Recent Developments That All DBA International Debt Buying
Members Should Know
Recent regulatory and legal developments could affect the manner in which your company collects on purchased receivables. While each of these developments are limited to a particular state or jurisdiction, DBA International advises all members to review your business practices and the practices of law firms retained to litigate your accounts and discuss with legal counsel any potential impact on your company as a consequence of these actions.
Convenience Fees (NC)
On June 12, 2014, the North Carolina Department of Insurance issued a memorandum indicating that all licensed collection agencies are prohibited from charging convenience fees to North Carolina consumers pursuant to section 58-70-115(2). “Convenience fees” would include any extra charge based on the method of consumer payment such as credit card, phone, check, etc.
Section 58-70-115(2) is similar to the provision contained in 15 USC 1692f (1) of the Fair Debt Collection Practices Act (FDCPA). Both provisions essentially indicate that it is an unfair practice to collect any interest, fee, charge, or expense unless legally entitled to such payment. While the Department of Insurance acknowledges that convenience fees may be permissible in certain scenarios under North Carolina law, they make it clear that in the case of licensed collection agencies such practice is absolutely prohibited “under any circumstances” (emphasis added).
Meaningful Involvement (NJ)
On June 30, 2014, the United States District Court for the District of New Jersey in the case Daniel Bock, Jr. v. Pressler and Pressler, LLP found that the law firm violated 15 USC 1692e of the FDCPA concerning false and misleading representations when it signed, filed, and served a collection-related complaint against the plaintiff where the complaint was prepared by non-attorneys followed by a limited attorney review.
The court based its analysis on case law that interprets 15 USC 1692e to require “meaningful involvement” by attorneys prior to the bringing of suit. While the court does not establish a standard for attorney review, it does state the following:
“The case law is sparse, and it is possible for reasonable people to disagree as to what constitutes reasonable attorney review. But whatever reasonable attorney review may be, a four-second scan is not it.”
Venue (IN, IL & WI)
On July 2, 2014, the United States Court of Appeals for the 7th Circuit in the case Mark Suesz v. Med-1 Solutions, LLC found that a debt collector violated 15 USC 1692i of the FDCPA concerning the requirement that collection lawsuits (not involving real property) be brought in the “judicial district or similar legal entity” in which the consumer (1) signed the contract or (2) resides. In Suesz, the court concluded that the statutory wording “judicial district or similar legal entity” means the “smallest geographic area that is relevant for determining venue in the court system in which the case is filed” (emphasis added).
Based on the facts in this case, it was determined that when the State of Indiana divided a county court into smaller township courts, the “judicial district” was the township court covering the geographic area where the consumer signed the contract or resides. Notably, this decision reversed a prior 7th circuit court decision where the court found that a county court in the State of Illinois that was subdivided into smaller venues did not result in separate judicial districts.
With this reversal, the court declined to make the ruling prospective only. Consequently, this case opens the possibility of legal liability for debt collectors that received a judgment in any state that encompasses the 7th circuit (Indiana, Illinois, and Wisconsin) if the judgment was not granted by the court having venue over the smallest geographic area in the court system in which the case was filed. It also establishes judicial precedent which may be adopted by courts outside of the immediate states affected by the ruling.
July 11, 2014