Under the terms of the settlement reached in several class actions against Midland Funding for its (apparently past) practice of employing robo-signers to execute affidavits for debt buyer lawsuits, each class member would receive under $20 — and that’s it. The Sixth Circuit rightly decided this was unfair (pdf).
Unfortunately, the Sixth Circuit seemed to think the settlement was unfair primarily because the named plaintiffs (i.e., those whose names actually appeared on the complaints) would receive $8,000 plus the elimination of their debts. The class members who opted into the settlement just got $17.38 each, and still owed their debts:
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The [Fair Debt Collection Practices Act](http://lawyerist.com/tag/FDCPA/) is basically a checklist for debt collectors, a list of things they must do and things they cannot do. With some regularity, someone actually breaks it up into a list. Consumerist just put together a list of 23 things debt collectors may not do, which includes the obvious:
3. Use threats of violence or harm;
5. Use obscene or profane language;
As well as the not-so-obvious:
17. Use a false company name;
21. Contact you by postcard.
This list is far from complete, but it is a good place to start. It is also worth pointing out that these prohibitions only apply to consumer debts; they do not apply to business debts. (Via Consumer Law & Policy Blog)
Everyone agrees that a consumer plaintiff who prevails in a Fair Debt Collection Practices Act lawsuit is entitled to get his or her attorney fees and costs paid by the debt collector defendant. But in Marx v. General Revenue Corporation, the question is whether, under the Federal Rules of Civil Procedure, a debt collector can collect costs from an unsuccessful plaintiff. In other words, does the FDCPA apply, or do the rules of civil procedure?
This is a Really Big Deal, because if debt collectors can collect costs from unsuccessful plaintiffs, it will make it riskier to sue debt collectors. Quite apart from the law, the whole point of the FDCPA is to provide a formidable check on debt collection abuses. Damages in these cases are small, so if they cannot recover attorney fees and costs — or if they risk having to pay substantial costs — they will not sue.
If you want people to be able to stop debt collection abuses, then you cannot increase the risk. Doing so will render the FDCPA far less effective as a check on debt collection abuses. If you think consumers and consumer lawyers are running amok, then I suppose you favor the debt collector’s position.
Read Argument preview: Court considers litigation expenses in debt-collection disputes on SCOTUSblog. (Thanks, Graham!)
According to the National Law Journal*, the American Bar Association’s Business Law Section filed comments (PDF) with the Consumer Financial Protection Bureau objecting to its latest move to assume jurisdiction over debt collectors — plenty of which are lawyers and law firms. Lawyers don’t like anyone regulating us but other lawyers, generally through state professional responsibility boards, which hear complaints and dole out punishment for ethical infractions. Judges can also punish lawyers for misusing the legal system.
But those options don’t seem to have stemmed the tide of complaints about debt collection abuses, some of which surely come from law firms with more than $10 million in annual receipts from debt collection — the ones now subject to the CFPB’s jurisdiction. Exempting debt collectors from the CFPB’s jurisdiction just because they happen to work for a law firm would be just as silly as exempting them from the Fair Debt Collection Practices Act. Which they aren’t.
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For as often as I represented people sued by Gurstel Chargo or sued Gurstel Chargo for FDCPA violations, I’m shocked at how little I wrote about one of Minnesota’s busiest debt collection law firms. I actually know the marketer (a lovely person, actually) who came up with Gurstel’s current marketing campaign, and I chuckled when I saw it for the first time. Accountability Matters as a debt collector slogan is the height of hubris. I’m just grateful I’m here to see Gurstel take its own medicine.
Here’s what a Gurstel
lawyer told a disabled veteran:
Fuck you! Pay us your money! You can’t afford an attorney. You owe us. I hope your wife divorces your ass. If you would have served our country better you would not be a disabled veteran living off social security while the rest of us honest Americans work our ass off. Too bad; you should have died.
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The Volunteer Lawyers Network receives lots of calls from Minnesota consumers who have debt collection problems. It has helped many people dealing with debt collection, but it cannot represent consumers with FDCPA claims because VLN is not able to represent plaintiffs. In order to get those consumers the help they need, VLN just released a tool to help consumers get a list of consumer lawyers who can help them.
If you think you have an FDCPA claim, you can use VLN’s FDCPA screening form to self-screen and get a list of consumer rights lawyers drawn from the NACA consumer lawyer directory) who may be able to help you.
Debt collectors frequently call wrong numbers, for a variety of reasons. And, unfortuately, if your number ends up on one debt collector’s list, it is likely to end up on others. When this happens, it is nearly impossible to make the calls stop. Here’s why.
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You should record all collection calls, if it is legal for you to do so (see below for more on this). Here’s why.
First, you must keep a record of any agreements or promises the debt collector makes. Without a recording, any agreements or promises will be difficult, if not impossible, to prove. You also need to protect your legal rights. If a debt collector violates the Fair Debt Collection Practices Act during a call, you need to be able to prove what they said or did to violate the FDCPA.
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The 9th Circuit US Court of Appeals recently found that “a literally true statement can still be misleading” and therefore a violation of the Fair Debt Collection Practices Act. Arrow Financial Services (a Sallie Mae Company) sent a consumer a letter stating that if Arrow were reporting the debt to a credit reporting agency, it might submit negative information to that credit agency. However, Arrow could not have submitted the underlying debt to any credit reporting agency.
Gonzales, the consumer in this case, sued because Arrow implied a threat of negative credit reporting when it did not have the right to report the debt in the first place. The 9th Circuit agreed.
This decision (PDF) suggests that debt collectors cannot simply use a form that says if and leave it up to consumers to determine whether they are subject to the negative side of the if. In the 9th Circuit, at least, debt collectors may not threaten—even conditionally—unless they actually do have the right to do what they are threatening to do.
(Thanks for the tip, Randall!)
Jim Moriarty is a graduate of the same “boot camp” program for FDCPA lawyers that I attended. In fact, he and I attended the same session! Jim has been practicing law for close to 30 years, and he is “committed to and passionate about providing personal, quality legal representation to his clients.”
To contact Jim, visit his Iowa consumer attorney profile.