Consumer Law Hinsights – December 2019
Consumer Law Hinsights is a monthly compilation of nationwide consumer protection cases of interest to financial services and accounts receivable management companies, brought to you by Hinshaw & Culbertson LLP.
You can also expand each of the topics below to read our full analysis of the cases covered in this edition.
SCOTUS Holds Discovery Rule Does not Apply to FDCPA Claims
This week, in an 8:1 opinion delivered by Justice Thomas, the Supreme Court concluded that the one-year statute of limitations in the Fair Debt Collection Practices Act (FDCPA) begins to run when the violation occurs, not when the violation is discovered. In doing so, they overturned rulings by the Fourth and Ninth Circuit, that had held the FDCPA's statute of limitations was subject to equitable tolling.
Seventh Circuit Explains 1099C Notice can be Misleading under the FDCPA
The Seventh Circuit recently held that a debt collector, who had indicated it "may file a 1099C form" if the debtor paid a discounted amount, could be in violation of the FDCPA if the debt collector sought to discharge less than $600 in principal. Here, the debt collector's letter offered several settlement options, in which the debt collector agreed to discharge a certain amount of the debt if the debtor made timely payments. The amount of discharged debt would have been less than $600 in the options offered. The letter also disclosed that "[s]ettling a debt for less than the balance owed may have tax consequences and Discover may file a 1099C form."
Reporting Monthly Payments on a Charged off Debt Does not Violate the FCRA
A debtor entered into a contract with the creditor where she received $1,400 in financing and, in return, agreed to make 24 monthly payments of $72.04 to repay the debt. The debtor defaulted, and the debt was accelerated. The debtor reviewed her credit report, which showed a trade line from the creditor with a scheduled monthly payment of $72. The debtor claimed that the creditor had charged off the account, and therefore, the monthly payment amount should be listed as $0. The debtor disputed the trade line to the bureaus and the creditor verified the information.
Multiple Addresses in Initial Letter do not Violate the FDCPA's Initial Disclosure Requirements
A debtor claimed a debt collector's initial letter violated the FDCPA because it contained multiple addresses, which created confusion as to where a consumer should mail a written dispute and also took the consumer's attention away from the validation notice by deemphasizing some text and highlighting other sections of the letter. The letter supplied the FDCPA validation notice in the second paragraph of the letter. The letter later stated, "mail all correspondence and payments to the address listed below." After this statement the front page of the letter states, "Office Location: 60 Motor Parkway Commack, NY 11725-5710[.]" Directly below this address is a detachable coupon which reads "MAKE CHECK PAYABLE TO: [debt collector] as attorneys AND RETURN COUPON WITH PAYMENT TO PO BOX 9030, Commack, NY 11725-9030 IN[.]" The bottom-right corner of the coupon has an arrow pointing to the same P.O. Box address, and to its left the debtor's name and address is listed.