The FDCPA Year in Review: 2021

This article reviews a very active 2021 concerning the Fair Debt Collection Practices Act (FDCPA): significant new FDCPA regulations took effect, a Supreme Court decision significantly impacts standing in FDCPA cases, and twenty-one appellate court panels issued important FDCPA published decisions. Of special note, all the chapters in the digital version of NCLC’s Fair Debt Collection have been extensively reorganized, rewritten, and updated.

The CFPB Regulation F on the FDCPA

One of the most significant FDCPA developments in years, is that the Consumer Financial Protection Bureau’s Regulation F on the FDCPA went into effect on November 30, 2021. See 12 C.F.R. pt. 1006. A recent NCLC article summarizes the new regulation and provides links for more detailed information. In addition, the digital version of NCLC’s Fair Debt Collection has recently been updated and examines Regulation F in detail. Fair Debt Collection § 1.1.1.6 provides a table indicating where each Regulation F provision is discussed in the treatise and the corresponding statutory provision.

Supreme Court Ruling on Constitutional Standing

In June 2021, the Supreme Court issued a major ruling on federal court standing requirements, TransUnion L.L.C. v. Ramirez, ___ U.S. ___, 141 S. Ct. 2190, 210 L. Ed. 2d 568 (2021). The case dealt with constitutional standing in a Fair Credit Reporting Act case, but Ramirez will almost certainly be raised in any FDCPA litigation. The practice implications of this decision for many types of consumer claims are examined in a June NCLC article. Summarized below are FDCPA 2021 appellate decisions on constitutional standing, both before and after the Ramirez ruling.

In addition, NCLC’s Fair Debt Collection § 11.15 analyzes Ramirez in depth and provides practice advice on how most effectively to plead and show standing for cases based on violation of specific FDCPA provisions. That section also exhaustively considers both federal district and appellate court FDCPA decisions interpreting both Ramirez and the Supreme Court’s 2016 decision in Spokeo, Inc. v. Robins, 578 U.S. 330 (2016).

Year-End Review of 2021 FDCPA Appellate Decisions

The rest of this article summarizes all 2021 FDCPA published decisions from the Circuit Courts of Appeal. For unpublished appellate decisions––those not appearing in F.3d or F.4th––and for federal district court decisions, see NCLC’s Fair Debt Collection. The published decisions from 2021 summarized here are from the Second, Third, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Circuits. There are twenty-one decisions, and they are listed below under sixteen topics. Some decisions are listed under multiple topics.

Appellate Decisions on Standing Issued After the Ramirez Decision

Lupia v. Medicredit, Inc., 8 F.4th 1184 (10th Cir. 2021). Consumer alleged violations of §§ 1692c(c) and 1692g(b) when the collector called the consumer after receiving a letter disputing the debt and asking the collector not to call. The Tenth Circuit found that the consumer had standing, holding that, “[t]hough a single phone call may not intrude to the degree required at common law, that phone call poses the same kind of harm recognized at common law—an unwanted intrusion into a plaintiff’s peace and quiet.” In addition to the fact that the consumer’s claims “have roots in long-standing common-law tradition,” the court also noted that Congress enacted the FDCPA in part to protect privacy interests such as those expressed by the consumer.

Wadsworth v. Kross, Lieberman & Stone, Inc., 12 F.4th 665 (7th Cir. 2021). Consumer alleged that collector violated § 1692g(a) for failing to provide a written validation notice after the initial communication and §§ 1692d(6) and 1692e(11) for failing to identify itself as a debt collector. Reversing summary judgment for the consumer, the Seventh Circuit held that the consumer lacked standing because she failed to provide evidence that she suffered any concrete injury. The court noted that she did not pay the alleged debt and did not allege detrimental reliance on the collector’s communication and held that stress, anxiety, and embarrassment alleged by the consumer were not sufficient to establish concrete harm.

Ward v. Nat'l Patient Acct. Servs. Sols., Inc., 9 F.4th 357 (6th Cir. 2021). Consumer alleged violations of §§ 1692d(6), 1692e(11), and 1692e(14) where collector failed to identify itself as a debt collector in a voicemail message and did not identify itself by its full business name.

The majority held that the procedural injuries asserted did not bear a close relationship to the traditional harm of invasion of privacy. The majority also held that the consumer’s allegations that they mailed a cease communication letter to the wrong corporation as the result of the collector’s failure to identify itself was not sufficient to establish standing because “confusion alone is not a concrete injury.” It rejected the economic expense of retaining counsel as a concrete injury since this would nullify Article III limits by granting standing to anyone who retained counsel. Finally, the court said that the consumer did not clearly allege harm caused by the voicemail message they received after sending a cease communication letter to the wrong entity. As a result, the majority concluded that the consumer did not have standing because they failed to satisfy the concreteness element.

In contrast, the dissent concluded that the collector’s misidentification resulted in a concrete harm because the consumer sent a cease contact letter to the wrong entity and the collector contacted him after he sent the cease letter, which resembled the tort of intrusion upon seclusion.

Appellate Decisions on Standing Issued Prior to Ramirez

Garland v. Orlans, P.C., 999 F.3d 432 (6th Cir. 2021). Consumer alleged violation of § 1692e(3) based on a form letter in a non-judicial foreclosure that was sent without meaningful attorney review. The Sixth Circuit held that the consumer lacked standing because the “bare” allegations of confusion and anxiety were “not concrete enough to support standing” and the alleged anxiety was traceable to the consumer, not the collector.

Markakos v. Medicredit, Inc., 997 F.3d 778 (7th Cir. 2021). Consumer sued collector for violations of § 1692g(a) after collector sent consumer a letter seeking to collect $1,830.56, consumer disputed the debt, and collector subsequently claimed that $407 was owed. The Seventh Circuit affirmed dismissal of consumer’s claim for lack of standing. The court found that she failed to satisfy the injury-in-fact prong of standing because the consumer did not allege harm where she did not pay but instead disputed the debt, rejecting consumer’s argument that there was an informational injury. Two judges wrote separate concurrences, agreeing that the decision was correct under Seventh Circuit precedent but questioning whether those precedents went too far.

Pennell v. Global Tr. Mgmt., L.L.C., 990 F.3d 1041 (7th Cir. Mar. 11, 2021). Consumer sent collector a letter refusing to pay and requesting that collector cease all communications. Collector sold debt to a second collector who sent another collection letter. Consumer sued the second collector for violations of §§ 1692c(a)(2) and 1692(c). The Seventh Circuit held that the consumer failed to establish the injury-in-fact prong of standing since stress and confusion alleged in the complaint were insufficient to establish standing. The court refused to consider consumer’s argument that injury-in-fact could be established based on the invasion of privacy because this argument was not included in the complaint.

Smith v. GC Servs. L.P., 986 F.3d 708 (7th Cir. 2021). Consumer alleged that the collector violated § 1692g(a)(3) by telling consumers to put disputes in writing. The Seventh Circuit held that the consumer did not satisfy the injury element of standing because they did not try to show what good a dispute would have done for them and therefore did not allege injury.

Appellate Decision on the Definition of “Communication” 

Fontana v. HOVG L.L.C., 989 F.3d 338 (5th Cir. 2021). Consumer alleged that collector violated § 1692c(b) when it called the consumer’s sister, left a message for the consumer, and asked the sister to have the consumer return the call. Affirming the lower court’s dismissal of the claim, the Fifth Circuit concluded that the conversation did not imply that a debt existed where the collector’s representative gave the agency’s name—Bay Area Credit Service—but no information about its business or information about the purpose of the call beyond saying that the call was about an “important personal business matter.” Since the conversation did not convey information about a debt, it was not a “communication” as defined by § 1692a(2) and the consumer did not plead sufficient facts to suggest a plausible violation of the FDCPA.

Appellate Decision on the Definition of “Debt” 

Conboy v. United States Small Bus. Admin., 992F.3d 153 (3d Cir. 2021). Affirming summary judgment for the collector where the debt at issue was a commercial loan from the United States Small Business Administration that did not qualify as a consumer debt under § 1692a(5).

Appellate Decision Interpreting “In Connection with Collection of a Debt”

Heinz v. Carrington Mortg. Servs., L.L.C., 3 F.4th 1107(8th Cir. 2021). Consumer alleged violations of §§ 1692e and 1692f by mortgage servicer related to an attempted loan modification. The Eighth Circuit acknowledged that nonjudicial foreclosure is a debt collection activity but held that each communication must be examined separately to determine if it was made in connection with the collection of a debt. Using the “animating purpose test” for purpose of § 1692e, the court found that none of the communications at issue were made in connection with the collection of a debt. Including a disclosure that the communication is from a debt collector for the purpose of collecting a debt did not automatically mean that the communication was sent “in connection with the collection of a debt.”

The court also held that alleged violations of § 1692f were not “done in an attempt to collect upon a debt” where the mortgage servicer did not discuss, reference, or request payment in any of the communications.

Appellate Decision on the Least Sophisticated Consumer Standard

Hopkins v. Collecto, Inc., 994 F.3d 117 (3d Cir. 2021). Consumer alleged that a validation letter violated §§ 1692e and 1692f where it stated that the consumer owed $0 in interest and $0 in fees on a static debt without stating that the itemization will not change. The court rejected the consumer’s argument that it should discount precedents decided in circuit courts that use the “unsophisticated debtor” standard instead of the “least sophisticated debtor” and called the two standards “functionally equivalent.”

Appellate Decisions on Deception

Klein v. Affiliated Group, Inc., 994 F.3d 913 (8th Cir. 2021). The Eighth Circuit affirmed summary judgment for the collector on consumer’s claim that the collector violated §§ 1692e and 1692e(10) by stating that her account had been “turned over” from one collector to another, concluding that there was a valid assignment of the contract between two collectors.

The court also affirmed summary judgment for the collector on consumer’s claim that collector violated §§ 1692e(5) and 1692f(1) by collecting without notifying her of the hospital’s financial assistance policy, concluding that the collection efforts by the third-party collector were not billing statements issued by a “hospital organization” and were not covered by the Treasury Department’s regulations. Moreover, the court found that the FDCPA “does not impute” the hospital’s responsibility to comply with those regulations to collector’s working on its behalf. Here, the consumer had previously received notice about the financial assistance policy from a medical bill, applied, and been rejected before receiving letters from the collector.

Moyer v. Patenaude & Felix, A.P.C., 991 F.3d 466 (3d Cir. 2021). Consumer received a collection letter stating “[i]f you wish to eliminate further collection action, please contact us at 800-832-7675 ext. 8500.” Affirming summary judgment for the collector, the Third Circuit rejected consumer’s argument that the letter violated § 1692e(10) because collector never claimed that a phone call was a “legally effective” way to stop collection activity. The court also rejected the consumer’s argument that the quoted language created confusion regarding the consumer’s rights under § 1692g since the letter instructed the consumer to write and did not state that a call would be sufficient.

Appellate Decision on Harassing Calls

Zurich American Ins. Co. v. Ocwen Fin. Corp., 990 F.3d 1073 (7th Cir. 2021). The court affirmed a lower court determination that fifty-eight calls to a consumer over a four-month period despite the consumer’s pleas to stop were meant to annoy or harass in violation of § 1692d(5). The decision also affirmed that insurer did not have a duty to defend or indemnify the insured collector for invasion of privacy.

Appellate Decisions on Interest Itemization and Accrual

Cortez v. Forster & Garbus, L.L.P., 999 F.3d 151 (2d Cir. 2021). Consumer argued that a post-judgment letter offering to settle the outstanding amount due for particular sums due by certain dates violated §§ 1692e and 1692e(2)(A) for failing to disclose that interest would accrue on the judgment if payment was not made according to one of the settlement offers. The Second Circuit clarified that in Avila v. Riexinger & Associates, L.L.C., 817 F.3d 72 (2d Cir. 2016) it previously “held only that a debt collector must ‘either’ disclose that interest and fees continue to accrue ‘or’ offer to extinguish the debt in exchange for a specified payment” but was not required to do both. Here the court found that the collector complied with the second safe harbor. It reversed summary judgment for the consumer and remanded with instructions to enter summary judgment for the collector.

Hopkins v. Collecto, Inc., 994 F.3d 117 (3d Cir. 2021). Consumer alleged that a validation letter violated §§ 1692e and 1692f where it stated that the consumer owed $0 in interest and $0 in fees on a static debt without stating that the itemization will not change. Citing decisions from other circuits finding no FDCPA violations on similar facts, the Third Circuit affirmed dismissal. In a footnote, the court also noted that the Consumer Financial Protection Bureau recently finalized debt collection regulations requiring itemization and specifically allowing $0 to be entered for no interest or fees.

Appellate Decision on Time-Barred Debt

Kaiser v. Cascade Capital, L.L.C., 989 F.3d 1127 (9th Cir. 2021). The Ninth Circuit concluded that the debt was time-barred under Oregon’s four-year statute of limitations for sale-of-goods claims; found that the consumer’s allegations that the collector filed a time-barred lawsuit stated a claim for violations of §§ 1692e and 1692f; and concluded that the consumer stated a claim under § 1692e for threatening to sue the consumer on a time-barred debt based on language in the collection letter.

The court also held that “a mistake about the time-barred status of a debt under state law could qualify as a bona fide error within the meaning of the FDCPA,” distinguishing mistakes about the meaning of the FDCPA that were at issue in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich L.P.A., 559 U.S. 573 (2010).

Appellate Decisions on FDCPA Claims Based on Collector’s Alleged Litigation Misconduct in Its Collection Lawsuits

Robbins v. Med-1 Solutions, L.L.C., ___ F.4th ___, 2021 WL 4167266 (7th Cir. Sept. 14, 2021). Affirming summary judgment for the collector, the Seventh Circuit held that the consumer could not use Indiana’s claim preclusion or issue preclusion doctrines to block the collector from arguing that the consumer was obligated to pay attorney fees incurred while disputing attorney fees associated with the collection lawsuit (“fees-on-fees”). The court also rejected the consumer’s argument that the collector violated §§ 1692e and 1692f by claiming that the consumer’s agreement with the medical provider required her to pay fees-on-fees, holding that the contract provision requiring the consumer to pay the “costs of collection, including attorney fees” included the cost of collecting attorney fees.

Smith v. Stewart, Zlimen & Junegers, Ltd., 990 F.3d 640 (8th Cir. 2021). The Eighth Circuit affirmed dismissal of consumers’ claims under §§ 1692e, 1962e(2)(A), 1692e(5), and 1692e(10) for representing in a state court collection lawsuit that “disbursements” were owed. The court held that, to state a claim for misrepresentation to a third-party, the consumers must allege facts “establishing that those representations were false, deceptive, or misleading under the circumstances” and that the consumers had not alleged facts showing that the collector had done anything other than take “a good faith legal position in its prayer for relief.”

The Eighth Circuit also affirmed dismissal of consumers’ claims under §§ 1692f and 1692f(1) for filing a lawsuit to collect alleged debts without sufficient evidence to establish complete chain of title. Even though a standing order of the state trial court where the collection action was filed required such evidence, the Eighth Circuit held that failure to comply with the order did not violate § 1692f(1) since that section protects consumers from attempts to collect debt not owed and here the consumers did not allege that the debts were not owed. Since the consumers did not allege any wrongdoing, the court concluded that the collector was “entitled to bring a good faith claim to collect the alleged debts” although the collector did not comply with the state court order.

Appellate Decisions Concerning Medical Debt

Klein v. Affiliated Group, Inc., 994 F.3d 913 (8th Cir. 2021). The Eighth Circuit affirmed summary judgment for the collector on consumer’s claim that the collector violated §§ 1692e(5) and 1692f(1) by collecting without notifying her of the hospital’s financial assistance policy, concluding that the collection efforts by the third-party collector were not billing statements issued by a “hospital organization” and were not covered by the Treasury Department’s regulations. Moreover, the court found that the FDCPA “does not impute” the hospital’s responsibility to comply with those regulations to collector’s working on its behalf. Here, the consumer had previously received notice about the financial assistance policy from a medical bill, applied, and been rejected before receiving letters from the collector.

Klotz v. Celentano Stadtmauer and Walentowicz L.L.P., 991 F.3d458 (3d Cir. 2021). The Third Circuit affirmed dismissal of consumer’s §§ 1692e, 1692e(2)(A), and 1692f claims based on efforts to collect the medical debts incurred by the consumer’s deceased husband because it found that New Jersey’s common law doctrine of necessaries is not preempted by the Equal Credit Opportunity Act and the collector properly complied with the requirements of the doctrine.

Appellate Decision on Overshadowing of Verification Rights

Moyer v. Patenaude & Felix, A.P.C., 991 F.3d 466 (3d Cir. 2021). Consumer received a collection letter stating “[i]f you wish to eliminate further collection action, please contact us at 800-832-7675 ext. 8500.” Affirming summary judgment for the collector, the Third Circuit rejected consumer’s argument that the letter violated § 1692e(10) because collector never claimed that a phone call was a “legally effective” way to stop collection activity. The court also rejected the consumer’s argument that the quoted language created confusion regarding the consumer’s rights under § 1692g since the letter instructed the consumer to write and did not state that a call would be sufficient.

Appellate Decisions on the Bona Fide Error Defense

Kaiser v. Cascade Capital, L.L.C., 989 F.3d 1127 (9th Cir. 2021). The Ninth Circuit held that “a mistake about the time-barred status of a debt under state law could qualify as a bona fide error within the meaning of the FDCPA,” distinguishing mistakes about the meaning of the FDCPA that were at issue in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich L.P.A., 559 U.S. 573 (2010).

Lupia v. Medicredit, Inc., 8 F.4th 1184 (10th Cir. 2021). Consumer alleged violations of §§ 1692c(c) and 1692g(b) when the collector called the consumer after receiving a letter disputing the debt and asking the collector not to call. The collector did not challenge that the call violated these provisions but instead relied upon the bona fide error defense. Affirming summary judgment for the consumer, the Tenth Circuit held that the collector had the burden of proof to show that it maintained reasonable procedures, that evidence of its procedures was submitted too late in the case after collector denied the existence of procedures in discovery, and that collector’s policy of entering letters into its system within three days of receipt was not a reasonable procedure adapted to avoid the phone call that violated §§ 1692c(c) and 1692g(b). In dicta, the court also questioned whether collector’s statement of what was “typically” done when processing the mail even qualified as a “procedure.”

Appellate Decision on Attorney Fees After Settlement

Tejero v. Portfolio Recovery Assocs., L.L.C., 993 F.3d 393 (5th Cir. 2021). The Fifth Circuit affirmed the lower court’s decision to award no attorney fees in a case involving settlement of an FDCPA claim. The court held that the language in § 1692k(a)(3)—“in the case of any successful action to enforce the foregoing liability”—“means a lawsuit that generates a favorable end result compelling accountability and legal compliance with a formal command or decree under the FDCPA” and that the consumer “won no such relief because he settled before his lawsuit reached any end result.”

Appellate Decision on a Bankruptcy Discharge Violation

CitiMortgage, Inc. v. Davis, ___ F.4th ___, 2021 WL 5856795 (7th Cir. Dec. 10, 2021). Seventh Circuit affirmed dismissal of FDCPA and other claims against the mortgagee based on continued collection of a mortgage debt that the consumer claimed was discharged in bankruptcy. Since the consumer did not appeal a prior determination by the bankruptcy court that the mortgage debt was not discharged, FDCPA and other claims against the mortgagee represented an impermissible collateral attack on the bankruptcy court holding.