E.D.N.Y.: FDCPA Does Not Extend to Communications with Credit Counselors

Baiting calls involving a customer’s representative asking whether the customer can dispute the account over the phone or whether the dispute must be in writing are nothing new to agencies. The Eastern District of New York (E.D.N.Y.) reviewed the issue of whether information discussed during such calls violates the FDCPA. In Sandoval v. I.C. Systems, 17-CV-3755, 2018 WL 1582218 (E.D.N.Y. Mar. 29, 2018), the court found no violation. 

You can download the decision here.

Factual and Procedural Background

I.C. Systems credit reported plaintiff’s delinquent account to one of the credit bureaus. Plaintiff, wanting help with his credit, sought the assistance of a credit counselor known as Mrs. Reyes.  

Mrs. Reyes, with plaintiff present, initiated a call to I.C. Systems to discuss the account. Plaintiff verified his information and provided I.C. Systems authorization to speak with Mrs. Reyes about his account. At the time of the call, the account was already recalled by the creditor. As Mrs. Reyes discussed what she perceived to be incorrect information on plaintiff’s credit report, she asked the I.C. Systems representative whether the plaintiff can dispute the account over the phone or whether it must be disputed in writing. Due to the account being recalled, the I.C. Systems representative said the account could not be disputed, but it would be removed from plaintiff’s credit report within 30-60 days.

Plaintiff filed a lawsuit against I.C. Systems alleging that it violated the FDCPA by providing false, deceptive, or misleading representations during the call. I.C. Systems filed a motion to dismiss. The underlying issue to be decided by the court was whether the FDCPA extends to communications between a debt collector and a consumer’s representative that were not initiated by the debt collector.

Decision

The court declined to extend the FDCPA to fit this situation and granted I.C. System’s motion to dismiss. 

In its reasoning, the court distinguished between communications between a debt collector and a consumer versus those between a debt collector and a consumer’s representative. The court cited several of its, and the 2^nd Circuit’s, prior decisions where the courts refused to extend the FDCPA to communications between a debt collector and the consumer’s attorney because the attorney acts as the intermediary between the debt collector and the consumer. While the court recognized that Mrs. Reyes is not an attorney, it did point out that Mrs. Reyes, in her capacity as a credit counselor, acted as an intermediary between the debt collector and the consumer. Finding this to be similar to attorney representation, the court refused to extend the FDCPA to the conversation between Mrs. Reyes and I.C. Systems.

The court also pointed out that the call at issue was not initiated by I.C. Systems. Citing several cases from courts within the 2nd Circuit, the court reiterated that the FDCPA does not extend to communications initiated by someone other than the debt collector.

Analysis 

Agencies have received many calls similar to the call in question in this case. Many believe such calls to be a baiting tactic used to try to trick the debt collector into a technical FDCPA violation. 

Even though the court did not allude to baiting in the incident above, this decision helps to alleviate some of the baiting concerns of agencies. One thing many, if not all, of the alleged baiting calls have in common is that the calls are initiated by someone other than the debt collector. Many of these calls have the consumer on the line to authorize a third party representative to speak with the debt collector, and then the consumer goes silent while the conversation continues.  Many of these calls include someone asking, on behalf of the consumer, whether the account can be disputed over the phone or if the dispute needs to be in writing. There is now a strongly worded defense against such tactics.