FTC RELEASES AGENDA FOR UPCOMING DEBT COLLECTION WORKSHOP
The Federal Trade Commission recently released a draft agenda of the specific topics to be addressed during the October 10-11 workshop in which the FTC will examine the present state of the debt collection industry and the effectiveness of existing consumer protections relating to debt collection. The draft agenda, which can be found on the FTC’s website at http://www.ftc.gov/, provides that the following topics will be addressed via presentations and panelist discussions:
- Overview of Changes in and Affecting the Industry;
- Debt Collection Today: Understanding the Business;
- Concerns About Debt Collection: Consumers’ Perspective;
- Concerns About Debt Collection: Collectors’ Perspective;
- The Role of Creditors in Debt Collection;
- Locating the Correct Consumer and Determining the Correct Amount Owed;
- Credit Reporting and Debt Collection: Key Concerns;
- Debt Collection Litigation: Current Issues; and
- Pivotal Issues and Proposed Solutions: Next Steps.
Although the workshop will be held at the FTC Conference Center in Washington, DC, interested parties may view the proceedings via a live webcast by visiting the above website on October 10th.
DEBT BUYER PERMITTED TO CHARGE INTEREST PROVIDED FOR IN CONTRACT BUT DEMAND FOR ATTORNEYS’ FEES FOUND TO VIOLATE FDCPA
The United States District Court for the District of Minnesota held that a debt buyer and its law firm did not violate the FDCPA by attempting to collect interest at a rate exceeding Minnesota’s
general usury rate from a Minnesota debtor in Munoz v. Pipestone Financial, LLC, No. 04-4142 (JNE/SRN), 2007 WL 2509755 (D. Minn. Aug. 20, 2007). Following the valid when made
doctrine, the District Court indicated that the defendants’ actions were permissible because (i) the rate was provided for in the card-member agreement entered into between the debtor and the originating national bank and (ii) the originating national bank was permitted to charge such rate pursuant to the National Bank Act and Delaware law. See also Olvera v. Blitt & Gaines, P.C., No. 03 C 6717, 2004 WL 887372 (N.D. Ill. Apr. 26, 2004); PRA III, LLC v. Hund, 846 N.E.2d 965 (Ill. App. Ct. 2006) (following the valid when made doctrine).
The District Court, however, held that the defendants violated the FDCPA by misrepresenting their entitlement to attorneys’ fees in a state court action filed against the debtor. The complaint that the defendants filed in the state court action had asserted that attorneys’ fees were due and owing at the time the state-court action began in an amount that was in accordance with a contingency-fee agreement between the law firm and debt buyer. The District Court indicated it was impermissible for the defendants to assert that such attorneys’ fees were due and owing at the time of filing the complaint because (i) the debtor had not agreed to pay such a contingency fee, but rather agreed to pay “all collection expenses actually incurred” and “reasonable fees” of an outside attorney, and (ii) the debt buyer had not incurred any attorneys’ fees in the state-court action when the complaint was filed. According to the District Court, the defendants could have avoided liability by structuring their complaint to request the state court to find the amount of attorneys’ fees reasonable rather than asserting that such amount was due and owing.
Charles Gall and Mike Tomkies