There are some consumer attorneys and debtors who purposely play a game of engagement with debt collectors, including collections law firms, with the hope that collectors make a trivial mistake by violating the Fair Debt Collections Practices Act (“FDCPA”). As soon as collectors violate the FDCPA, these very same attorneys and debtors threaten a lawsuit and/or file a lawsuit against unsuspecting collection agencies and collections law firms.
These are what I call "Gotcha" lawsuits. The perpetrators seek to bait creditors into an FDCPA violation so they can cry, "Gotcha," and then file a handy-dandy lawsuit for money damages. Thankfully, a recent case out of a federal appeals court in California could curtail this practice.
In Davis v. Hollins Law, a collector at a collections law firm was in settlement negotiations with a debtor who had defaulted on a Costco American Express business credit card. 2016 U.S. App. LEXIS 14517 (9th Cir. Aug. 8, 2016). After multiple emails and phone calls between the law firm and the debtor where the assigned collectors identified their communications as being from a debt collector, a collector let his guard down and committed what was thought to be a technical violation of the FDCPA by leaving a single voicemail for the debtor without identifying the call as being from a debt collector. Id.
The debtor, despite admitting that he knew that the voicemail was from a debt collector, filed a lawsuit anyways against the collections law firm over the collector’s failure to acknowledge in the single voicemail that the communication was from a debt collector.
The federal appeals court reversed the federal trial court and found that if a debtor is aware that communication is from a debt collector, “[the FDCPA] does not require a subsequent communication from a debt collector to use any specific language so long as it is sufficient to disclose that the communication is from a debt collector, …” Id.
This case is extremely important to collection agencies and collections law firms that are in regular contact with consumers. Collectors have a tough job and even the best collector can occasionally make a mistake by failing to disclose that a communication is from a debt collector.
As a result of this new case, collectors, so long as they make clear to debtors in their initial communication that they are a debt collector and the debtors are aware that they are being contacted from a debt collector, no longer have to use specific language stating they are a debt collector in subsequent communications.
Of course, in order to prevent unwarranted lawsuits from attorneys and debtors who are not familiar with this new case, it is always advisable for collectors to state that a communication is from a debt collector in all communications with debtors.
Proper knowledge, training and preparation are still the best ways to defeat "gotcha" lawsuits.
Founded in 1997, Gill Law Firm represents small, medium and large corporations in commercial debt recovery, small business and nonprofit startups throughout the state of Florida. To find out how the firm may help your company collect its unpaid deficiency judgments, please contact A. Wayne Gill, Esq. via email at firstname.lastname@example.org or by phone at (561) 454-0301.