legal judgment on the validity of each claim.
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