Will The Willfulness And Misrepresentation Lawsuit Be Dropped?
In a lawsuit filed by Williams and Fudge, their attorney contends that the defendants violated the Fair Debt Collection Practices Act when they refused to return signed statements from its customers. The complaint further claims that the defendants violated the FTC’s regulations by engaging in deceptive practices when it came to the collection of payments by its consumers.
The lawsuit, which was filed in Federal District Court for the Northern District of Ohio, says that the “unjust and unlawful” practices were done “with the full knowledge of the defendants” during the time that they were experiencing a financial crisis. It says that the defendants did not have an adequate amount of capital to pay its bills and needed to divert funds to cover its expenses. To this end, the lawsuit says, the defendants hired illegal agencies to collect debts, and when it failed to collect, the defendants used other strategies to avoid paying creditors.
The complaint also claims that these practices occurred on a larger scale than is required by the FTC’s regulations, which the complaint says are necessary to protect consumers from deceptive acts and practices. It further contends that the federal court erred in finding that there was no proof that the defendants had failed to comply with the FDCPA and to prevent the case from being transferred to another district, in violation of the statute of limitations.
In the lawsuit, the plaintiffs claim that the defendants violated the federal and state regulations by failing to have a reasonable basis for denying any payment, not even an attempt, for debts, including credit card debts. They also claim that they failed to provide adequate documentation of the debts’ actual balance, or of their sales price, which violates the regulations.
These violations occurred because the debt collection agents used intimidation tactics to intimidate their clients, including threatening to have them arrested and to damage their credit ratings. Also, they misrepresented their fees to the clients. In some instances, they intentionally delayed or refused to process payments, which could cost the clients’ lives. The lawsuit also contends that the defendants breached the statute of limitations by collecting payments that they could not legally collect.
According to the plaintiffs, the defendants engaged in similar practices in other areas of debt collection, such as credit card debt collection, medical billing, tax delinquency, and medical collections. However, the lawsuit states that the case against the defendants is unique because it involves the collection of credit card debt, and it relates to a specific FTC regulation, which is known as the “notice and acknowledgment rule.”
The lawsuit, which was filed in October 2020, was dismissed by the U.S. District Court for the Northern District of Ohio in November 2020. On appeal to the Fifth Circuit Court of Appeals, the plaintiffs, who represent a wide range of consumers, including debtors who owe money to a variety of creditors, are seeking to enjoin enforcement of the lawsuit against the defendants.
Specifically, the complaint says that the court erred in ruling that the FDCPA does not apply to the collection of debt owed to credit card companies. According to the complaint, a properly drafted Notice Of Default, and a timely Request For Release of Default By A Default In Payment, are not the same thing, and the FTC is not entitled to enforce the Notice Of Default, which requires the debtor to respond within a certain time, while the Request For Release of Default is issued by the creditor after a particular date.
Another error that the complaint contends the court made in its decision, was in allowing the defendants to use a “citation” to describe their debt collection efforts as a “willful violation,” even though the FDCPA has no such definition. and the complaint argues that such actions cannot be considered “willful” within the meaning of the regulation. The complaint also asserts that the court erred in allowing the defendants to use a “failure to serve” to describe what happened, although the notice of default itself is sufficient to establish that the defendants did not follow the required procedure.
In addition to the plaintiffs themselves, the complaint names various other companies, including the defendants, as defendants. One of the complaint’s co-plaintiffs is the Credit Card Manufacturers Association (CCMA). Some of these entities are BankFirst, National Association of Consumer Credit Counselors, and New Economy Movement.