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The Fair Debt Collection Practices Act is designed to protect consumers from abusive or harassing conduct, false or misleading statements or unfair act by Debt Collectors.
What is “false and misleading” under the Fair Debt Collection Practices Act?
As usual, we start with the statutory definition. Thanks to LII.
15 U.S.C. §1692e says
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.
(2) The false representation of—
(A) the character, amount, or legal status of any debt; or
(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.
(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.
(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.
(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to—
(A) lose any claim or defense to payment of the debt; or
(B) become subject to any practice prohibited by this subchapter.
(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.
(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.
(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.
(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.
(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.
(13) The false representation or implication that documents are legal process.
(14) The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.
(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.
What does this mean for you?
Short version is that they cannot lie about anything. They can’t tell you that you owe money if you don’t. They can’t tell you that you will go to jail over a regular old debt, (though that might be abuse under the act, also), and they can’t tell you anything untrue, generally.
Lets talk about some of the specifics.
§1692e says they cannot misrepresent the amount, character or status of the debt. Examples of this are representing that the debt is still owed if you have already won the collection lawsuit, or if you have filed for Bankruptcy. In fact, there is caselaw that says that collecting on a debt Discharged in Bankruptcy is a violation, Turner v J V D B Assocs Inc, 330 F. 3d. 991 (7th Cir. 2003). Note that there are defenses that are winnable for the debt collector. And certainly, a junk debt buyer who has sued and lost and still sends letter a- knows you have a lawyer and b-knows they lost and that they are collecting a debt the judges says you don’t owe.
§1692e says that they cannot say they are an attorney if they are not. Examples of this are when the letter says it comes from an attorney’s office, but the attorney never looked at the letter or the file. But they can put language in the letter that says that no attorney has looked at the file, and that (apparently) makes it all OK. (I don’t agree, but then I am not a judge.).
§1692e says that they can’t tell you that you will go to jail or that they can garnish you if they can’t. Examples of this are where they don’t have a judgment, and they don’t sue. There are lots of debt collectors who just simply don’t sue. They aren’t lawyers (note the theme from above), and they don’t hire lawyers. Also, you can’t go to jail for the non-payment of most debts. There are exceptions. Some of the exceptions are for checks that are drawn on closed or overdrawn accounts (commonly called bad checks). But a credit card that you didn’t pay, or a payday loan that you did not pay is NOT a criminal violation, and you cannot go to jail. In fact, for payday loans, it is a violation of the Virginia Payday Lending Act for the payday lender to tell you that you can go to jail for writing a check that bounces (note: a closed account is different- you can go to jail for that.)
§1692e says that they cannot communicate false credit information. This dovetails into the Fair Credit Reporting Act. This includes if you dispute the debt, and they don’t bother to tell anyone that you disputed, but somehow, they say that you still owe the money. There is case law on this point also. If they update your credit file, they are required to identify your account as disputed.
§1692e says they can’t simulate court documents. This essentially means they can’t send you something that LOOKs like a lawsuit if it is NOT a lawsuit.
§1692e says they can’t use false or misleading means to collect. This applies to EVERY communication. Examples of this are when they talk to your neighbors or co-workers (which may violate other provisions also), or tell you something that is not true. This may be a redundant section, but there are some things that fall into the grey areas that are caught here.
§1692e requires that the debt collector tell you that they are debt collectors. Often they will forget to use this language in voice-mails. A voice mail left on your voice mail that just says “we are calling about an important business matter, please call us back at phone number ___” There is actually a name for this syndrome by debt collectors, this violation is called a Foti (after Foti v. NCO) violation, though I think it should be renamed a Edwards (after Edwards v. Niagra Credit (11th Cir)) violation.
§1692e dovetails with 1692e. It says they can’t simulate legal process. That means that they can’t make a document look like a summons or warrant (civil or criminal).
If they are a lawyer or they do sue, §1692e would come into play. This subsection says that if they send you a summons or warrant, they can’t tell you that its NOT a court document. Here’s where I have some issues, and we may see a long blog post about this particular issue. I am not sure that it is (or isn’t) OK for them to sue you (in Virginia, the form is called a Warrant in Debt) and then tell you that you don’t have to show up for court. Technically, this is half true. If you owe the money, and you don’t dispute anything, and you are just going to tell the judge that you owe the money, then coming to court for that is a waste of time. The judge will enter judgment against you. If you don’t show, the judge will enter judgment against you. So what’s the difference? I think that if the collector tells you that you don’t have to show, they should also HAVE to tell you that if you don’t show that a judgment will be entered against you. What if they agreed to a payment plan? Did they agree to continue the case and not enter the judgment? If not, when they agreed to the payment you may end up with a judgment so they can enforce your payment plan. That MAY be a violation. I think it falls into a better violation of Unfair and Deceptive act.
Stay tuned and come visit us NEXT WEEK when we talk about UNFAIR AND DECEPTIVE collection practices.
If you have been impacted by anything we mentioned here, you can make an appointment to see us.
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