COLLECTION LETTER MAY HAVE IMPERMISSIBLY IMPLIED DISHONESTY AND BAD INTENTIONS FOR NOT PAYING A DISHONORED CHECK
The United States Court of Appeals for the Seventh Circuit recently held that a debt collector may have violated the federal Fair Debt Collection Practices Act by sending a collection letter implying that the debtor was dishonest and had bad intentions because she failed to pay for a dishonored check. McMillan v. Collection Professionals, Inc., No. 05-2745, 2006 WL 1867483, *4-7 (7th Cir. July 7, 2006). In that case, a debt collector sent a dunning letter demanding payment for a dishonored check. The letter stated, in pertinent part:
YOU ARE EITHER HONEST OR DISHONEST.
YOU CANNOT BE BOTH
Your creditor believed you to be honest when credit was extended.
The injustice of permitting this account to become past due and then ignoring all requests for payment casts a doubt of good intentions.
The debtor sued the debt collector on the theory that the letter (i) used false, deceptive or misleading representations or means in violation of Section 1692e, (ii) was an attempt to disgrace her in violation of Section 1692e(7) and (iii) employed unfair or unconscionable means to collect a debt in violation of Section 1692f.
The district court dismissed the debtor’s claims. According to the court of appeals, however, there was no evidence in the record as to why the debtor’s check did not clear or that the creditor had prior communications asking for payment that were ignored. The district court also indicated that many individuals who write dishonored checks are not necessarily dishonest and do not necessarily have bad intentions and there are many other reasons why a check may be dishonored. For these reasons, the court of appeals found that the debtor stated claims upon which relief could be granted under Sections 1692e, 1692e(7) and 1692f of the FDCPA, and therefore reversed the district court’s dismissal.
Charles Gall and Michael Tomkies
COLLECTION ACTION MAY BE FILED WITHOUT IMMEDIATE MEANS OF PROVING DEBT
The United States Court of Appeals for the Sixth Circuit recently held that a debt collector and its law firm did not violate Sections 1692d and 1692e(10) of the federal Fair Debt Collection Practices Act by filing a collection action without the means of proving the debt collection claim at the time of filing. Harvey v. Great Seneca Fin. Corp, No. 05-3970, 2006 WL 1836066, *6, 8 (6th Cir. July 6, 2006). In that case, a debt collector and its law firm filed a complaint against a debtor to collect allegedly owed debts. Attached to the complaint were two exhibits that listed the account number, the balance and the statement closing date for two separate accounts. The collection suit was later voluntarily dismissed after the debtor sought discovery concerning the ownership of the debts in question, the origination of the debts and their amounts.
The debtor sued the debt collector and the law firm for filing the complaint. The debtor alleged that the by filing the complaint without the means of proving its claims, the defendants violated (i) Section 1692d of the FDCPA, which prohibits any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt and (ii) Section 1692e(10), which prohibits the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning the consumer.
The district court, however, held that the debtor’s allegations failed to state a claim under the FDCPA and the court of appeals agreed. The court of appeals indicated that Section 1692d of the FDCPA prohibits tactics intended to embarrass, upset or frighten a debtor and that are likely to cause the suffering and anguish that occur when a debt collector attempts to collect money that the debtor, through no fault of his own, does not have. According to the court of appeals, the single filing of a debt collection lawsuit is not such a tactic, and therefore does not violate Section 1692d. The court of appeals also indicated that the defendants did not violate Section 1692e(10)’s prohibition against misrepresenting the legal character of the debts because they never implicitly represented that by filing the complaint that they had in hand the means to prove their claims. Furthermore, the court indicated that a debt may be properly pursued in court even if debt collector does not yet possess adequate proof of its claim.
Charles Gall and Michael Tomkies