Creditors and debt collectors may rest assured that they are not violating the Fair Debt Collection Practices Act (FDCPA) when sending debt-collection communications prior to any knowledge of a debtor’s bankruptcy filing. In Carrasquillo v. CICA Collection Agency, Inc., the district court for the District of Puerto Rico relied on a Third Circuit case when finding a debt collector lacked the requisite knowledge and intent to violate § 1692e of the FDCPA. Consequently, the court dismissed the debtor’s case with prejudice — barring the debtor from bringing this specific FDCPA claim against the debt collector again.

As background, the plaintiff did not notify the debt collector, CICA Collection Agency, Inc. (CICA), of his bankruptcy filing prior to the debt-collection communication at issue. Although, the creditor and non-party to the action, Claro Puerto Rico (Claro) was listed on the bankruptcy petition, Claro also failed to inform CICA of the plaintiff’s bankruptcy filing. After receiving the debt-collection communication, the plaintiff, through his bankruptcy attorney, filed suit against CICA for violation of § 1692e of the FDCPA. The plaintiff alleged that at the time CICA mailed the debt-collection letter to him, CICA knew or should have known that he had filed for bankruptcy and was under the protection of the bankruptcy code. The court found the plaintiff’s arguments unpersuasive.

Specifically, the court articulated that “a debt collector’s unknowing violation of an automatic [bankruptcy] stay does not transform an otherwise accurate collection letter into a ‘false representation’ within the meaning of § 1692e,” on the other hand, a “false representation under § 1692e(2)(A) requires that the misrepresentation be intentional.” The court found that the provision prohibiting debt collectors from using false or misleading representation in the collection of any debt was not intended to punish debt collectors for failing to discover a debtor’s bankruptcy filing, but was instead intended to prohibit only knowing or intentional conduct by debt collectors.

The court did not penalize the debt collector for its lack of knowledge or even lack of diligence in determining whether the debtor was protected by the bankruptcy code before mailing the debt-collection letter. Instead, it appears the court penalized the debtor for failing to notify the debt collector of the bankruptcy filing resulting in dismissal of the claim with prejudice. Had the plaintiff informed CICA of his bankruptcy petition, and CICA nevertheless mailed out the collection letter following notice, the plaintiff’s claim may have survived.

DENVER, Colo — Harvest Strategy Group Inc. made a charitable contribution to the Abdorrahman Boroumand Center (ABC) for Human Rights in Iran. The compelling stories of the organization and its backstory are detailed on the website, iranrights.org. The nonprofit organization is working towards peaceful transition in Iran by documenting human rights abuses and promoting democratic values. 

ABC for Human Rights

ABC works to expose the ongoing government obstruction of rights and freedoms—freedoms that one may take for granted in a democratic nation: the right to a fair trial, the right to defend oneself in a court of law, the freedom to grow up without being forcefully married as a minor, the right to leave an abusive marriage, and more. The human rights abuses extend to women, children, and men alike, with politically motivated and government-sponsored censorship, manipulation, violence, arrests, and executions prevalent in the regime under ultimate and unchecked authority given to an unelected religious leader. 

Iranian Legal Climate

“In our part of the world, these kinds of abuses may feel distant, obscure, or even forgotten. While we remain committed to local outreach, we believe in focusing on the causes that matter to us most and this is one of them. We’re mindful of the legal protections, processes, and freedoms we enjoy—and the lack thereof in other more oppressive environments. In places like Iran, lawyers are routinely persecuted. Freedom of speech and the right to a fair trial, among other civil liberties, are still not available in some countries,” said David Ravin, Executive Vice President at Harvest Strategy Group. 

A Larger Mission

Harvest has a three-part mission as shown below.   Social influence is one of its three pillars because businesses exist for more than just financial gain. Businesses that support social causes can have an impact far beyond their own industry or geography. Improving the quality of life for someone in need is truly a business objective worth celebrating.  

Service: To lead the accounts receivable management industry in partnerships, service, technology and the delivery of superior results.

Economic: To operate the Company for profitable growth, increasing value for our stakeholders and expanding opportunities for development career growth for our employees.

Social:  To operate the Company in a way that actively recognizes the central role that business plays in our society by supporting our local community and those in need. 

About Harvest Strategy Group

Harvest Strategy Group provides single-point-of-contact, nationwide recovery management services for banks, finance companies, debt buyers, and credit unions. The company fosters an entrepreneurial environment and encourages its staff to challenge boundaries, think outside the box, and feel a sense of ownership and accountability for results. The Harvest team’s mission is to lead the accounts receivable management industry through strength in partnerships, exceptional service, and the delivery of superior results. To join the team, apply to Harvest Strategy Group online.

Once a litigation strategy is underway, changing course is not always easy. A debt collection firm recently learned this lesson the hard way when its timely attempt to transfer a case out of state court and into federal court was denied. According to the Fourth Circuit Court of Appeal, by initially participating in the state court action, a law firm waived its ability to remove its case to federal court.

In Redman v. Javitch Block, LLC (Case No. 21-2236), after successfully moving to vacate a default judgment, a consumer filed a state law class action suit against the collection law firm, Javitch Block, LLC (Javitch). The suit was subsequently amended to include allegations under the Fair Debt Collection Practices Act (FDCPA). Fourteen days after the consumer brought the FDCPA claims, Javitch filed a motion to dismiss the lawsuit. A few days later, the state court judge recused himself, and the judge who vacated the default judgment was assigned to the case. Hours later, Javitch filed a timely notice to transfer the case to federal court. 

In federal court, the consumer argued that the case should be transferred back to state court because Javitch continued to litigate in state court after the FDCPA claims were filed and thus could no longer remove the action. The district court agreed, holding that by filing that and other motions, Javitch waived its right to transfer the case to federal court. 

Javitch appealed, arguing that the motion to dismiss it filed in the state court did not prevent it from transferring the action. The Fourth Circuit disagreed, reasoning that engaging in defensive litigation, such as filing a motion to dismiss, indicates an intent to waive the right to remove and stay in state court. The Fourth Circuit also noted that by litigating in state court and only filing their notice of removal when the case was transferred to a particular judge, was essentially forum shopping.

You can read the opinion here. 

InsideARM’s Perspective

This case is a good reminder that in litigation, it is always essential to consider your next steps thoughtfully. As the law firm found out in this case, everything filed can have an effect on the potential next steps. Extenuating circumstances (like the appointment of a new judge) may not be enough to allow a deviation from a previously chosen path. It is wise to evaluate all options with counsel at the outset to ensure you don’t give a future court any reason to believe you have waived any of your legal rights. 

COPLEY, OH — DebtNext Software, a leading fintech software provider focused on recovery management solutions, is proud to announce new positions for several employees. Thom Majka will be starting a new role as Director of Client Success, Andy Hannan will embark on his new position as Director of Product Innovation, and Eric Port will take on a new position as Director of Operations.  

Thom has been the Director of Business Development for DebtNext Software since 2006. His 47 years of industry experience bring tremendous value to his new role that will complement client understanding of the DebtNext product and service offerings.  

“I’ve been fortunate to have been a part of DebtNext’s success and client growth for the past seventeen years. I’m looking forward to developing a focused communications medium with clients and their respective business users to listen, learn, and be accountable. Building trusting relationships has been and will be my daily pursuit for our vendor partners and mutual clients they service,” says Thom. 

Andy Hannan has been with DebtNext since 2013 and has been a part of the accounts receivables management industry for over 20 years. In his new role as Director of Product innovation, Andy will use his unique ability to be creative, energetic, and forward thinking to continue to play a critical role in the development of DebtNext Software products.  

“I am looking forward to continue working with a creative and curious team, developing a product that strives to create function rich solutions that empower customers,” says Andy. He will enable and contribute to a culture and process of innovation, identifying key business problems and ushering the development of solutions for DebtNext clients.  

Eric joined the DebtNext team in 2008 and brings a wide breadth of industry knowledge and platform experience.  In his new role as Director of Operations, Eric will be responsible for administering recurring client platform reviews as well as the management of contractual relationships with DebtNext clients. He will ensure that DebtNext is delivering the proper level of support to their growing client base.

Eric is excited about the opportunity, “The DebtNext platform has evolved into one of the most robust recovery management platforms in the industry.  It’s exciting to be a part of that.  I look forward to building on existing client relationships and ensuring our level of support is in line with client expectations,” he says.

“Our company would not have enjoyed the growth we have over the past twenty years without leaders like Thom, Andy, and Eric. We are continually evolving our client coverage and product teams and these positions are a direct reflection of Thom, Andy, and Eric’s efforts in those areas,” said Paul Goske, President of DebtNext Software. “We’re excited about continuing to build on our team’s success and grow our Platform’s functionality for our clients.” 

About DebtNext  

Founded in 2003 as a fintech software provider, DebtNext has been focused on recovery management solutions for their clients. Their industry leading platform, dPlat, is being used by some of the nation’s largest utility, telecommunications, financial services, and accounts receivable management firms. With an emphasis on client relationships, DebtNext is proud to help their clients achieve maximum operational efficiency and gain a competitive advantage.  To learn more about DebtNext, visit www.debtnext.com.

DES PLAINES, Ill. — Asset Recovery Solutions, a nationally licensed Illinois based provider of First Party, Third Party, BPO, and MSA services is pleased to announce the promotion of Patrick Kelly to Vice President of Operations.

Prior to joining the ARM industry, Patrick studied at The Ohio State University. His career path over the last 25 years has led him from OSI, Arrow Financial, and GRC to a key role as Director of Operations for Asset Recovery Solutions, LLC. 

Since becoming part of the ARS family in 2014, Patrick has continued to cultivate his professional skillset. Over the last nine years, his contributions have been recognized by ARS ownership as well as our varied clientele.  Pat’s attention to detail, firm stance on compliance, and always putting the client’s best interest first are a few traits that contribute to his success.  

Joel Bernheim, EVP of Operations at ARS commented that ‘Pat has been an invaluable member of our team. As such, he is instrumental to our plans for continued growth and diversification. We believe that Pat’s leadership of ARS servicing activities has been and will continue to be one of the keys to our success.’

In Patrick’s free time, he is a die-hard fan of The Ohio State Buckeyes, enjoys barbequing for friends, and is a great husband to his wife Mandi and father to their four kids.

Please join us in congratulating Patrick on his well-earned promotion.

Community Financial Services Association (CFSA) has filed its brief in opposition to the CFPB’s certiorari petition seeking review of the Fifth Circuit panel decision in Community Financial Services Association of America Ltd. v. CFPB.  In that decision, the panel held the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution and, as a remedy for the constitutional violation, vacated the CFPB’s payday lending rule (Rule).  CFSA also filed a cross-petition for certiorari in which it asks the Supreme Court to review the Fifth Circuit’s rejection of the other grounds on which CFSA claimed the Rule was unlawful.  The CFPB has indicated that it will reply to CFSA’s cross-petition by January 25 and it appears that the CFPB does not intend to file a reply to CFSA’s brief in opposition to its certiorari petition.  The Supreme Court is expected to consider both the CFPB’s certiorari petition and CFSA’s cross-petition at its February 17 conference.

Opposition to certiorari petition  

In its opposition to the CFPB’s certiorari petition, CFSA makes the following principal arguments in support of its position that the Court should deny the petition:

• As established by legislative history and case law, the role of the Appropriations Clause is to ensure Congressional oversight of federal fiscal matters and restrain the Executive Branch’s exercise of power

[article_ad]

• The CFPB’s funding mechanism nullifies Congress’s appropriations authority in an unprecedented manner “by allowing a single Congress to unite purse and sword for an Executive agency that it wishes to permanently shield from political accountability, unless and until the President and both chambers of Congress agree to restore fiscal oversight.”  The CFPB has the ability to self-determine the amount of its funding, subject to an “illusory” cap.  In addition, the CFPB can retain its unused funds, effectively creating a “‘permanently available’ endowment ‘without any further act of Congress,’” there is no temporal limit on Congress’s ceding of its appropriations power to the CFPB “because it operates in perpetuity,” and there is no limitation on the CFPB functions that are funded.  Should “the people’s representatives try to take back the power of the CFPB’s purse, the President or either chamber can unilaterally ‘veto’ that effort.”  

• The CFPB’s funding mechanism is unprecedented in nature in that “[n]o other agency from the Founding until 2010 appears to have been permanently ceded the power to choose the amount of its own public funding for core executive powers.”

• The CFPB’s argument that a statute passed by Congress satisfies the Appropriations Clause ignores the Clause’s text and context.  “Deciding the amount that an agency may draw from the government’s accounts is the key legislative function that the Appropriations Clause vests ‘exclusive[ly]’ in Congress…..[U]nder any standard, it is ‘delegation running riot’ to grant a law-enforcement agency perpetual authority to fill in a blank check from the federal fisc every year so long as it does not exceed more than half a billion dollars (plus inflation adjustment).” (emphasis included).

• The CFPB is not comparable to other agencies funded outside the appropriations process through sources such as fees, assessments, or investments.  “[T]hese agencies are in an entirely unrelated family, given their historical pedigree and compatibility with the political accountability concerns animating the Appropriations Clause.”  The practice of funding certain agencies such as the Post Office and National Mint through fees they charge for services they render was authorized by the earliest Congresses, providing evidence of constitutionality.  Even if Congress “might be thwarted in taking back the purse-strings from such agencies, [there is political accountability because] the people have some ability to do so directly [by refusing to buy the agencies’ services.]”  The practice of funding certain agencies such as the OCC and FDIC through assessments they charge to entities they regulate began in the early 1900s, also making it a practice that is “‘long settled and established.’”  This practice also preserves some level of political accountability because these regulators “must consider the risk of losing funding if regulated entities exit their regulatory sphere due to excessive regulation.”  The Federal Reserve also fits within this funding tradition and “’is in a totally different league’” from the CFPB because of its limited regulatory and enforcement authority.

• Vacatur of the Rule was the appropriate remedy.  Because the Bureau could not have promulgated the Rule without the unconstitutional funding, it did not have the power to do so.  It does not matter if the Bureau had statutory authority to promulgate the Rule or whether it would have promulgated the Rule if validly funded.

• The Fifth Circuit decision does not warrant review because it is poor vehicle for the Appropriations Clause question.  The judgment only vacates a single CFPB regulation that has never gone into effect and the vacatur can be affirmed on two independent, alternative grounds that were rejected by the Fifth Circuit.  Constitutional avoidance principles require the Supreme Court to consider those grounds first and only reach the Appropriations Clause question if does not agree with CFSA on either one.  It makes little sense for the Supreme Court to accept discretionary jurisdiction given the possibility that it will disagree with the Fifth Circuit on the alternative grounds and be unable to reach the constitutional question.  In these circumstances, the Court should allow “further percolation on the novel constitutional question.”  The alternative grounds for vacating the Rule are:

1. The Rule was promulgated under former Director Cordray, who was unconstitutionally insulated from removal by former President Trump; and

2. The conduct prohibited by the Rule falls outside the statutory definition of unfair or abusive conduct.

CFSA concludes its opposition brief by urging the Supreme Court, if it decides to grant certiorari, to hear the case next term rather than this Term as the CFPB has urged.  CFSA argues that it is “neither necessary or appropriate to try to resolve a case of this complexity and importance in just four months during the busy conclusion of a momentous Term.”  CFSA comments that despite the Fifth Circuit decision, the CFPB “continues to plow full steam ahead, initiating and pursuing enforcement actions and even recently proposing new regulations.”  It also observes that if it is concerned about the decision’s impact on the CFPB’s ongoing activities, the Administration can seek interim appropriations until the Court resolves the Appropriations Clause issue.

Cross-petition for certiorari

While reinforcing its opposition to the CFPB’s certiorari petition, CFSA urges the Court, if it grants the CFPB’s petition (1) to also grant its cross-petition to consider the alternative grounds for vacating the Rule that the Fifth Circuit rejected or, (2) instead of granting the cross-petition, to consider the alternative grounds as antecedent questions added to the CFPB’s petition.  CFSA frames the alternative grounds as the following questions:

• Whether the Rule should be vacated because it was promulgated by Director Cordray while shielded from removal by President Trump under a statutory provision this Court later held is unconstitutional.

• Whether the Rule should be vacated because the prohibited conduct falls outside the statutory definition of unfair or abusive conduct.

With respect to the first question, CFSA argues that because the unconstitutional removal provision is what allowed Director Cordray to remain in office against President Trump’s wishes and promulgate the Rule by exercising powers of the Director’s office that he did not lawfully possess, the Rule is directly attributable to, and tainted by, the unconstitutional provision.  In such circumstances, vacatur is the standard and proper remedy.  The Fifth Circuit’s demand that CFSA provide evidence that the President’s hypothetical replacement for Director Cordray would have acted differently with respect to the Rule is at odd with Supreme Court precedent.  (The Fifth Circuit did not consider the CFPB’s argument that even if Director Cordray unlawfully promulgated the Rule, former Director Kraninger lawfully ratified the Rule after Seila Law made her removable at will by the President.  Nevertheless, CFSA calls the CFPB’s argument “clearly wrong” and asserts that unlike some agency actions, notice-and-comment rulemaking cannot be ratified by a later official.)

With respect to the second question, CFSA argues that the Rule’s provision that prohibits lenders from continuing to attempt preauthorized withdrawals for repayment from consumer’s bank accounts after two failed attempts exceeds the CFPB’s statutory authority to prohibit unfair or abusive conduct.  In exercising such authority, the CFPB cannot prohibit conduct where consumers are capable of reasonably avoiding the harm caused by such conduct.  Consumers can reasonably avoid additional fees or other harms caused by successive withdrawal attempts in various ways, such as declining loans that preauthorize successive withdrawal attempts, funding their accounts before the repayment date, or revoking access to their accounts if they lack the necessary funds. 

The U.S. Court of Appeals for the Ninth Circuit recently affirmed the trial court’s dismissal of a putative class action suit brought under the federal Telephone Consumer Protection Act because another panel of the Ninth Circuit had previously held that an autodialer must generate and dial random or sequential telephone numbers under the TCPA’s plain text.

A copy of the opinion in Colin Brickman v. Meta Platforms, Inc. is available at:  Link to Opinion.

The named plaintiff in this class action alleged that the defendant company violated the TCPA, 47 U.S.C. § 227, by sending unsolicited “Birthday Announcement” text messages to consumers’ cell phones; he alleged that these text messages were sent through an autodialer that used a “random or sequential number generator” (RSNG) to store and dial the telephone numbers of the consumers being texted. The plaintiff did not argue that the RSNG actually generated the consumers’ phone numbers, but that the RSNG was used to determine the order in which the phone numbers were stored and dialed.

The defendant disagreed with the plaintiff’s interpretation of the autodialer provision and argued that a TCPA-defined RSNG must actually generate the phone numbers in the first instance.

The trial court dismissed the class action suit with prejudice, and the plaintiff timely appealed.

As you recall, the TCPA generally bans calls made to a telephone if the call is generated by an “automated telephone dialing system,” commonly referred to as an “autodialer”. Id. § 227(b)(1)(A). The statute defines an autodialer as a piece of equipment with the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator [an RSNG],” and “to dial such numbers.” Id. § 227(a)(1)(A).

The question on appeal was whether a TCPA-defined autodialer must use an RSNG to generate the telephone numbers that are dialed. 

During the Ninth Circuit’s deliberations, another panel of the Ninth Circuit decided Borden v. eFinancial, LLC, 53 F.4th 1230 (9th Cir. 2022), which held that “an [autodialer] must generate and dial random or sequential telephone numbers under the TCPA’s plain text.” Id. at 1231. Therefore, the Ninth Circuit here concluded that the defendant here also did not violate the TCPA because it did not use a TCPA-defined autodialer that randomly or sequentially generated the telephone numbers in question.

The plaintiff countered that Borden did not control the outcome here because he said that Borden addressed the “production” prong of §227(a)(1)(A), not the “storage” prong at issue here. But the Ninth Circuit observed that the Borden panel did not limit its holding to the “production” prong. Borden instead interpreted the definition of an autodialer in its entirety, finding that the text and context of the TCPA “make[] clear that the number in ‘number generator’ . . . means a telephone number.” Borden, 53 F.4th at 1233. This is true regardless of whether the numbers are stored or produced.

Thus, the Ninth Circuit affirmed the judgment of the trial court.

Judge VanDyke issued a concurring opinion recognizing that the Ninth Circuit was compelled to follow Borden’s precedent, but also disagreeing with the precedent because it concluded that the word “number” means the same thing in all instances where it appears in the TCPA’s definition of an autodialer. Specifically, Borden decided that a “random or sequential number generator” in the definition must mean a “random or sequential phone number generator” because the other times that the word “number” is used in the definition clearly refer to a phone number. Id. at 1233 

But Judge VanDyke reasoned that Borden’s interpretation of autodialer overlooks that the phrase “random or sequential number generator” has a known meaning as a computational tool which is not limited to generating phone numbers, as the Supreme Court of the United States acknowledged in Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1172 n.7 (2022). Specifically, in footnote 7, Duguid stated: “an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list. It would then store those numbers to be dialed at a later time.” Id.

Furthermore, Judge VanDyke determined that to interpret the TCPA as Borden did removes any independent meaning for the word “store” in the clause “store or produce.” The judge noted that the interpretive quandary presented in Duguid was whether “using a random or sequential number generator” refers back to both “produce” and “store.” But the Supreme Court gave “store” an independent meaning from “produce” in Duguid, footnote 7, in that a random or sequential number generator might also be used to determine the “order in which to pick” preproduced telephone numbers “stored” in the RSNG, regardless of how they were generated.

Nevertheless, Judge VanDyke concluded that the Borden panel erroneously nullified the significance of the word “store” in the clause “store or produce,” by sneaking the term “produced” back into the relative clause, redefining an autodialer as equipment that can “store…telephone numbers to be called, [which are produced] using a random or sequential [telephone] number generator.” By removing any independent meaning for “store” from the TCPA’s definition of autodialer, Judge VanDyke stated that the Borden panel silently cut the legs out from under the Supreme Court of the United States’ interpretive rationale in Duguid.

ROSEVILLE, Minn — Frontline Asset Strategies recognizes that it has a presence in its offices and its communities. Frontline actively supports local charities and participates in events that create positive change in their neighborhoods, cities, and the global community around them. This year, as Frontline does every year, they donated to our favorite charitable organization—Marine Toys for Tots. 

“Toys for Tots is our favorite charity and one we support each and every holiday season,” says Tom Clement, Chief Sales Officer, and Partner at Frontline Asset Strategies. “Our team takes pride in all of our community involvement efforts throughout the year but each holiday season our donation to Toys for Tots helps children and families buy toys, spread joy, and bring light into the world, even for just a moment.” 

Toys for Tots 

Since 1947, Toys for Tots has been on the minds of millions of American families. An organization that has taken the country’s hearts, Toys for Tots has supported 281 million children and families to date and has distributed over 627 million toys. This 2022 holiday season marks the 75th anniversary of this incredible organization and to mark the event Toys for Tots has been holding dozens of events throughout the country including an Alaskan Toy Delivery for the first time in its history, a Hollywood Christmas Parade, a celebratory parachute jump, and much more. 

With over 800 individual Toys for Tots communities throughout the 50 states and U.S. territories, Toys for Tots is one of the largest charitable organizations in the country. 

A Culture of Change

The Frontline team has been growing its budding culture and is off to a strong start. Frontline Asset Strategies places emphasis on a positive, determined mindset focused on helping others not only in the office but in the community. The team is proud of its community involvement taking place among new friends and coworkers motivated to build on the strong foundation laid by FAST’s long-successful MN headquarters.

Frontline is rooted in its core values of finding the right people, building strong consumer-centric values, remaining an evolutionary organization, and focusing on the right tasks. These values help Frontline not only provide fair, transparent collection and recovery solutions through advanced technologies and positive experiences but also be a leader in the communities it serves. 

Learn More Online

To learn more about Marine Toys for Tots or to discover more of their 75th Anniversary events, please visit their website. To discover ways to donate your time, money, or toys, visit their donations page where you can participate in virtual toy boxes. 

To discover how Frontline Asset Strategies has positioned itself as a leader in its community, visit their About page on their website. 

About Marine Toys for Tots

The mission of the Marine Toys for Tots Foundation is to assist the U. S. Marine Corps in providing a tangible sign of hope to economically disadvantaged children at Christmas. This assistance includes providing day-to-day leadership and oversight of the Program, raising funds to provide toys to supplement the collections of local Toys for Tots Campaigns, providing promotional and support material, and defraying the costs of conducting annual Toys for Tots Campaigns. 

About Frontline Asset Strategies

Founded in 2008, Frontline Asset Strategies is a nationally licensed and bonded full-service collection agency specializing in accounts receivables management solutions that assist clients with maximizing the recovery of delinquent and non-performing accounts. The Frontline Asset Strategies team works with integrity and transparency to deliver positive consumer interactions that exceed expectations. They are headquartered in Roseville, MN with an additional location in Jacksonville, FL.

Recently, in Velez v. Absolute Resolutions Investments., LLC, the district court for the Northern District of Illinois confirmed the long-standing principle that not all communications sent from a debt collector to a debtor are governed by the Fair Debt Collection Practices Act (FDCPA). Instead, the communications must be in connection with the collection of a debt to fall within the statute’s purview.

As background, the defendants, Absolute Resolutions Investments, LLC (ARI) and Absolute Resolutions Corporation (ARC), were debt collectors who regularly worked together to collect consumer debts. ARI acquired a debt owed by the plaintiff. In February of 2021, the plaintiff’s attorney informed the defendants that the plaintiff was represented by counsel. Counsel sent a second letter in May of 2021 asking ARI to stop collection and reporting of the debt because the plaintiff had been affected by the COVID-19 crisis. In response, ARI suspended collection of the account and opened an investigation.

On June 17, 2021, ARC, acting as records custodian for ARI, sent a letter directly to the plaintiff rather than his attorney. The letter indicated that the defendants needed additional time to investigate the plaintiff’s dispute of the credit reporting of his account and that they would request the consumer reporting agencies to delete the reporting while the investigation was in progress. Based on this letter, the plaintiff filed suit alleging the defendants violated FDCPA § 1692c(a)(2), which prohibits debt collectors from communicating with a consumer in connection with the collection of any debt “if the debt collector knows the consumer is represented by an attorney with respect to such debt.”

The defendants moved for summary judgment, arguing that the plaintiff had not suffered an injury-in-fact sufficient to confer standing under Article III of the Constitution. The court noted that stress and annoyance alone do not amount to “concrete harm for standing purposes.” But the plaintiff alleged that the stress caused him financial harm because it prompted him to refuse freelance work that he ordinarily would have performed. The court held that was evidence of a tangible harm sufficient to confer standing.

However, the court also noted that the FDCPA does not apply to every communication between a debtor and a debt collector. Based on a “common sense inquiry” as to its purpose, the court found that the June 2021 letter did not amount to a communication in connection with the collection of a debt. Rather, the letter merely acknowledged the plaintiff’s dispute, stated that ARC would investigate, and told the plaintiff that ARC had asked the consumer reporting agencies to delete the credit reporting of the account. Because it found that the FDCPA did not apply to the letter, the Court granted summary judgment in favor of the defendants.