Fair Debt Collection: 7.2.2.11 Other Misrepresentation of Debt’s Character or Legal Status
FDCPA § 1692e(2)(A) prohibits false statements as to a debt’s character or legal status.
FDCPA § 1692e(2)(A) prohibits false statements as to a debt’s character or legal status.
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FDCPA § 1692e(3) prohibits a debt collector from even indirectly impersonating an attorney.208 Non-attorney collection agencies can violate FDCPA § 1692e(3) by using a name that implies they are attorneys, such as “Lawyers Collection Services,”209 or by creating a fake law firm website.210 It can also be a FDCPA § 1692e(3) violation where a non-attorney collection agency’s phone calls have a caller ID of “law office.”
With the possible exception where the attorney clearly discloses it has not reviewed the consumer’s account,222 FDCPA § 1692e(3) is violated where a collection letter is on an attorney’s letterhead or is signed by an attorney, but the attorney has not meaningfully reviewed the account.
Not every form letter suggests it is from an attorney, and lawyers may defend a FDCPA § 1692e(3) claim by arguing that the letter does not indicate it is from an attorney. This argument will not get the collector far if there is the mention of “attorney,” “law offices,” “law firm” or the like on the letterhead, in the signature block, or in the address where payment should be made.242
The Second Circuit, in Greco v. Trauner, Cohen & Thomas,247 provided an exception that allowed a lawyer to mass mail duns without any evaluation of the accounts.
FDCPA § 1692a(6) provides that the FDCPA applies to a creditor that uses a name other than its own, so as to indicate that a third person is collecting or attempting to collect the debt owed the creditor.257 Where in fact the creditor sends out a collection letter that is on law firm letterhead, does the FDCPA then apply to the creditor and has the creditor violated section 1692e(3)?
FDCPA § 1692e can be violated where a collector improperly serves a court summons or complaint and misrepresents in the affidavit of service that it was properly served—also known as sewer service.1046 FDCPA § 1692a(6)(d) exempts from the FDCPA process servers “serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt.” Courts hold that this exemption does not apply to a process server’s filing of a false affidavit.1047
A complaint that misrepresents that the collector has a valid lawsuit against the consumer can violate FDCPA § 1692e. Filing a time-barred complaint as a FDCPA § 1692e violation is examined at § 7.4.9.3, supra. Res judicata may also bar a collection suit, and suing the consumer despite that can be deceptive.1062
Collectors may sue the consumer on a legal theory inapplicable to the facts pled in the case. This can be the result of sloppiness where the collector is filing thousands of complaints on a cookie-cutter basis without professional attention of an attorney. Or the practice can be deliberate because the inapplicable theory authorizes a larger recovery (such as attorney fees or prejudgment interest) and the collector assumes it will prevail by default on the inapplicable theory.
A collection lawsuit can violate FDCPA § 1692e where it seeks amounts the plaintiff is not entitled to,1084 including stating an amount due that includes amounts that the plaintiff might have a right to in the future, but is not yet entitled to.1085 A collector violates FDCPA § 1692e where, in litigation, it alleges the plaintiff is owed attorney fees to which the collector is not entitled,1086 where it alleges it is owed interest charges not
This subsection often overlaps with § 7.4.10.4.2, infra, on filing lawsuits without evidence of the claims in the lawsuit. In mass filing of collection lawsuits, collection firms may file complaints without meaningful review by an attorney or without possessing evidence to support the claim. These violations are distinct.
Debt buyers may file suit with insufficient evidence to prove their case, on the assumption they will win by default. If the consumer contests the case, the debt buyer may or may not have any access to account-level business records on the debts that they buy.1105 It may be a factual issue whether a debt buyer has or can obtain (from the original creditor or a prior debt buyer) the additional information and documentation.
Debt collection litigation often includes affidavits submitted by the collector—attached to the complaint, used to introduce business records, and in support of summary judgment. Even where the collector has prevailed in its collection lawsuit, misrepresentations in affidavits may be actionable under FDCPA § 1692e.
In seeking to win their case without producing evidence, collectors may send the consumer a request for admissions. The consumer’s failure to timely respond, under applicable court rules, may be treated as admitting to all the statements in the request.
Since collectors often do not want to try a case, but are litigating on the expectation of a default judgment,1134 they may engage in a number of deceptive practices to obtain a default judgment.
It is a FDCPA § 1692e violation to agree to a settlement as full satisfaction for a judgment debt, but then continue pursuing postjudgment creditor remedies.1142 Also deceptive is to continue to garnish or threaten garnishment even after prior garnishments had satisfied the judgment.1143 Similarly it is a FDCPA § 1692e violation to collect on a judgment after it has been vacated.1144 After the judgment has been vacated, it also violates FDCPA
Exemptions may limit a collector’s ability to garnish consumer income or assets or seize consumer property, and representations can be deceptive where they suggest a creditor can seize more than exemption law allows.1148 State law may provide for differing amounts that can be garnished depending on the consumer’s status (such as head of family).
Collectors can violate FDCPA § 1692e by misrepresenting to the consumer the collector’s rights in pursuing postjudgment remedies. It can be deceptive to inform the consumer that joint bank accounts are subject to complete seizure when they are not.1155 It can also violate FDCPA § 1692e where the garnishment order sent to the consumer’s employer and/or to the consumer contains a misrepresentation of state law garnishment requirements.1156
It can be deceptive and FDCPA § 1692e may be violated in a variety of circumstances where a collector misrepresents some aspect of a homeowner’s legal rights as to mortgage servicing or foreclosures. These include where:
Mortgages may involve multiple entities, including an originating creditor, an entity owning the loan (often a trust), one or more entities servicing the loan, and a foreclosure attorney.1207 This complexity may lead to confusion and to representations and practices violating FDCPA § 1692e.
Mortgage servicers and collectors may be sloppy in their paperwork and accounting regarding mortgage debt.
Note that this Regulation F provision has expired. Ensure that any claim brought under the expired Reg. F § 1006.9 dates back to the effective period of these regulations (discussed below). FDCPA claims must be brought within the statute of limitations as discussed at § 12.3, infra.