Fourth Circuit rejects arguments that FDCPA protections apply only if debtor disputes the debt

The federal Fair Debt Collection Practices Act provides a host of protections against harassment and abuse by debt collectors. One provision permits the debtor to dispute the debt, a step that requires the debt collector to verify the debt before continuing collection activities. Another provision prohibits the collection of debts using false or misleading representations or means to collect. Late last week, the Fourth Circuit rejected the argument that a debtor must avail herself of the dispute provision in order to enjoy the FDCPA's other protections. Although this point should seem obvious, this is not the first time an FDCPA defendant has tried to argue that a debtor must dispute the debt to bring claims under other FDCPA provisions, so it's good to see an opinion squarely rejecting the theory.

On top of the fact that the statutory language does not support the theory, the facts of the case illustrate why the theory makes little sense. Diane Russell received a letter from Absolute Collection Services about an unpaid medical bill, and three weeks later, she paid the creditor in full. Nonetheless, Absolute continued to pursue her for months after the payment. Absolute eventually threatened to report the supposedly unpaid debt to the credit bureaus and thereby damage Russell's credit. Russell's problem was not that she didn't owe the debt -- it was that Absolute continued to go after her after she paid it. So disputing the validity of the debt within 30 days of the initial collection letter (as the statute allows) wouldn't have made sense. The Fourth Circuit wisely held that Russell did not need to take this step, and it affirmed a jury verdict in Russell's favor.

The case is Russell v. Absolute Collection Services.

Should HIPPA Block Doctors' Offices From Posting Baby Pictures? It Does.

by Jeff Sovern

You know those bulletin boards you used to see at some doctors' offices with snapshots of babies they had either treated or delivered?  Well, last week, the Times ran an article, Baby Pictures at the Doctor’s? Cute, Sure, but Illegal about how display of the photos where patients and others could see them violates HIPAA, the federal law protecting patient privacy.  Today the Times published my letter responding to the article.  It says, in part:

You report that federal privacy laws block doctors from posting pictures of patient babies where others can see them. Surely parents sending baby pictures to physicians do not expect the photos to be secret.

The law should be amended to permit their posting, unless parents request that they be kept private. This is the type of regulation that fuels claims that government is the problem.

If you find this interesting, the other letters on the matter are worth reading also.

Ron Elwood on Payday Lending

Ron Elwood has written The Verdict Is in: Payday Lending Is Guilty as Charged, Clearinghouse Review: the Journal of Poverty Law & Policy.  Here's the abstract:

The payday loan is symptomatic of the failure to provide access to reasonably priced credit. By understanding the fallacies in the arguments used to justify payday loans, advocates can help reform laws so that payday-loan borrowers do not fall into a debt trap. Advocates and policymakers might also set the stage for a new system that offers short-term, small-amount credit at reasonable terms.

(HT: Larry Kirsch)

Sunday Times Magazine Story: Paper Boys: Inside the Dark, Labyrinthine and Extremely Lucrative World of Consumer Debt Collection

Here.

CFPB fines USA Discounters, retail chain that preys on servicemembers

A few weeks ago, we flagged a Post/ProPublica investigative report about a retail chain that takes advantage of servicemembers' transience to trap them in a cycle of debt.

Now, as The Hill reports, the CFPB has moved against the retailer, USA Discounters, fining the chain approximately $400,000 (consisting of $350,000 in restitution and a $50,000 fine) for a practice of selling its customers "protections" that are either already guaranteed by law or that the store never provides.

This is another example of the CFPB's laudable pace of activity (which we've noted here), but it's also noteworthy because it highlights a gap between some of the most exploitative consumer practices and what federal regulators are in a position to police. What (rightfully) drew journalistic attention here -- the venue provisions of USA Discounters' contracts that forces servicemembers to face litigation in southeastern Virginia no matter where in the world they are stationed -- was different than what caused the company legal trouble with the CFPB this week. Although misleading consumers into buying something that they don't need is obviously a problem also, the venue trick appears to do more harm.

Call for consumer law papers -- deadline is tomorrow

I have been asked to post a reminder that if want a chance to present your paper on consumer law at the Association of American Law Schools 2015 annual meeting in January, you must submit it by tomorrow. Here ya go:

AALS Section on Commercial and Related Consumer Law

Call for Papers

Emerging Scholars in Commercial and Consumer Law

The AALS Section on Commercial and Related Consumer Law is pleased to announce a Call for Papers for its program during the AALS 2015 Annual Meeting in Washington, DC.  The program is tentatively scheduled to take place on Sunday, January 4, 2015 from 10:30am-12:15pm.

 As we all know, no area of the law is ever static.  New cases and issues arise that inform and challenge our thinking about existing laws and policies.  Such is the case for commercial and consumer law.  Whether concerning issues related to financial products, secured lending, arbitration, and the like, commercial and consumer law continue to evolve.  Central to this evolution is the emergence of new scholars who contribute their voices and perspectives to these areas of the law.  This panel will provide the valuable opportunity for pre-tenured professors to present and discuss their work with others in the field.  Panelists are welcome to discuss any topic related to commercial and/or consumer law.  Program and eligibility details are below. 

Business Lawyer Update on Automotive Consumer Finance

Kevin M. McDonald of VW Credit, Inc. and Kenneth J. Rojc of Nisen & Elliott, LLC have written Automotive Finance: Shifting into Regulatory Overdrive, 69 Bus. Law. 599 (2014).  Here is the abstract:

As part of the Annual Survey of the American Bar Association Section on Business Law, this article examines the impact of the Dodd-Frank Act on the auto finance industry. Regulation of auto finance is being reshaped at the federal level by the Bureau of Consumer Financial Protection ("CFPB"), which has oversight over many of the activities, products, and services that auto finance companies offer. Other federal regulators, including the Federal Trade Commission ("FTC"), with its enforcement authority over deceptive trade practices and debt collection activities, and the Department of Justice ("DOJ"), which has increased enforcement of fair lending laws, also contribute to the reshaping. This year’s Annual Survey focuses on the most significant changes in the auto finance regulatory environment and review the impact of those changes on the life cycle of auto finance products from origination through servicing and collection.

Mass justice (or not) for future tort claimants

That's the topic of Future Claimants and the Quest for Global Peace, a new article by prolific law prof Rhonda Wasserman. Here's the abstract:

In the mass tort context, the defendant typically seeks to resolve all of the claims against it in one fell swoop. But the defendant’s interest in global peace is often unattainable in cases involving future claimants – those individuals who have already been exposed to a toxic material or defective product, but whose injuries have not yet manifested sufficiently to support a claim or motivate them to pursue it. The class action vehicle cannot be used because it is impossible to provide reasonable notice and adequate representation to future claimants. Likewise, non-class aggregate settlements cannot be deployed because future claimants will not have contacted attorneys whose participation is critical to those alternative methods of dispute resolution. In lieu of class actions and non-class aggregate settlements, this Article proposes a hybrid public-private claims resolution process designed to provide many of the benefits of global peace, while preserving the constitutional rights of future claimants and ensuring them fair compensation as their injuries manifest. Under this proposal, defendants would secure judicial approval of a fair and reasonable class action settlement of the current claims and then, through an extra-judicial process, make fair offers on comparable terms to future claimants as their claims mature, adjusted to take into account the time value of money and intervening changes in legal doctrine and medical advances. Since the class action settlement would not purport to bind the future claimants, their constitutional rights would be protected. And even though the future claimants would not be bound by the class action judgment nor obligated to accept the fair offers on comparable terms, they would have an incentive to accept them, rather than sue in tort, because they would be assured fair compensation without incurring the costs of litigation.

Payday lending and disparate effects on communities of color

Following up on Deepak's post earlier this week flagging John Oliver's hilarious takedown of the payday lending industry, check out this post from our friends at Public Justice, discussing the impact of payday lending on minority communities (which are disproportionately targeted by these businesses) and the pernicious business model that relies on trapping borrowers in a cycle of debt.

who is most likely take out that fateful first payday loan? Those living in neighborhoods with the highest numbers of payday loan stores: statistically, people of color. This means that, in the longer term—the circle of debt that traps so many—those who have the most access to payday loans will end up having a harder time paying their bills, putting off seeking medical care they need, and even losing their homes because they don’t have the financial resources.  - See more at: http://publicjustice.net/content/shark-week-let%E2%80%99s-look-closely-at-who%E2%80%99s-preying-on-whom#sthash.XkKNgtaO.dpuf

who is most likely take out that fateful first payday loan? Those living in neighborhoods with the highest numbers of payday loan stores: statistically, people of color. This means that, in the longer term—the circle of debt that traps so many—those who have the most access to payday loans will end up having a harder time paying their bills, putting off seeking medical care they need, and even losing their homes because they don’t have the financial resources.  - See more at: http://publicjustice.net/content/shark-week-let%E2%80%99s-look-closely-at-who%E2%80%99s-preying-on-whom#sthash.XkKNgtaO.dpuf

CFPB Fines Bait-and-Switch Mortgage Scheme $19M

...reports the National Law Journal, here (subscription required).

In a consent order (available here), the CFPB found that Amerisave Mortgage Corporation violated numerous federal consumer protection and lending-related laws by luring borrowers to its services with inaccurate rates then overcharging them and misleading them into paying fees they did not need to pay.

Of the money the company will pay under today's order, almost $15 million will be refunded to consumers; the remainder constitutes a fine. The company will also be required to reform its practices.