Occasionally the issue arises for debt collectors where they need to send their debtors a billing statement but they have received a cease and desist letter from the debtor they must adhere to. The question then becomes whether a billing statement is a violation of a cease and desist request. While not addressed head on, one court in California appears to have held that it would not be. This article looks at the issue as applied to Florida and Federal Courts.

Relevant Statutory Provisions:

15 U.S.C. § 1692b(6) – “Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall— (6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.”

15 U.S.C. § 1692c(a)(2) – “(a) COMMUNICATION WITH THE CONSUMER GENERALLY. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt— (2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer;”

15 U.S.C. § 1692c(c) – “(c) CEASING COMMUNICATION. If a consumer notifies a debt collector in writing that the consumer 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 with respect to such debt, except— (1) to advise the consumer that the debt collector’s further efforts are being terminated; (2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or (3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.”

Fla. Stat. § 559.72 “Prohibited practices generally.—In collecting consumer debts, no person shall: (18) Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the debtor’s attorney fails to respond within 30 days to a communication from the person, unless the debtor’s attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication.”

Marcotte v. General Electric Capital Services

In April of 2010 the Southern District Court of California held that under the California Fair Debt Collection Practices Act (CFDCPA) debt collectors, collecting on their own behalf, may send billing statements to consumers even if represented by an attorney. The case was brought by Phillip Marcotte against GE Money Bank (GEMB) for a violation of the CFDCPA. Marcotte claimed G.E Capital violated the act by sending two billing statements to Marcotte after being informed that he was represented by an attorney, and all communications should go to the attorney. Plaintiff references 15 U.S.C. §§ 1692b(6), 1692c(a)(2), and 1692c(c) and the court pointed out that these “generally prohibit any communications from a debt collector once the debt collector knows the consumer has an attorney or once the consumer requests in writing that the debt collector cease communications.”

GEMB pointed to California Civil Code § 1788.14(c), which prohibits communications except “statements of account.” However, Plaintiff proceeded under section 1788.17, which incorporates by reference the federal Fair Debt Collection Practices Act (FDCPA) and there is no exception for billing statements in the prohibition of communication.

The court looked at the statutory structure, noting that the incorporation of the federal statute was later in date, and did not address the conflict regarding the billing statements. The court also noted that a repeal of a provision by implication is disfavored. Additionally, GEMB pointed to the Truth in Lending Act (TILA) provision that requires credit car companies to send monthly billing statements. GEMB also noted that under the FDCPA the definition for “debt collector” does not include collectors on their own behalf. These factors ultimately led the California court to find that the billing statements sent by GEMB did not violate the CFDCPA’s prohibition on communications to consumers once they are represented by counsel. By comparison, and seeing that the court referenced the two scenarios together, it would appear that the mailing of billing statements would also not violate a cease and desist request.

Applying Marcotte in Florida

One court in Florida addressed a circumstance where this would not hold true however. In Keliher v. Target National Bank, the defendants tried to use the Marcotte case, but the court found it did not apply. The difference between the two situations according to the Florida district court was that the billing statements sent by Target National Bank, also contained collection language that’s not part of the TILA requirements and violates the FDCPA as well as the Florida Consumer Collection Practices Act (FCCPA).

Interestingly, the defense in Marcotte argued that sending billing statements to the consumer rather than their attorney offered greater consumer protection due to the time constraints the consumer has to challenge the accuracy of any billing statement. Looking at these two cases along with the statutory language of both the FCCPA and the FDCPA it seems there is a fine line for creditors to walk. One important thing to note is that both cases addressed the prohibition on communication based on the creditor’s knowledge that the consumer is represented by counsel, and not based on a cease and desist request. Due to the fact that the language is similar for both situations, it can be inferred that courts may treat the two scenarios similarly. The safest solution for creditors is to carefully stick to the requirements of TILA and not include excess language that could be construed as a violation of either state or federal collections laws.

Tags: Consumer Credit