How Courts Analyze Cases Involving Misleading and Confusing Letters

FDCPA Claims, Written communications

The FDCPA  contains very specific provisions that require bill collectors to include specific disclosures in collection letters.   These required notices include:

  • amount of the debt
  • name of the creditor
  • a statement that unless the debtor “disputes the validity of the debt” within thirty days the debt collector will assume that the debt is valid but that if the debtor notifies the collector in writing within thirty days that he is disputing the debt, “the debt collector will obtain verification of the debt [from the creditor] . . . and a copy of [the] verification . . . will be mailed to the consumer.”
  • upon his request the debt collector will give the debtor the name and address of his original creditor, if the original creditor is different from the current one
  • If the debtor accepts the invitation tendered in the required notice, and requests from the debt collector either verification of the debt or the name and address of the original debtor, the debt collector must “cease collection of the debt . . . until the [requested information] is mailed to the consumer.

If the bill collector fails to include these notices, it will be liable to the debtor for $1,000 + actual damages + reasonable attorney’s fees.

What happens if a collection letter includes these notices but also includes other language that confuses the message?

This is exactly what happened in a well known Wisconsin case back in the mid-1990’s that offers helpful guidance to both debtors and creditors about confusing information in a collection letter.

In the Bartlett v. Heibl case, creditor’s attorney Heibl included the above notices but also included a threat that if the debtor did not pay within a week, he could be sued.  The problem:  attorney Heibel’s letter demanded action within 1 week, but it also offered rights under the statute that could be exercised within 30 days during which collection activities would be ceased.

What would happen if debtor Bartlett did nothing for 10 days, then asserted his rights requesting verification of the debt?   As the appeal court noted, these two statements in Heibls’ letter are contradictory and therefore confusing, thereby turning the required disclosure into “legal gibberish.”

The appeals court (in the 7th Judicial Circuit) reversed the lower court’s ruling and held in favor of debt Bartlett.  The court also took the unusual step of re-writing Heibl’s letter to include both the required disclosures and the threat of litigation in a format that would satisfy the FDCPA’s notice requirements and not be confusing.  This sample letter, now known as a “Bartlett letter” has been thereafter used by creditors in the 7th Circuit and elsewhere.   Presumably bill collectors in the 7th Circuit who use a Bartlett letter would have a strong argument to protect themselves from FDCPA liability.

The Bartlett v. Heibl case is very helpful reading in that it offers a very clear analysis of how an appellate court analyzes the FDCPA.  This is the type of analysis that I would use when reading collection correspondence that has been mailed to a potential FDCPA client.


Credit Card Company’s Failure to Report Credit Limits to Credit Bureaus Negatively Affects Your Credit Score

FDCPA Claims

Many people are aware of the FDCPA and its rules that protect consumers against harassment and misleading collection calls and letters.  But did you know that the FDCPA applies when a creditor’s credit bureau reporting practices lead to an unnecessary drop in your credit score?

Improper credit bureau reporting was the basis of a series of lawsuits against credit card giant Capital One.  Although Capital One has changed its practices as a result of lawsuits and unfavorable publicity, it previously engaged in a practice of reporting its customers’ payment histories but not including their credit limits in its submissions to the credit bureaus.

Why was this a problem?  With no credit limit disclosed, the Fair Isaac algorithm concluded that your balance was equal to your credit limit.  Since one of the factors that goes into calculating your credit score is your “credit utilization ratio,” your score might reflect a 100% utilization ratio for your Capital One account.   A 100% utilization will depress your credit score, whereas a 10% utilization ratio would function as a positive factor that will increase your score.

Capital One has apparently changed its practices, but you should be aware of the damage that arises when a creditor does not report your credit limit.  From now on, when you review your credit report make sure to confirm that your credit limit is shown for revolving credit accounts and that the credit limit number is accurate.


Seattle Lawyer Pursues FDCPA Claim Against Sallie Mae

FDCPA Claims

A Seattle lawyer is suing Sallie Mae for harassing him with unrelenting automated collection calls. Under the Fair Debt Collection Practices Act, harassing phone calls made by bill collectors are prohibited and you have the right to take legal measures against them.

Harrassing Phone Calls Lawyer Mark Arthur is suing Sallie Mae for at least $500 in damages for each unwanted phone call. Arthur, who had fallen behind on payments for his Seattle University School of Law loan, says Sallie Mae harassed him with dozens of calls on his cell phone, often within hours of each other. He says the calls woke him up at all hours of the night, even though the FDCPA specifically prohibits contacting consumers by telephone before 8:00 AM or after 9:00 PM.

“These unrelenting calls unfortunately corresponded with a time in my life that required great attention to family issues,” says Arthur. According to the suit, Arthur never gave Sallie Mae his cell phone number, and never gave his consent for the company to call him.

Arthur is seeking class action status for the suit, filed in federal district court in Seattle. The action seeks damages of $500 for each unwanted call, trebled to $1,500 because the alleged violations were knowing and willful.

Arthur provides an example of how to reprimand bill collectors and prevent further harassment through legal means. If you are experiencing harassing phone calls, you have the right to sue a debt collector in state or federal court within one year from the date of the violation. If you win, you may recover damages in the amount of any losses you suffered due to the violation, plus an additional amount of up to $1,000. In some cases you can recover court costs and attorney fees as well.

Make sure you collect evidence to support your FDCPA lawsuit. Save all forms of communication from bill collectors, record the time of phone calls and what was said, and save all answering machine messages. If it is legal to record phone conversations in your state, do so with bill collectors. Then report the debt collection agency’s inappropriate conduct to your state’s Attorney General’s office or the Federal Trade Commission.

If you think you may have a FDCPA claim, feel free to fill out the Free Claim Review form found on this website. An experienced attorney specializing in FDCPA claims will get back to you regarding your options.