Court Rules Explanation of Law Firm’s Role as Debt Collector Was Sufficient for FDCPA

Aspiring plaintiffs continue to litigate the issue of an attorney’s role in sending debt collection letters. Under the Fair Debt Collection Practices Act, a debt collector may not use false or misleading representations in the collection of a debt. 15 U.S.C. § 1692(e). In Bencomo v. Forster & Garbus LLP, et al., No. 18-cv-1259 (E.D. Wis. July 15, 2019), plaintiff Modesta Bencomo alleged that the debt collector on her Target credit card violated the FDCPA by misrepresenting attorney involvement in sending her a collection letter. The Court rejected her theory of liability.

In June 2018, New York law firm Forster & Garbus LLP (“Forster”) mailed a letter to Bencomo regarding her delinquent Target credit card account. In the letter, Forster identifies itself as a “New York law firm” and states that “[t]he above referenced account has been referred to this firm for collection. The Full Balance shown above is the full amount owed as of the date of this letter.” The letter explains that payment of the minimum amount due ($392.00) would bring the account current, after which Forster would return the account to the creditor, “our client.” The letter includes Bencomo’s right to dispute the validity of her debt, information about how to pay, and a disclaimer regarding Forster’s role in collecting the debt:

At this time we are only acting as a debt collector. Attorneys may act as debt collectors. Our firm will not commence a suit against you. However, if we are not able to resolve this account with you, our client may consider additional remedies to recover the balance due. … Please note that we are required, under federal law to advise you that we are debt collectors and any information we obtain will be used in attempting to collet [sic] this debt.

No attorney at Forster reviewed the account to determine whether Bencomo was delinquent and/or was a candidate for legal action.

Bencomo sued Forster under the FDCPA, alleging among other things “that the Letter creates the false impression that an attorney at Forster had personally reviewed the circumstances of Bencomo’s debt.”

The Court rejected this argument, reasoning that “[a]ttorneys may act as debt collectors without violating the FDCPA so long as they are clear about the capacity in which they are acting in the debt collection process,” and here, the disclaimer was clear. Slip Op. 7 (emphasis added). The attorney-involvement disclaimer explicitly informed Bencomo that Forster was “only acting as a debt collector at the time of the letter’s transmission.” Id. at 8. Nothing more was required. Specifically, Forster was not required to include explicit language stating that “no attorney with this firm has personally reviewed the particular circumstances of your account.” While that language may be acceptable to achieve the same result, it is not necessary. In short, the Court concluded that the unsophisticated consumer, upon reading the letter to Bencomo, would understand that Forster’s role in sending the letter was as a debt collector, not as a lawyer. Nothing was false or misleading about this.

After dismissing Bencomo’s remaining claims, the Court looked to the requirement in Rule 1 of the Federal Rules of Civil Procedure that the Court secure the “just, speedy, and inexpensive determination of every action,” and refused to allow Bencomo a second opportunity to amend her complaint. In the Court’s own words, “[t]he defendants, and the Court, cannot be expected to be strung along as Bencomo tries out every theory of liability she can imagine as those theories come to her mind.”

This opinion was a victory for debt collectors. The Court found that a straightforward explanation of a law firm’s role as a debt collector was a sufficient disclosure for purposes of the FDCPA.

Troutman Sanders will continue to monitor this developing area of the law.