A New York federal district court recently issued a strong denunciation of the practice of debtors attempting to induce debt collectors into committing violations of the Fair Debt Collection Practices Act (FDCPA). Finding that the case had “all the earmarks of a setup,” the court in Huebner v. Midland Credit Management, Inc. wrote that the FDCPA “is not a game, and its purpose is not to provide a business opportunity.”

The plaintiff (debtor) had telephoned the defendant (debt collector) about a debt listed on his credit report that was originally owed to his cell phone service provider. (The opinion includes as an appendix a transcript of the call, which the court commented was recorded by the plaintiff “for reasons that now seem obvious.”) In response to the plaintiff’s question asking what he had to do to dispute the debt, the defendant’s representative told him to “just advise me what your dispute is” and asked why he was disputing the debt. The representative also asked the plaintiff whether he ever had an account with the cell phone service provider.

As the reason for his dispute, the plaintiff repeatedly stated only that the debt was “nonexistent.” He also engaged in what the court described as “baiting of the representative.” For example, the plaintiff responded to the representative’s request for information about the dispute with statements such as “I don’t understand, I can’t take it off my credit card, my account without paying it?” Immediately following the call, the defendant sent a letter to the plaintiff indicating that it was ceasing its collection efforts. In his complaint, the plaintiff alleged that the defendant violated the FDCPA’s prohibition against using false or deceptive representations to collect a debt by telling him that he could not orally dispute the debt and that he needed a reason to do so.

The plaintiff’s attorney had assured the court that the call recording would show that the defendant had told the plaintiff the debt could only be disputed in writing. The court discovered, however, that there was no mention of the word “writing” and determined that the lawsuit did not have a good faith basis. It found no qualification of the statement by the defendant’s representative that “all [the plaintiff] needed to do to dispute the debt was to advise her of the dispute.” In addition, the court noted that the letter immediately sent by the defendant indicating that it was ceasing its collection efforts demonstrated that plaintiff’s oral dispute was effective. The court also observed that the representative’s request “for a smidgen of detail about the dispute, when plaintiff was being obviously and intentionally vague, does not amount to a statutory violation.”

The court concluded by commenting that the FDCPA “should not be diluted to become a plaything for fast talking plaintiffs and their lawyers,” and ordering the plaintiff and his attorney to show cause why the court should not dismiss the case, award attorney’s fees and costs to the defendant, and issue sanctions under Rule 11 of the Federal Rules of Civil Procedure.

While the court did not find a technical violation in this case, many FDCPA cases reward unscrupulous debtors and counsel who are often able to obtain money settlements by catching an unwitting debt collector in a “gotcha” technical violation. As the court observed, these cases are frequently brought on behalf of plaintiffs “who seize on the most technical alleged defects in collection notices or telephone communications, often raising claims of ‘confusion’ or ‘deception’ regarding practices as to which no one, not even the least sophisticated consumer, could reasonably be confused or misled.”

Attorneys in Ballard Spahr’s Consumer Financial Services Group regularly advise clients on compliance with the FDCPA and state debt collection laws and defend clients in FDCPA lawsuits and enforcement matters. They also prepare clients for Consumer Financial Protection Bureau examinations. The Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance.

For more information, please contact Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, John L. Culhane, Jr., at 215.864.8535 or culhane@ballardspahr.com, Collection Documentation Task Force Chair Christopher J. Willis at 678.420.9436 or willisc@ballardspahr.com, or Marjorie J. Peerce at 646.346.8039 or peercem@ballardspahr.com.


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