Consumer Financial Protection Bureau Argues Against Weakening 1692e

Litigators and Consumer Financial Protection Bureau-regulated companies will be interested in an amicus brief filed by the CFPB in January. It addresses an appeal of an interpretation of the Fair Debt Collection Practices Act being heard in the First Circuit.

A Womble Bond Dickinson client alert calls it a reminder to understand how technologies, like bankruptcy scrubs and letter logic, can prevent litigation like Carrasquillo v. CICA Collection Agency. 

The plaintiff in this case had filed for bankruptcy. Defendant CICA sent a letter saying a debt was due, and a lawsuit could be filed if it wasn’t paid promptly.

Instead, the plaintiff sued, arguing that the statements in the letter were false because of its pending bankruptcy, citing 15 U.S. Code § 1692e. CICA countered that a claim under 1692e was precluded, because it originated from a violation of the Bankruptcy Code.

The district court observed that the defendant was not notified of the bankruptcy filing prior to sending the notice, and dismissed the case. It carved out an exception to 1692e, ruling that the letter could not be a false representation because that requires intention based on knowledge.

In its amicus filing, the CFPB says that the district court was wrong to introduce knowledge or intent of wrongdoing (scienter) into 1692e.

Its interpretation of the 1692e prohibition on “any false, deceptive, or misleading representation or means in connection with the collection of any debt” applies whether the representation is intentional or unintentional.

Womble Bond Dickinson advises FDCPA-regulated companies to understand the capabilities and limitations of technology solutions like bankruptcy scrubs, how data from those products interact with your call logic, and to test the adequacy of those systems regularly as part of compliance management.