Opinion
Civil Action No. C82-2020A.
October 14, 1983
ORDER
This action, brought pursuant to the Fair Debt Collection Practices Act (the FDCPA), 15 U.S.C. @ 1692 et seq., arises from a dispute over a $65.30 bill. The thrust of the plaintiff's complaint is that the defendant violated the FDCPA by threatening legal action which it did not intend to take and harassing plaintiff by numerous letters improperly threatening damage to plaintiff's credit rating and business reputation, thereby entitling him to damages pursuant to 15 U.S.C. @1692k(a) and (b). Jurisdiction is conferred by 15 U.S.C. @1692k(d).
I. FACTS
On November 6, 1980, the creditor issued one statement to the plaintiff in the amount of $65.30 and another statement for the identical items in the amount of $76.40 (showing $65.30 plus a handling charge of $11.10). Two different account numbers appeared on the statements. On January 26, 1981, plaintiff received a phone call from defendant regarding the bills, and requested a copy of the invoice during this conversation. On February 3, 1981, plaintiff sent defendant a letter confirming the conversation along with a check in the amount of $65.30. Defendant negotiated the check on February 10, 1983.
Subsequently plaintiff received a series of three form letters alternately demanding payment of $65.30 or $76.40. The first form letter was sent on February 24, 1981 and again on March 10, 1981, stating that the file had been turned over to defendant for legal action. On March 19, 1981, defendant's second form letter stated the following:
"Since you have ignored our last letter, let me tell you what is going to happen next. A full and detailed account of your deceptive business pratices is going to be sent to our credit reporting agencies to be entered into their computers.
At the very least your credit rating will be damaged, and your professional standing as well.
On the outside chance that you might have honestly overlooked this matter, I will hold this file for five -5- days in order to give you an opportunity to respond, after which I will have to proceed with the aforementioned action."
Plaintiff responded by letter dated March 25, 1981, enclosing a copy of the check and previous letter to defendant, and requesting that communication at his office cease. On May 14, 1981, June 9, 1981, February 24, 1982, and March 1, 1982, defendant sent the same "credit rating" form letter to plaintiff's office address.
On September 21, 1982, defendant received plaintiff's complaint by certified mail. On that same date, defendant sent plaintiff two form letters (one for each account number) stating:
"Since you have totally disregarded all our attempts to resolve this matter amicably, we have now made note of your total disregard and refusal to pay this account on our credit computer.
Our attorney is at present filing in federal court in an attempt to litigate this matter.
As of this point, if we do not hear from you within two -2- business days we will commence litigation. You will not only be sued for the amount of the invoice, but for late charges and interest as well as all court costs and legal fees.
We strongly suggest, to avoid further discomfort for yourself and your company, that you strive to clear up this matter now."
II. Violations of the FDCPA
In 1977 Congress enacted the FDCPA in response to national concern over the "use of abusive, deceptive and unfair debt collection practices by many debt collectors." 15 U.S.C. § 1692 (a). The purpose of the FDCPA is "to protect consumers from a host of unfair, harassing, and deceptive debt collection practices without imposing unnecessary restrictions on ethical debt collectors." S.Rep. No. 382, 95th Cong., 1st Sess. 1-2,reprinted in 1977 U.S. Code Cong. Ad.News 1695, 1696. The FDCPA is "primarily self-enforcing," S.Rep. No. 382, supra at 5, 1977 U.S. Code Cong. Ad.News at 1699, through private causes of action. See 123 Cong. Rec. 28112-13 (1977) (remarks of Rep. Annunzio).
Plaintiff alleges several violations, general and specific, of the FDCPA. The facts are undisputed. In reaching the award of damages, it is proper to consider "the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional." 15 U.S.C. § 1692k (b) (1).
A. Validation notice
Defendant failed to send plaintiff the notices required by the validation provisions of 15 U.S.C. § 1692g. The letters did not notify the consumer that the debt, or any portion thereof, could be disputed. The collector's validation notice must be sufficient to put unsophisticated consumers on notice as to their rights.Baker v. G.C. Services Corp., 677 F.2d 775 (9th Cir. 1982).The clear language of the statute explicitly requires that the debtor shall be given notice that he may "dispute the validity of the debt, or any portion thereof . . ." 15 U.S.C. § 1692g(a) (3). One of the fundamental legislative concerns of the FDCPA was to "eliminate the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer had already paid," S.Rep. No. 95-382, 95th Cong., 1st Sess. 4 (1977), and protecting consumers who had become victims of computer error, H.R. Rep. No. 95-131, 95th Cong., 1st Sess. 8 (1977).
In this case, the first form letter's statement that "there is still time" clearly does not inform the consumer of the appropriate procedure to dispute the debt. Nor do the second and third form letters inform the consumer of the consequences of disputing the debt. Defendant's communications simply failed to disclose any of the required information, and thus violate the FDCPA.
B. Ceasing communication
15 U.S.C. § 1692c(c) provides that if a consumer notifies the debt collector in writing that he refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer except to advise him that further efforts to collect are being terminated or to notify him of specified remedies. The FDCPA is designed to protect a consumer's reputation and privacy, as well as to prevent loss of jobs resulting from a debt collector's communication with parties not specifically enumerated in 15 U.S.C. § 1692b. S.Rep. No. 382,supra at 4, 1977 U.S. Code Cong. Ad.News at 1699; 15 U.S.C. § 1692a.
In the instant case, the defendant sent at least six letters over a period of eighteen months demanding payment after it received notice in writing that plaintiff had paid the debt and that he wished them to cease further communications with him. Moreover, defendant sent two letters to plaintiff threatening immediate legal action after he filed the instant action, and thus violated 15 U.S.C. § 1692c(a) (2) prohibiting communication with a consumer represented by counsel. See Harvey v. United Adjusters, 509 F. Supp. 1218 (D. Ore. 1981). These final letters were sent nearly six months after previous communication with plaintiff, and indicate a deliberate policy of evading the spirit of the statute. Defendant failed to cease communication with plaintiff in violation of § 1692c.
C. Harassment or abuse
15 U.S.C. 1692d provides that "a debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." The legislative history indicates that this general prohibition "will enable the courts, where appropriate, to proscribe other improper conduct which is not specifically addressed." 1977 U.S. Code Cong. Ad.News at p. 1698; Harvey v. United Adjusters, supra.The defendant's persistence in continuing to demand payment with increasingly harsh threats of loss of credit and business reputation, has the natural (and intended) consequence of harassment and intimidation in order to effect a collection. Defendant's violation of § 1692d is clear.
D. Deception and improper threats
Plaintiff alleges violation of the general prohibition of 15 U.S.C. § 1692e and e(10) in the defendant's use of false, deceptive or misleading representations or means in collecting or attempting to collect this debt. In addition to the general standard, § 1692e(5) bars a threat "to take any action that cannot legally be taken or that is not intended to be taken."
Defendant's first communication states that the file has been turned over for legal action. It further states "You have shown no interest in getting this matter taken care of. You have disregarded all the good business practices that prompted our client to issue you credit in the first place." This letter, sent after the plaintiff had sent a check which was negotiated, gives the false implication that the consumer committed "a crime or other conduct in order to disgrace the consumer." § 1692e(7). The implication persists in the subsequent form letters sent to plaintiff that he is the party engaging in deceptive practices.
The second form letter sent to defendant asserts that if the consumer does not respond within five days, a "full and detailed account of your deceptive business practices is going to be sent to our credit reporting agencies to be entered onto their computers." The letter goes on to state "at the very least your credit standing will be damaged and your professional standing as well." This letter, sent twenty-four days after the initial form letter, clearly threatens action which is illegal under the validation provisions of the FDCPA: the consumer has thirty days in which to dispute a debt under 15 U.S.C. 1692g. Ost v. Collection Bureau, Inc., 493 F. Supp. 701 (D.N.D. 1980);Zoeckler v. Credit Claims and Collections, Inc., 554 F. Supp. 937 (N.D. Ga. 1982). If a consumer did dispute the debt as provided for in validation provisions, this would have to be included in any credit report. Hooper Holmes, Inc., 95 F.T.C. 853 (1980); F.T.C. Staff Opinion Letter, LeFevre, 11/16/81; F.T.C. Staff Opinion Letter, Reffkin, 8/1/80. Plaintiff here did dispute the debt.
The letter is deceptive since defendant was threatening adverse credit rating that "cannot legally be taken or that is not intended to be taken". It is also deceptive in that it make the false representation that the defendant is a consumer credit reporting agency which can issue adverse credit ratings, in violation of § 1692e(8) and (16). Further, it implies (incorrectly) that the defendant could lawfully communicate with third parties by releasing to creditors, neighbors, or the business community information in violation of § 1692c(b).Rutyna v. Collection Accounts Terminal, Inc., 478 F. Supp. 980 (N.D. ILL. 1979). The defendant's communications threaten to communicate unvalidated information.
Finally, the third form letter falsely represents that "an attorney is at present filing in federal court in an attempt to litigate this matter. As of this point, if we do not hear from you within two -2- business days we will commence litigation." This letter clearly falls within the prohibition of §§ 1692e(5) and e(10) by creating "the impression that legal action by defendant is a real possibility," Baker v. G.C. Services Corp., 677 F.2d 775 (1982). and also misrepresents the legal status of the debt in violation of § 1692e(2). Defendant has unquestionably violated the prohibitions of § 1692e.
III. Damages
The FDCPA is a strict liability statute. Once the consumer shows a violation, statutory damages may be awarded under 15 U.S.C. § 1692k. The plaintiff need not prove the debt invalid or show any actual damages to receive statutory damages. Baker v. G.C. Services Corp., 677 F.2d 775 (9th Cir. 1982); Harvey v. United Adjusters, 509 F. Supp. 1218 (D. or. 1981); Carrigan v. Central Adjustment Bureau, Inc., 502 F. Supp. 468 (N.D. Ga. 1980). In the instant case, plaintiff has shown actual damages in the amount of $4,000.00.
An award of statutory damages for mental distress is not conditioned in this Act upon the plaintiff's proving pecuniary or monetary damages. Rutyna v. Collection Accounts Terminal, supra, Bingham v. Collection Bureau, Inc., supra, Carrigan v. Central Adjustment Bureau, Inc., supra. Additional damages may be awarded even though the creditor's conduct is not wanton, malicious or oppressive, in order to increase the incentive for debt collector compliance. Anderson v. United Finance Company, 666 F.2d 1274, 1278 (9th Cir. 1982); Baker v. G.C. Services Corp., 677 F.2d 775 (9th Cir. 1982); Whatley v. Universal Collection Bureau, Inc., C.A. No. C81-684A (N.D. Ga. Jan. 29, 1982). The violations in this case authorize a finding of statutory damages in the amount of $4,000.00 in addition to actual damages.
To determine the award of damages in the instant case, this Court has considered the frequency, persistence and nature of noncompliance, and the extent to which such noncompliance was intentional. 15 U.S.C. § 1692k(b)(1). Defendant was trying to collect two allegedly separate debts from the same consumer. Defendant failed to comply with the validation provisions of the Act with respect to either debt. The consumer requested that communications cease, yet the defendant persisted in sending threatening and misleading letters in reference to two different accounts.
The FDCPA is part of the Consumer Protection Act, and as such, should be liberally construed in favor of the consumer to effect its broad remedial purpose. Mirabal v. General Motors Acceptance Corp., 537 F.2d 871, 878 (7th Cir. 1976). Unlike the TIL Act, 15 U.S.C. § 1640 et seq. (1976), which is a disclosure act, the FDCPA is a substantive regulation protecting the consumer from specified conduct by debt collectors aimed at harassing and intimidating consumers. The only required action is the debt collector's compliance with § 1692g validation provisions. The other provisions enumerate specificly proscribed conduct which the legislature intended to eliminate because existing remedies were inadequate. 15 U.S.C. 1692(b) and (e).
The FDCPA protects against abuses doubly inflicted on a consumer, and provides for judicial discretion in determining the damages to be awarded. To effectuate the explicit purposes of the FDCPA, there should be more protection afforded to a consumer receiving a series of misleading, abusive letters in a dunning campaign alleging two (or more) debts as for one. The legislative history of the FDCPA indicates Congress' implicit approval for the recovery of several statutory awards per plaintiff. The plaintiff can join in one proceeding several causes of action for continued harassment on one alleged debt or another. Congress deleted a limitation similar to section 130(g) of the TIL Act (which restricted the maximum statuory recovery to a single award for any one transaction or open-end account) in an early FDCPA bill. No similar provision was included in the FDCPA itself. See H.R. 11969, 94th Cong. 2d Sess. § 812(f) (1976) (Clearinghouse No. 31,059Z1), at p. 15. Other considerations include the legislative purpose in providing for an effective private enforcement mechanism of the FDCPA as well as the deterrent effect upon abusive collection attempts, 15 U.S.C. § 1692(e). 15 U.S.C. 1692(b). S. Rep. No. 95-382, 95th Cong., 1st Sess. 2 (1977), 1977 Cong. Admin. News 1696-7.
Under the Act plaintiff as prevailing party is entitled to an award of attorney's fees and costs. 15 U.S.C. 1692k. Plaintiff is awarded $750.00 attorney's fees plus costs of this action.
ORDERED, that plaintiff recover of defendant $4,000.00 actual damages, $4,000.00 additional damages, $750.00 attorney's fees, and costs of this action.