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§ 1692e: Bass v. Portfolio Recovery Associates, LLC, Dist. Court, N.D. Ill. 2018

 

Link: Bass v. Portfolio Recovery Associates, LLC, (N.D. Ill., Aug. 22, 2018)

PRA, a debt collector, sent two letters to the debtor offering to settle the debt at a discounted amount that stated “[w]e are not obligated to renew this offer.” PRA’s second letter contained essentially the same settlement offer as its first letter but with a later deadline. The debtor claimed this language violated 15 U.S.C. § 1692e of the Fair Debt Collection Practices Act which forbids debt collectors from threatening to take any action that cannot legally be taken or that is not intended to be taken or using of any false representation or deceptive means to attempt to collect any debt.

Judge Andrea R. Wood rejected this argument, finding that a debt collector repeating the same settlement offer while also clearly indicating that it is not obligated to renew the offer does not remove it from the safe harbor language the Seventh Circuit espoused in Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769, 776 (7th Cir. 2007). There, the court reasoned that “[t]he word `obligated’ [was] strong and even the unsophisticated consumer [would] realize that there [was] a renewal possibility but that it [was] not assured.” Id.

As for the § 1692f claim, the court held that to allow his claim under § 1692f to proceed based on the same conduct that falls within the § 1692e safe harbor would undermine the Seventh Circuit’s solution in Evory. The court briefly addressed PRA’s motion for the Plaintiff to pay its fees under 28 U.S.C § 1927 and concluded the conduct by Bass’s counsel did not reach the level of being unreasonable and vexatious to justify a sanction of fees.

 

§ 1692a(6): Hughes v. United Debt Holding, LLC, Dist. Court, ND Illinois 2018

 

Link: Hughes v. United Debt Holding, LLC (N.D. Ill., Aug. 20, 2018)

Magistrate Judge Maria Valdez rejected a motion to dismiss and found that a debt purchaser and a payment processor  can both qualify as a debt collector under the Fair Debt Collection Practices Act. As to UDH, which argued it was only a “debt buyer,” the court looked to the standard set forth in McMahon v. LVNV Funding, LLC, 301 F.Supp.3d 866, 884 (N.D. Ill. Mar. 14, 2018):

UDH qualifies as a debt collector under the “principal purpose” definition because it “uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts.”

“[e]ven if the second prong [of the FDCPA’s definition of debt collector] . . . require[s] interaction with debtors, the plain language of the first prong does not.”

As to Payment Management Services USA, LLC, which argued it was merely a payment processor, the court found that the confusing letter allowed suit:

While UDH is listed as the current creditor, the letter is unclear on whose behalf the payment was being collected. Id. (stating “Pursuant to our . . . client’s approval we are authorized to offer you a settlement . . .” without identifying the client by name). Without more, Plaintiff may have reasonably believed that PMS was collecting the outstanding debt, not simply processing it. Construing all reasonable inferences in Plaintiff’s favor, the letter does not completely foreclose the possibility that PMS could satisfy the definition of “debt collector” under the FDCPA.

§ 1692c(a)(2): Holcomb v. Freedman Anselmo Lindberg, LLC (7th Cir. 2018)

 

Link: Holcomb v. Freedman Anselmo Lindberg, LLC (7th Cir., 2018)

In Holcomb, the Seventh Circuit held that where a debtor’s attorney does not file an appearance with the court, the debt collector attorney does not run afoul of the FDCPA where it serves a court paper upon a debtor directly as required by Illinois Supreme Court Rule 11. The court discounted the fact that the debtor’s attorney had physically appeared at two court dates and that the orders from those dates indicated that the attorney was present on behalf of the debtor. This narrow decision is explicitly restricted to the Rule 11 context.

§ 1692c(a)(2) of the Fair Debt Collection Practices Act (“FDCPA” or “the Act”), which prohibits a debt collector from directly contacting a debtor who is represented by counsel absent “express permission” from “a court of competent jurisdiction.” 15 U.S.C. § 1692c(a)(2).

In sum, because Finko had not filed a written appearance in the collection action, he was not Holcomb’s attorney of record for purposes of Rule 11’s service requirements. So Rule 11 expressly permitted—indeed required—Freedman to send the default motion directly to Holcomb. The law firm’s compliance with that rule did not violate § 1692c(a)(2). Accordingly, we REVERSE and REMAND for entry of judgment in Freedman’s favor.