Update (February 26, 2014): I confess that sometimes I feel ALMOST as much sympathy for those dabbling in the dark art of debt collection as I feel for the debtors who have to be on the receiving end of these communications. In a recent decision on cross-motions for summary judgment before U.S. District Court Donovan W. Frank (D. Minn.), (denying both sides’ motions) we get to sit in on telephone conversations between a debt collector and a debtor in which the debtor questions whether the collector wants the debtor to pay the debt by getting money from out of her excretory tract.
As it turns out, there can be a fair bit of cash down there if you know what you’re doing. Butt, as a proctical matter, the point is that debt collectors are held to fairly high standards of what they must say and what they may say. The folks on the other end of the line do not have the same constraints.
Update (February 15, 2013): (Under the subject line: FDCPA and The Lawful Squeeze: Keep It Real): The FDCPA applies to DEBT COLLECTORS, not debt collectors and figuring out the difference is how lawyers make the big bucks. Seriously, when a company is collecting its own debt in its own name, it falls outside the FDCPA. From the FDCPA’s point of view, the company is not a “debt collector” under those circumstances; it is a creditor to whom the federal statute does not apply.
What if the company collecting the debt advertises in such a way that the consumer is unaware of the company name and is confused by the company’s later debt collection calls? How could that happen? Let’s say the consumer hooks up with the company through an internet come-on which does not highlight or disclose the company name. Again, the FDCPA targets companies that collect debts owed to others, not people or companies collecting their own debts. Therefore, the fact that a consumer might be unaware of the company name of a creditor does not somehow convert the company into a debt collector under the FDCPA. So held Sr. U.S. District Court Judge Richard H. Kyle (D. Minn.) this week in a typically direct. succinct, and correct decision (if I do say so myself).
Original post (May 9, 2012): The Fair Debt Collection Practices Act (FDCPA) has been around since 1977 when it was signed into law by Jimmy Carter on September 20, which just happens to be the very day that Fonzie first jumped the shark. (Coincidence? You decide.)
Seriously, the law has been around as long as Namie Amuro and debt collectors still cannot figure out how to comply with it day in and day out? (Maybe this is because, in part, compliance with the statute as construed by many courts puts debt collectors between a rock and a hard place, Scylla and Charybdis, Morton’s Fork, Hobson’s Choice, or Catch 22, as U.S. Dist. Ct. Judge Joan N. Ericksen (D. Minn.) recently wrote?)
The phrase, “A fool and his money are soon parted,” is over 500 years old. No one knows its origin but it’s not that insightful a proverb anyhow. The point is obvious. But apparently the adage is catchy and it has stuck for a long time.
The corollary, “It is difficult to take money from smart people,” is less catchy, but equally if not more true. That is one challenge with FDCPA compliance.
It can very difficult and costly to get money from people who owe it and the FDCPA’s framework makes it significantly more difficult and costly by prohibiting many practices that any of us might be tempted to resort to when we are owed money (such as screaming profanity, threatening humiliation, masquaerading as someone you’re not when calling about the debt, harassing with 3 a.m. phone calls, and so on).
Alleged debtors and a clever FDCPA debtor bar stand on one side and credit collection shops stand on the other. It is a 35-year long game of cat and mouse with no end in sight.
This post was inspired by a recent decision in the case of Read v. Messerli & Kramer (“M&K”), one of the more established Minnesota debt collection operations and a relatively rare (if maybe transient) win for the debtor. (Initially, M&K was represented in the matter by Christopher Morris of the Minneapolis Bassford Remele law firm (which has a well-known FDCPA defense practice with Morris, Michael Klutho and others), but early on in the litigation, M&K took on its own defense.) (Another recent D. Minn. FDCPA case involving Morris (Zortman) was covered earlier here and was the subject of a more recent decision here (in which Morris won summary judgment.))
At issue: “overshadowing” — that is, whether the debt collector’s communication required by the FDCPA of the right of the alleged debtor to dispute the debt was “overshadowed” by a subsequent communication that overshadowed or obscured a notice provision required by the statute.
Late last month, U.S. District Court Judge Joan N. Ericksen (D. Minn.) denied defendant’s motion to dismiss Read’s complaint.
An unsophisticated consumer could read [M & K’s later] letter and believe that whatever “opportunity” M&K previously gave him [to dispute the debt] has now expired and that legal action is imminent. Absent any clarifying language, the unsophisticated consumer could also infer that the “opportunity” referred to in the letter was his opportunity to dispute the debt, even though the letter was sent only twenty-six days after the initial communication— before the thirty-day validation period [(the period to dispute the debt under the FDCPA)] had expired.
It is contrarian (and, to many, outrageous and/or ridiculous) to suggest sympathy is in order for debt collectors. But one has to recognize that collecting debts is a very challenging way to make one’s living and the safeguards of the FDCPA to prevent “abusive” tactics make that hard job substantially harder.