Letters from Debt Collector Violate FDCPA When Sent After Consumer's Cease and Desist Letter

In Marino v. HoganWillig, PLLC[1], a Federal District Court concluded that two of three letters sent by a debt collector to a consumer after the consumer had sent the collector a cease and desist letter violated the Fair Debt Collection Practices Act (FDCPA). The case was before Judge William M. Skretny of the Federal District Court for the Western District of New York on the defendant debt collector's motion for summary judgment. (For the uninitiated, in a summary judgment motion, a party claims that there are no factual issues in dispute and the only issues to be decided are legal issues which can be decided by a judge, and therefore the case need not go forward to trial).

In this case, the plaintiff Dominic Marino had a medical procedure that was not entirely covered by medical insurance, resulting in a bill from Harlem Anesthesia PLLC (Harlem) in the amount of $1,380.00. Mr. Marino's wife called Harlem and asked if it would accept $760.00 in full satisfaction of the $1,380.00 debt, and Harlem agreed to do so.

Despite this agreement, Practice First Management, the billing agent for Harlem, forwarded the balance of the debt, $620.00, to defendant HoganWillig for collection. Upon receiving a payment demand from HoganWillig, the plaintiff Mr. Marino sent a cease and desist letter to HoganWillig, pursuant to FDCPA §1692c, advising HoganWillig that he disputed the debt and considered it paid in full. Nonetheless, HoganWillig sent three more letters, the last two of which were marked "final notice."

In defense of its first communication, HoganWillig invoked 1692g(b), which provides that if a consumer disputes a debt in writing, the creditor must cease communication until it has verified the debt with the consumer. HoganWillig claimed 1692g(b) "required" it to respond once Mr. Marino had disputed the debt. The court stated that HoganWillig's interpretation of 1692g(b) was not correct, and that the statute did not "require" validation, but agreed with the principle behind HoganWillig's argument, stating that, "To hold otherwise would force [defendant] into a frozen state where it could not seek to collect the debt because compliance with 1692g(b) would violate 1692c." Thus, the court held that HoganWillig's first letter did not violate the FDCPA.

However, HoganWillig did not do so well with the other two letters. The defendant argued that the other two letters were permissible under exception (2) or (3) to § 1692c, which allow notice to a consumer that the creditor intends to invoke "specified remedies." HoganWillig's letter contained an offer of a payment plan, which the collector claimed was a permissible "specified remedy." The court found this argument "specious from the outset," as well as "tenuous and strained."

The court pointed out that the payment plan language appeared to be boilerplate in all the letters sent by HoganWillig, rather than a specific response to a cease and desist letter. Also, noting that § 1692c was meant to protect consumers from further unwanted communications from creditors, the court observed that HoganWillig's letters, in addition to the payment plan language, also threatened to report the debt to credit reporting agencies, stated that the consumer could have trouble getting credit in the future, and then mentioned the possibility of the debtor's wages being garnished. Such a letter, stated the court, "is certainly more abusive than one that simply details various payment plans." The court concluded that to hold that these letters were exceptions "would allow debt collectors to send what are otherwise payment-demand letters, in violation of 1692c(c), by simply including a passing reference to a payment plan option."

The plaintiff also claimed, and the court agreed, that marking the last two letters "final notice" was a violation of § 1692e. The court concluded that "the least sophisticated consumer" could easily conclude by the language in the notices that this was his last chance to pay the debt before further action was taken, and so found that the final notice letters violated § 1692e.

HoganWillig's bona fide error defense did not sway the court. The court stated that § 1692k(c) and the case law interpreting it requires that HoganWillig must show that it took precautions to eliminate the specific error complained of by the plaintiff, which HoganWillig did not do. Further, HoganWillig's own affiant indicated that she did not follow the alleged precautions HoganWillig claimed were in place.