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Midland (San Diego) - FDCPA Question


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Okay, helping my sister out here which is another saga entirely. I have never had any collection items, thus this is not my strongest area of expertise.

 

This was a WAMU card that was sold to Chase who promptly ratejacked her from 9.9% to 29.99% with no negative credit issues or lates at the time, but her utilization was ~ 50%. Add a divorce and a dead beat dad into the mix and we get a default here on Chase.

 

Almost no collection activity from Chase who eventually sold this debt to Midland Credit Management in San Diego, CA. Once Midland initially contacted my sister, I crafted a nice DV letter for her with a limited C&D informing Midland that all future communication needed to be thru the USPS. She mailed the DV letter CMRRR and has the signed green card. Subsequent to this, there has been NO response to the DV letter and there was no further collection activity for a couple of years.

 

The current balance according to Midland is $12K + and the SOL EXPIRES next month! (March/2014). So for about the last six months, without ever validating, Midland started mailing her collection letters with various offers such as 50% or 70% off of the balance due and I am sure this is a result of the rapidly approaching SOL. So would this "continued collection activity" be considered multiple FDCPA violations for each letter since validation has NEVER been provided?

 

These are the comments on her three reports right now. EX - Your Statement: Account in dispute under Fair Credit Billing Act. EQ - Comments: Consumer disputes this account information; Collection Account. TU - Remarks: Acct Info Disputed by Consumer; >Placed for Collection<. Now with the SOL so close, I have told her to do nothing right now and hopefully Midland does not sue AND she has some FDCPA violations...Thanks CB!

 

 

 

 

 

 

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Since you sent the initial DV letter within 30 days of initial communication, then yes...it would be continued collection activity. How certain are you of the SOL? If you're 100% certain, then I'd wait for it to pass, then send off an ITS to them...demanding deletion and some form of settlement....say, 500 dollars from them for their violations

 

 

Of course, if you have no intention of following through with it, I wouldn't threaten legal action....

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Make sure and document everything from Midland. Once the state SOL safely passes by, contact a FDCPA consumer attorney and see if they will pick up the lawsuit pro bono. Attempting to collect a debt while it is in dispute is not illegal; what is illegal is a CA not informing the consumer that they will continue to attempt to collect a debt during the dispute process...it is called overshadowing.

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Since you sent the initial DV letter within 30 days of initial communication, then yes...it would be continued collection activity. How certain are you of the SOL? If you're 100% certain, then I'd wait for it to pass, then send off an ITS to them...demanding deletion and some form of settlement....say, 500 dollars from them for their violations

 

 

Of course, if you have no intention of following through with it, I wouldn't threaten legal action....

Thanks Pryan...

 

I have triple checked the SOL on this and have told my sister to do NOTHING until March. My thoughts were to send a letter only demanding deletion while documenting the FDCPA violations, no ITS, she just needs this deleted and is too stressed to fight Midland for cash.

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Rouge,

Sanscrit is wrong, actually with a timely DV (within 30 days of initial communications as in your sister's case), it is a violation of the FDCPA to continue collections until they have validated the debt.

 

Overshadowing is when a Collection Agency tells you that you have 30 days to dispute the debt and also demands payment with a deadline that conflicts with the 30 days.

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I may be mistaken, but it seems I have read somewhere that a settlement offer without validation is NOT a violation...of course, I may just be confused...

You are correct CG , there are no violations... so far.

 

Thanks everyone!

 

So the nuances of the FDCPA arise, I thought that a settlement offer was still considered continued collection activity, that in this case of an unanswered timely DV would constitute FDCPA violations. My sister has ONLY been receiving settlement offers, nothing else from Midland, no calls, nothing.

 

Might have to rethink my strategy on getting her a deletion next month....

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I don't recall any court case which ruled that offering a settlement (asking for money) prior to validation after a timely DV (which requires that collection activity (asking for money) ) wasn't continued collection activity.....

 

 

do you have a case in mind regarding that? I've been "out of the loop" for awhile and would be interested in reading that case

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I don't recall any court case which ruled that offering a settlement (asking for money) prior to validation after a timely DV (which requires that collection activity (asking for money) ) wasn't continued collection activity.....

 

 

do you have a case in mind regarding that? I've been "out of the loop" for awhile and would be interested in reading that case

+1 for me too! This was news to me.....

 

Granted it is a "settlement offer", however this is clearly still a form of collection activity.

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Since my sister really needs the baddie gone, I will have her dispute this account with the CRA's next month, thus completing the second half of the classic 1-2 Punch! Then if Midland does verify their account with the CRA's without validating, she will then definitely have a FDCPA violation for "continued collection activity" and hopefully she can leverage this against Midland.

Edited by Rogue
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I don't recall any court case which ruled that offering a settlement (asking for money) prior to validation after a timely DV (which requires that collection activity (asking for money) ) wasn't continued collection activity.....

 

 

do you have a case in mind regarding that? I've been "out of the loop" for awhile and would be interested in reading that case

Over Shadowing: Bartlett v. Heibl,128 F.3d497 7th Circuit 1997, Swanson v. Southern Oregon Credit Services,Inc ''The validation notice may not be either overshadowed or contradicted by other language or material in the origional or subsequent collection letters sent within 30 days after receipt of the first one.''

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I don't recall any court case which ruled that offering a settlement (asking for money) prior to validation after a timely DV (which requires that collection activity (asking for money) ) wasn't continued collection activity.....

 

 

do you have a case in mind regarding that? I've been "out of the loop" for awhile and would be interested in reading that case

Over Shadowing: Bartlett v. Heibl,128 F.3d497 7th Circuit 1997, Swanson v. Southern Oregon Credit Services,Inc ''The validation notice may not be either overshadowed or contradicted by other language or material in the origional or subsequent collection letters sent within 30 days after receipt of the first one.''

 

Thanks Sandscrit, I just went and read about these two cases...

 

I understand over shadowing, but that does not appear to be the case here and you previously stated in Post #7 that there are no current FDCPA violations. Since the timely DV letter was received and signed for by Midland, there has been no collection activity until recently as the SOL has been rapidly approaching. The recent collection activity has ONLY been settlement offers, with varying degrees of discounts offered. I thought this constituted FDCPA violations for "continued collection activity" and you opined to the contrary in Post #7.

 

What I am trying to ascertain and what I think Pryan is also asking, is why would these discounted settlement offers NOT be FDCPA violations for "continued collection activity" because Midland is attempting to collect on the debt that they have not yet validated in light of a timely DV letter. I appreciate your input, just trying to clarify this issue. Thanks, Rogue

Edited by Rogue
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I don't recall any court case which ruled that offering a settlement (asking for money) prior to validation after a timely DV (which requires that collection activity (asking for money) ) wasn't continued collection activity.....

 

 

do you have a case in mind regarding that? I've been "out of the loop" for awhile and would be interested in reading that case

Over Shadowing: Bartlett v. Heibl,128 F.3d497 7th Circuit 1997, Swanson v. Southern Oregon Credit Services,Inc ''The validation notice may not be either overshadowed or contradicted by other language or material in the origional or subsequent collection letters sent within 30 days after receipt of the first one.''

 

Thanks Sandscrit, I just went and read about these two cases...

 

I understand over shadowing, but that does not appear to be the case here and you previously stated in Post #7 that there are no current FDCPA violations. Since the timely DV letter was received and signed for by Midland, there has been no collection activity until recently as the SOL has been rapidly approaching. The recent collection activity has ONLY been settlement offers, with varying degrees of discounts offered. I thought this constituted FDCPA violations for "continued collection activity" and you opined to the contrary in Post #7.

 

What I am trying to ascertain and what I think Pryan is also asking, is why would these discounted settlement offers NOT be FDCPA violations for "continued collection activity" because Midland is attempting to collect on the debt that they have not yet validated in light of a timely DV letter. I appreciate your input, just trying to clarify this issue. Thanks, Rogue

 

 

 

Exactly....Overshadowing is different than continued collection activity....

 

 

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Question for the OP...did the settlement letter include the balance, and the name and address of the OC? IIRC, if it did then it contained the necessary elements for validation. Probably a moot point, however, with the SOL expiring today....

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Question for the OP...did the settlement letter include the balance, and the name and address of the OC? IIRC, if it did then it contained the necessary elements for validation. Probably a moot point, however, with the SOL expiring today....

Great question CG.....but not necessarily a moot point, as any FDCPA violations could be used against Midland for $$$$ or leverage in getting Midland deleted from reports.

 

Okay, I have one of the settlement letters here.....top right of letter in a box with four separate blue headers:

 

MCM Account Number

1234566789

 

Original Creditor

Chase Bank USA, N.A.

 

Original Account Number

The actual VISA #4xxx

 

Current Balance

$xxxx

 

The rest of the letter contains and discusses two different settlement options. So does the original account information posted in this letter constitute and meet the standard for validation? Thanks!

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Forgot to add, there is NO address information provided for Chase in this settlement letter. And one other piece of info that may be relevant, my sister told me this weekend that this VISA was originally a Providion card (Ha..I had forgotten about the Provsalamanders!), subsequently sold to WaMu and finally sold to Chase.

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All that letter proves is that they claim she once had a Chase card, with a specific account number, that they claim had a balance of xxxx......

 

That's what I thought pryan...

 

At this point, I DO NOT think the settlement letters constitute proper validation, especially in light of the fact Midland is still reporting this account to all three CRA's as in "dispute" (See OP), because if Midland thought they had properly validated, their TL would not still be listed in a "dispute" status.

 

And also at this point, I think that the Midland settlement letters are in fact FDCPA violations for "continued collection activity" as they are an attempt to collect on this debt. If my sister wanted to sue Midland, I would definitely clarify this, but at this point I will just reference "various FDCPA violations" in her dispute letter as she just needs this baddie gone.

Edited by Rogue
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Further, the FDCPA prohibits contacting a debtor who has "notified a debt collector in writing that the consumer refuses to pay a debt. . . ." irrespective of whether the statement is false under state law or otherwise. 15 U.S.C. § 1692c©. There are three limited exceptions to this prohibition. Id. As this court has explained, those exceptions are:

(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.

 

Clark v. Capital Credit & Collection Services, Inc., 460 F.3d 1162, 1169 (9th Cir. 2006). A settlement offer is an example of a "specified remedy." See Lewis v. ACB Business Services, Inc. 135 F.3d 389, 399 (6th Cir. 1998) (holding that a letter that "can be construed as a type of settlement offer" fell within the exception in § 1692c©(2)).

However, if you sent a DV, and they haven't validated the debt - and then offer a settlement - I think it's still an attempt to collect.

15 U.S.C. § 1692g(a)(1)-(5).

Section 1692e provides that a "debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. A debt collector violates this rule where, among other things, it "use ... any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." Id. § 1692e(10).

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ICAN -

 

Thank you so much, that really clarifies the issue and I never cease to learn something here at CB!!

 

When I get home I will look take a look at the case law you cited. Curious if anyone else here at CB has NOT been validated by Midland but subsequently received settlement offers from them even thought a timely DV was sent.

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The Lewis case that ICAN quoted above was right on in regards to "settlement" offers NOT violating the FDCPA. The following quotes below come from this article which is only three pages and worth the read! http://www.hwa.com/content/documents/July2010ServicingMgmt.pdf

 

While few appellate courts have weighed in specifically on whether loan modification agreements violate the FDCPA, several courts have found other "settlement" type offers not to be per se violations. The leading opinions on the issue are the Sixth Circuit’s Lewis v. ACB Business Services Inc. (and its offspring, Gillespie v. Chase Home Finance LLC, which applied the same concept to a mortgage servicer) and the Seventh Circuit’s Bailey v. Security National Servicing Corp.

 

In the Lewis case, the debtor sent a "cease communication" letter in accordance with Section (§) 1692c of the FDCPA. Thereafter, the collection agency sent to the borrower a letter that contained the statutory debt disclosure language and outlined several plans to settle the delinquent credit card debt. In response, the borrower filed suit alleging several FDCPA violations, including the cease-communication provision of §1692c©. The court found that the debt collector’s letter notifying the debtor of various payment plans was a permissible communication, stating, "We believe that Lewis’ interpretation of §1692c©(2), which would prohibit collectors from sending non-coercive settlement offers as a remedy, is plainly at variance with the policy of the legislation as a whole."

The court went on to harmonize the practice of sending settlement letters with the FDCPA prohibitions against abusive debt-collection practices: "Allowing debt collectors to send such a letter is not only consistent with the act, but also may result in resolution of the debt without resorting to litigation, saving all parties involved the needless cost and delay of litigation as is exemplified by this very case...it is certainly within the purpose of the act to allow a debt collector to make a truthful statement that various payment plans are available."

 

 

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