The Fair Debt Collection Practices Act (FDCPA) offers potent remedies against abusive debt collection tactics. Often, your loan servicer and foreclosure law firm will claim not to be “debt collectors” under the Act, or will claim that their activities are in connection with foreclosing a security interest, and not in collecting a debt. The courts are not uniform in their treatment, but servicers can be subject to the FDCPA when they collect or attempt to collect debts they obtain after the loan is in default. And if an entity hired by the mortgage company or servicer to pursue a foreclosure ALSO demands payment or otherwise attempts to collect the debt underlying the deed of trust, that entity may be a covered debt collector subject to the entirety of the FDCPA. This has been applied to law firms. See Reese v. Ellis, Painter, Rattree & Adams, L.L.P. 2012 WL 1500108 (11th Cir. 2012); Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373 (4th Cir. 2006); Kaltenbach v. Richards, 464 F.3d 524 (5th Cir. 2006).
In Arizona, Judge Silver recently allowed a Complaint past dismissal on allegations that Tiffany & Bosco violated the FDCPA:
Similar to the letter sent to the Reeses, T&B’s letter to Plaintiff appears to have had
two goals. First, it was an attempt to collect a “debt” as evidenced by the listing of the
various alternatives such as payment of the “total amount past due in one lump sum by a
specified date.” (Doc. 14-1 at 3). Second, it was to inform Plaintiff that Bank of America
would be enforcing its security interest. The letter’s reference to the foreclosure did not
automatically take it outside the FDCPA. So holding would “exempt from the [FDCPA] any
communication that attempts to enforce a security interest regardless of whether it also
attempts to collect the underlying debt.” Id. at 1217. Such a rule would “create a loophole
in the FDCPA” that would allow “a lender (or its law firm) [to] harass or mislead a debtor
without violating the FDCPA,” provided the debt was secured. Id. “That can’t be right. It
At the oral argument, T&B took issue with this reasoning and argued it was incorrect
that its February 11, 2011 was an attempt to collect a debt. According to T&B, its letter
contained no explicit demand for payment and, therefore, the letter fell outside the FDCPA.
There are two clear flaws in this argument. First, given the procedural posture of the case,
the Court must construe the facts in the light most favorable to Plaintiff. Based on this
requirement, it is possible to read T&B’s letter as containing an explicit demand for payment.
(Doc. 14-1 at 3) (“You would pay the total amount past due in one lump sum by a specified
date.”). And second, the FDCPA governs communications “in connection with the collection
of any debt.” 15 U.S.C. § 1692e. There is no statutory requirement that only explicit
demands for payment qualify as communications covered by the FDCPA. In fact, there is
case law establishing the FDCPA applies to communications which do “not explicitly ask
for payment,” but merely “offer to discuss . . . repayment options.” Gburek v. Litton Loan
Servicing LP, 614 F.3d 380, 386 (7th Cir. 2010). Viewing the complaint’s allegations in the
light most favorable to Plaintiff, T&B’s February 11, 2011 letter was a communication in
connection with an attempt to collect a debt. The complaint further alleges that
communication contained a false statement. This states a claim under the FDCPA.
O’Quin v. Bank of America, N.A., No. CV-12-00744-PHX-ROS, (Doc. 33)(Filed Sept. 10, 2012). Full Order here: