CFPB Files Amicus Brief in FDCPA Appeal

This month, the Consumer Financial Protection Bureau (CFPB) started the new year by filing an amicus brief in an ongoing appeal in the First Circuit focusing on an interpretation of the Fair Debt Collection Practices Act (FDCPA), specifically 1692e. While FDCPA litigators await a decision on this issue, debt collectors can use this case as a reminder to understand how their technologies, like bankruptcy scrubs and letter logic, can prevent litigation like this case.

Read the full article.

About the author
Justin T. Bradley

Transcript

 Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

With a focus on innovation, collaboration and client service. We are committed to delivering exceptional value to our clients and to the communities we serve. And now our latest episode.

This month, the Consumer Financial Protection Bureau started the new year by filing an amicus brief in an ongoing appeal in the First Circuit focusing on an interpretation of the Fair Debt Collection Practices Act, specifically 16 92e. While litigators await a decision on this issue, debt collectors can use this case as a reminder to understand how their technologies, like bankruptcy scrubs and letter logic, can prevent litigation like this case.

In the case, Carra skiyo v. C I C A Collection Agency, the debt collector sent a letter to the plaintiff during the pendency of the plaintiff's bankruptcy that stated 1) the debt was due and owing and 2) the plaintiff could be sued. The debtor filed suit against the collector, arguing that the letter violated 15 U.S. Code § 16 92e because these statements were false due to the status of the debtor's bankruptcy at the time the letter was mailed.

C I C A contended that the claim under 16 92e was precluded as it originated from a violation of the Bankruptcy Code.

The district court took judicial notice of the bankruptcy proceedings of the debtor and observed the fact that the debt collector was not provided notice of the bankruptcy filing prior to sending the notice. In dismissing the case, the court carved out an exception to 16 92e that the statement could not have been a false representation because it requires knowledge of the misrepresentation to be intentional. Additionally, the district court noted that the consumer had knowledge of the bankruptcy and could have notified the debt collector prior to the notice, placing the burden on the debtor. Because the court dismissed the claim, it declined to rule further on the bankruptcy preemption.

The Consumer Financial Protection Bureau asserts in its amicus filing that the district court erred by introducing a knowledge or intent of wrongdoing requirement into 16 92e. The Bureau’s interpretation of 16 92e’s prohibition on debt collectors using “any false, deceptive, or misleading representation or means in connection with the collection of any debt” applies whether the representation is intentional or unintentional, which the Consumer Financial Protection Bureau argues is the prevailing view of the federal appellate courts in eight other cases.

Further, the Bureau highlights that the Fair Debt Collection Practices Act includes a bona fide error defense in 16 92k(c) to help debt collectors avoid liability if it can show “by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” 

While the Consumer Financial Protection Bureau introduced the bona fide error defense as proof of Congress's intent for the Fair Debt Collection Practices Act to cover unintentional violations, this filing should be viewed as an important reminder for compliance professionals at Fair Debt Collection Practices Act regulated companies to:

Ensure policies and procedures to avoid violations are in place and up to date;
Understand the capabilities and limitations of technology solutions like bankruptcy scrubs, and how data from those products interact with your letter and call logic; and
Test the adequacy of these procedures and systems regularly as part of a robust compliance management system.

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit The Show Notes, where you can find links to related resources mentioned today. The Show Notes also have more information about our attorneys who provided today's insights, including ways to reach out to them.

Don't forget to subscribe via your podcast player of choice so that you never miss an episode. Thank you again for listening.