December 2013

In this issue:

  • The Consumer Financial Protection Bureau has announced a proposed rulemaking with regard to debt collection practices with comments due on February 10, 2014. This may be a major revision to the regulations implementing the FDCPA.

  • The FTC has determined that the Telemarketing Sales Rules’ caller ID restrictions do not need to be modified to reduce caller ID spoofing. The tactic is already illegal under its rule (and the FTC Act) and the FTC concluded that no additions or modifications to the Telemarketing Sales Rule could effectively prevent caller ID spoofing.

  • A Florida court has ruled that a plaintiff could not proceed with a class action against a debt collector after the debt collector made her an offer of judgment fully satisfying her individual claims


Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau has announced a proposed rulemaking with regard to debt collection practices with comments due on February 10, 2014. This may be a major revision to the regulations implementing the FDCPA. Specific issues the agency intends to address include e-mail and text messaging and entities collecting their own debts (currently exempt from the FDCPA in most circumstances).

Comment: If your business collects debts on its own behalf or for other entities, you should review the proposal as it likely is a precursor for a major change in the FDCPA regulations.

Federal Trade Commission
The FTC has obtained a court order against a Canadian individual and four telemarketing companies to pay more than $5.1 million to Canadian and American consumers with regard to claims of buyers for those consumers’ cars. The order permanently bans the defendants from telemarketing and payment processing. FTC v. Matthew J. Loewen, et al. The FTC alleged the defendants falsely claimed that in exchange for a $390 fee, they would connect the consumer with a buyer for their car. The U.S. District Court for the Western District of Washington found the allegations to be true and ruled that defendants violated the FTC Act and the Telemarketing Sales Rule.

Six defendants have settled claims the FTC made with regard to prerecorded calls which said they were from “Rachel from Cardholder Services.” FTC v. ELH Consulting, LLC, et al. The plan marketed debt settlement services. The defendants agreed to a permanent ban from all telemarketing as well as settling debt relief services.

The FTC has determined that the Telemarketing Sales Rules’ caller ID restrictions do not need to be modified to reduce caller ID spoofing. The tactic is already illegal under its rule (and the FTC Act) and the FTC concluded that no additions or modifications to the Telemarketing Sales Rule could effectively prevent caller ID spoofing.

Comment: Many of my clients have been victims of caller ID spoofing, and the FTC’s conclusion that it should not impose additional burdens on a compliant company when the practice is already illegal is refreshing.

The FTC has filed a complaint against a company which allegedly “crammed” tens of millions of dollars of charges on consumers’ mobile phone bills without permission. FTC v. Tatto, Inc.
A website allegedly informed visitors they had won free Justin Bieber tickets, but instead gathered phone numbers for a paid “cramming” service.

The FTC has issued its analysis of the national “do-not-call” registry for fiscal year 2013. It contains registration and complaint figures for all 50 states by population as well as information regarding entities accessing the registry. The registry contains more than 220 million telephone numbers.

California
A California court has denied a motion to reconsider a defendant’s argument that the TCPA did not apply to debt collection calls. Inigues v. CBE Group, Inc. The court ruled that the defendant was incorrect that there was a broad exemption for debt collection calls from TCPA restrictions and, therefore, denied the request.

A California court has denied a defendant’s motion to compel arbitration in a TCPA case where she alleged a bank called her on her cellular telephone without consent. Martin v. Wells Fargo Bank. The bank claimed that a 1987 consumer disclosure statement was modified in 2012 to include mandatory arbitration. The plaintiff denied ever receiving or seeing the change and the court ruled that the bank had the burden of proving the existence of the arbitration agreement by preponderance of the evidence. The court ruled that it failed to do so and denied the motion to compel arbitration.

Florida
A Florida court has ruled that a plaintiff could not proceed with a class action against a debt collector after the debt collector made her an offer of judgment fully satisfying her individual claims. Delgado v. Collecto, Inc.

Comment: The court held that a case for controversy no longer existed for the individual after she had received an offer of judgment fully satisfying her individual claims. There are other circuits that have disagreed with this ruling, and the Supreme Court likely will resolve the “conflict” between jurisdictions.

Minnesota
A Minnesota court has denied a motion to dismiss a purported TCPA class action brought by an individual against a bank. Hashw v. Department Stores National Bank. The plaintiff claimed that he was contacted on a cellular telephone using an ATDS. The court ruled that his allegations were sufficient to allow the TCPA claim to continue.

Missouri
A case in Missouri has addressed the same question as Florida, i.e. whether an offer of judgment mooted an individual’s claim such that a class action could not proceed. March v. Medicredit, Inc. That court ruled that a defendant should not be able to use offers of judgment to support class actions.

New York
An appeals court in New York has overruled a trial court which dismissed a TCPA class action in the state because New York’s rules prohibit class action suits for statutory damages. The court held that the state’s civil procedure statute did not apply to the TCPA which was a federal claim. Bank v. Independence Energy Group, LLC.

Comment: Until now, TCPA class actions could not be brought in the state of New York. This case eliminates that bar.