debt collection

A Cautious Win for Creditors and Debt Collectors

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insideARM.com ran a story recently about an FDCPA case that wasn’t decided in favor of the consumer.

The meat of this story is about how, exactly, the words if and unlessfunction in a collection letter.

In one case, Camacho v. Bridgeport Fin., Inc., Bridgeport Financial did not prevail in the FDCPA lawsuit brought against it by a consumer because the language in its initial contact made it sound like the consumer must dispute the debt in writing: “Unless you notify this office in writing within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.”

In another case, Riggs v. Prober & Raphael, Prober & Raphael may have gotten lucky. The language they use isn’t quite so definitive:

“Please be advised that if you notify my office in writing within 30 days that all or a part of your obligation or judgment to FIRESIDE BANK is disputed, then I will mail to you written verification of the obligation or judgment and the amounts owed to FIRESIDE BANK. In addition, upon your written request within 30 days of receipt of this letter, I will provide you with the name and address of the original creditor, if different from the current creditor.

If I do not hear from you within 30 days, I will assume that your debt to FIRESIDE BANK is valid.”

That unless in Bridgeport’s letter sounded, at least to the Ninth Circuit Court, like it was a requirement – something that the Fair Debt Collection Practices Act actually doesn’t intend. The FDCPA does not make written communication the only communication a consumer can use to dispute a debt. Look at section 1692g(a)(3-4):

§ 809. Validation of debts

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—

…

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector

Pay particular attention to that if in (4). And for the Ninth Circuit Court, that’s where Prober & Raphael got it right and stayed on the right side of the FDCPA. The word if doesn’t sound like it’s dictating the terms of the communication to the consumer.

As much as possible, our communications to debtors should adhere to the FDCPA, especially when the FDCPA’s language can protect an agency. We can still be sued for following the FDCPA – being compliant isn’t a shield against lawsuits. But adhering to the FDCPA can protect us in court.

In this specific case, though… It’s too soon to tell. Basing an argument off of something as slippery as the difference between if and unlessmakes us a little anxious. What thoughts do you have?

Attorney John Rossman on CFPB Supervision: An Interesting Take

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John Rossman’s podcasts on insideARM.com are always informative – but his recent one on CFPB oversight of the debt collection industry is definitely worth your time. In the wake of little oversight from the FTC, we’re about to see what it’s like with the New Boss. And like any new employee, the New Guy always seems to over-perform his first few months on the job.

Are we suggesting that oversight is totally unwelcome? Not at all – and neither is Rossman. But the potential danger may cost and confusion, something we all should be mindful of.

Shifting Reliance on Revolving Credit

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Two articles from vastly different zip codes on the Internet recently caught our attention here at Monarch:

From SmartMoney.com: The Best Credit Cards of 2012 and From the Huffington Post: Ask the Readers: Which Credit Cards Do You Use?

As we appear to be slowly limping out of this recent recession, it’s interesting to note the tenor of story showing up about credit cards. Three years ago, it seemed what we mostly heard was: use cash, never credit. If you don’t have the money in hand at that moment, it’s probably best not to buy.

Now, credit is sexy again. Major issuers are reporting more declines in card charge-offs and delinquencies. But are we in danger, then, of making everything just like it was right before everything went so wrong?

The Line Between PR and Profit: Working with Creditors

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insideARM.com has been paying a lot of attention to creditors lately.

It’s a complicated relationship. On one hand, third-party agencies rely on creditors for accounts, so rocking the boat may not always be in an agency’s best interest. Requesting indemnification for any erroneous information seems like an easy solution – until you realize that there are likely many agencies willing to roll the dice and not require any indemnification.

On the other hand, though – collectors are in a tough spot. They get blamed for all evil-doing when it comes to calling consumers and asking payment for debts owed.  What is almost never talked about is that these companies are hired by someone – a creditor – and the creditor plays a much bigger role in the behavior of debt collection agencies than most people realize.

Monarch would love to hear some of our colleagues’ feedback on how they deal with the line between PR and Profitability. What are some ways to handle the creditor relationship?