Debt Buyers + Collectors

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Last week, a district court in Nevada held that an undated, model form debt validation notice does not violate the Fair Debt Collection Practices Act (FDCPA). In Bergida v. PlusFour, Inc., the defendant sent a debt validation letter to the plaintiff that followed the model form provided by the Consumer Financial Protection Bureau (CFPB). The letter was not dated. The plaintiff claimed the letter violated FDCPA §§ 1692d, e, f, and g because she could not determine what date was “today” and “now,” which allegedly misled her about the status of the debt, confused her, made the letter seem illegitimate and suspicious, and caused her to spend time and money trying to figure out whether the debt was valid. When considering the defendant’s motion to dismiss, the court applied the least sophisticated debtor standard and found that the plaintiff failed to state a claim.

Earlier this year, a district court for the Middle District of Florida upheld a jury award of $225,000 in punitive damages in a debt collection case finding the defendant’s conduct “reprehensible” based on the physical harm caused to the plaintiff, the defendant’s indifference or reckless disregard of the harm it caused to the plaintiff, the plaintiff’s financial vulnerability, and the defendant’s repeated actions.

A U.S. District Court in the Western District of Wisconsin recently denied both the defendant and plaintiff’s summary judgment motions in a Fair Credit Reporting Act (FCRA) case, holding that the reasonableness of the defendant’s investigation of the plaintiff’s identity theft claim was a triable issue.

On October 12, the U.S. Court of Appeals for the Third Circuit issued a decision rejecting a district court’s finding that the so-called informational injury doctrine established Article III standing for the named plaintiff and putative class in a class action brought under the Fair Debt Collection Practices Act (FDCPA).

The Utah court of appeals has recently affirmed the dismissal of a plaintiff’s suit against a debt buyer based on its alleged failure to register as a collection agency prior to filing collection lawsuits. The court’s decision in Meneses v. Salander Enterprises LLC, not only holds that a violation of the Utah Collection Agency Act (UCAA) is not a deceptive or unconscionable act under state law, but also calls into question whether the UCAA ever even applied to debt buyers. As discussed here, the UCAA was repealed by the state legislature earlier this year, but cases asserting this theory of liability remain pending before state and federal courts.

Recently, the New Jersey appellate division held that a debt purchaser is not liable under the New Jersey Consumer Fraud Act (NJ Fraud Act) for failing to obtain a license under the New Jersey Consumer Finance Licensing Act (NJ Licensing Act). Although the decision is unpublished, it is still a welcome relief for purchasers of defaulted debt.

The Connecticut Banking Commissioner (Commissioner), acting through the Consumer Credit Division of the Department of Banking (the Division), conducted an investigation into the Law Offices of David M. Katz, discovering that in 2018 and 2019 the firm had engaged in in unlicensed collection activity involving about 10,000 Connecticut accounts with a total balance of $1.4…

In Moore v. Merchants & Medical Credit Corp., Inc., the plaintiff initiated litigation in state court alleging a violation of the Fair Debt Collection Practices Act (FDCPA) based on the defendant’s use of a letter vendor to send the plaintiff a demand. After removal, the U.S. district court for the Middle District of Pennsylvania found that the plaintiff failed to allege a harm sufficient to confer federal jurisdiction and remanded the case to the original Pennsylvania state court.

The Third Circuit Court of Appeals overruled a district court’s reading of an exception into §1681s-2(b) of the Fair Credit Reporting Act (FCRA) that would allow a furnisher discretion to refuse to investigate an indirect dispute it deems frivolous or irrelevant. Instead, the Third Circuit held that a furnisher must investigate even frivolous indirect disputes — disputes submitted by a consumer first to a consumer reporting agency (CRA) that are then transmitted by the CRA to the furnisher. A copy of the decision can be found here.

On August 24, the U.S. District Court for the Southern District of Georgia denied the defendant’s motion to dismiss claims asserted under the Fair Debt Collections Practices Act (FDCPA), holding that for claims based on collections suits, the statute of limitations does not begin to run until the consumer is served with a copy of…