Westbrook Law PLLC Notches Win in Wrongful Repossession Trial

After a trial in December of 2017, the Montcalm County Circuit Court ruled in favor of the defendant and counter-plaintiff, represented by Westbrook Law PLLC, in a case that began as a $5,000.00 deficiency claim by the plaintiff/counter-defendant car dealer, and ended with a judgment against the car dealer for more than $10,000.00.

The case, Powers v. Brown, resulted from the dealer’s claim that the buyer missed an installment payment on his auto loan, thus entitling the dealer to repossess the vehicle and collect a deficiency balance on the loan. However, the evidence introduced at trial showed that the dealer had no contractual right to repossess the vehicle. Relying on Michigan’s conversion statute, M.C.L. § 600.2919a, Westbrook Law PLLC argued on behalf of the buyer that the dealer was liable for damages. The court (J. Schafer) agreed, finding that the dealer was liable for double damages and attorney fees.

TJW

House Financial Services Committee Evaluates Bill to Exempt Collection Lawyers from Fair Debt Collection Practices Act

In December, House Bill H.R. 4550, entitled “Practice of Law Technical Clarification Act of 2017,” was introduced by sponsors Vincente Gonzalez (D-Tex.) and Alexander Mooney (R-W. Va.). If passed, the bill would dramatically limit the legal protections to consumers currently provided by the federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692o (“FDCPA”), by completely exempting collection lawyers from liability. Under current law, collection lawyers are treated the same as other debt collectors, and prohibited from engaging in abusive, misleading, or unfair collection practices. See Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010). Westbrook Law PLLC has filed several lawsuits against collection law firms that violated the FDCPA. Those claims would not exist under the law as amended by H.R. 4550, and there is little question that the amendment would enable new and intensified abuses by collection law firms to go unchecked.

H.R. 4550 is currently being evaluated by the House Financial Services Committee, which may approve or kill the bill. Westbrook Law PLLC is actively engaging with committee members to ensure they are aware of the anti-consumer nature of this bill and to request that they do their part to prevent it from becoming law.

TJW

Equifax Leaked Your Personal Information – Now What?

On September 7, 2017, Equifax, one of the “big three” U.S. credit reporting agencies, reported that hackers had gained access to sensitive personal information of 143 million Americans contained within Equifax’s extensive consumer files. If Equifax has a credit file on you–as it does on most Americans–your chances of being affected by this data breach are more than 50%. Equifax has known about this hack since June 29, 2017.

Equifax keeps extensive dossiers of data about consumers and sells that data to prospective creditors, current creditors, and others who subscribe to Equifax’s services. While some news outlets have described the hack as affecting Equifax “customers,” this is not accurate. Equifax has a file on you regardless of whether you have ever consented to it, and it is allowed, subject to the constraints of the Fair Credit Reporting Act 15 U.S.C. § 1681 (“FCRA”), to disclose your information to its subscribers. In other words, you are its product, not its customer.

The data in Equifax’s file typically includes the person’s name, address history, social security number, telephone numbers, a detailed credit history–i.e., open and/or closed loans and credit accounts, amounts owed, amounts and dates of recent payments, and any history of late payments or defaults–and public record information like bankruptcies or judgments. Equifax’s credit file on a consumer typically contains sufficient information to enable an unscrupulous person to steal the consumer’s identify and open fraudulent credit accounts in his or her name. This type of identity theft can result in enormous disruption, including harassment by debt collectors seeking to collect the fraudulently incurred debt, closure or freezing of existing legitimate lines of credit, and inability to obtain new legitimate loans because of damage to the victim’s credit inflicted by failure to repay the fraudulent loans.

Equifax and its main competitors, Trans Union and Experian, are closely regulated by the FCRA and have a duty under the law to ensure “maximum possible accuracy” of consumer reports provided to third parties. Numerous class-action lawsuits have already been filed regarding the data breach, and chances are good that you may be deemed a member of one or more classes and may eventually be entitled to relief accordingly. However, the more immediate concern is potential identity theft and damage to consumers’ credit. If you do not already monitor your credit, now is a good time to start. Note that Equifax, Trans Union and Experian are required by law to provide each consumer with at least one full, free credit report annually. These bureaus provide free credit reports online at www.annualcreditreport.com. In addition, if you are ever denied credit on the basis of an Equifax, Experian, or Trans Union report, you have the legal right to receive a free copy of the report on which the credit denial was based. Exercise this right any time you are denied credit for any reason.

If you discover fraudulent accounts or inaccuracies in any or all of your credit reports, you have the right to dispute the reports and may be entitled to compensation under the FCRA. Westbrook Law PLLC is experienced in representing consumers affected by inaccurate and improper credit reporting, and can provide guidance if you discover credit reporting errors or fraud. Contact us for a consultation.

TJW

Decision in Ricketson v. Experian Information Solutions, Inc. Clarifies the Law on Fair Credit Reporting

On July 18, 2017, the United States District Court for the Western District of Michigan issued an important decision in the case of Ricketson v. Experian Information Solutions, Inc., a case brought by Westbrook Law PLLC under the federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. In the Ricketson case, the plaintiff challenged Experian’s practice of rejecting consumer disputes without investigating them as required by the FCRA.

After noticing an inaccuracy in his Experian credit report, the plaintiff sent a dispute letter to Experian. Instead of investigating the disputed item as the FCRA requires, Experian sent a letter to the plaintiff stating that it had received a “suspicious request” that it believed was from a third party, and would not be investigating the disputed item. The Ricketson lawsuit resulted.

Experian challenged the lawsuit on various technical grounds. It argued that because the disputed information was never shared with any potential creditors, there could be no harm and no standing to hold Experian liable. It also argued that the evidence could not support a finding that its violation of the FCRA had been willful.

In its opinion, penned by Chief Judge Robert J. Jonker, the court rejected Experian’s arguments, finding that the investigation and disclosure requirements of the FCRA must be construed strictly, in order to avoid exactly the kind of harms the plaintiff suffered – mental stress and emotional distress linked to being deprived of accurate information about his credit standing. The court also held that Experian’s policies and procedures for handling disputes could support a jury verdict of willfulness, and thus give rise to punitive damages.

The FCRA is a comprehensive legal framework that strictly controls procedures for maintaining, correcting, and dispensing credit information about consumers. The court’s decision in Ricketson affirms the continuing vitality of the FCRA in protecting consumers’ rights not only to ensure that the information provided by credit reporting agencies about them is accurate, but also to be kept informed about the contents of the credit reporting agencies’ files.

If you discover that inaccurate information about your accounts, debts, or personal information is being reported by a credit reporting agency, contact us to learn more about your legal rights under the FCRA.

TJW

Supreme Court Releases Consumer-Unfriendly Opinion in Santander – What Does It Mean?

Yesterday, the U.S. Supreme Court released an opinion highly anticipated by consumer lawyers as well as the debt collection industry, in the case of Henson v. Santander Consumer USA, Inc. This case dealt with the question of whether a purchaser of defaulted debts, which then attempts to collect those debts from consumers, counts as a “debt collector” that is subject to strict consumer protections provided in the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”).

To grasp the potential impact of this case, one needs to understand the structure of the consumer debt collection industry as it exists today:

The first step is origination, when the consumer first incurs a debt to a creditor such as a bank, credit card issuer, other lender, wireless provider, or cable company.

When the consumer defaults on a debt–usually by failing to pay–one of two things may happen: (1) the original creditor may hire a third-party debt collection company to attempt to collect the debt, generally through telephone calls and collection letters; or (2) the original creditor may attempt to collect the debt itself for some period of time.

Often, once the debt becomes sufficiently aged, the creditor sells, or assigns, the debt to a debt buyer. The debt buyer pays the creditor only a fraction of the face value of the debt, then attempts to recover as much of the debt as possible from the consumer by various means, often including telephone calls and collection letters.

The final stage in the process is a lawsuit filed by collection attorneys acting on behalf of the debt buyer. Most of these lawsuits are not contested, and result in default judgments that are slowly collected through wage, bank account, and tax refund garnishments.

It has long been settled law that, under the FDCPA, third-party debt collection companies and collection attorneys ARE “debt collectors.” Most federal courts found that debt buyers were “debt collectors” as well, including the United States Court of Appeals for the Sixth Circuit, which establishes precedent for federal courts in Michigan. Generally, circuit precedent found that creditors collecting their own debts could NOT be “debt collectors” unless a rare exception applied.

All of this matters for one basic reason: the FDCPA restricts what “debt collectors” are allowed to do, and creates powerful remedies for consumers when they do not comply with the FDCPA. The FDCPA creates various protections for consumers; for example, it requires debt collectors to identify themselves as debt collectors in communications to consumers, disallows certain conduct in collection lawsuits, outlaws attempts to collect debts no longer owed, limits consumer harassment by telephone, and disallows unfair and fraudulent conduct in connection with debt collection. Consumers harmed by violations of the FDCPA are entitled to sue, and can recover a statutory penalty as well as their attorney fees.

In yesterday’s Santander decision, the Supreme Court unanimously held that debt buyers are not automatically “debt collectors” subject to the FDCPA. According to the opinion, penned by newest Justice Neil Gorsuch, this is so because debt buyers are attempting to collect a debt that is owed to them, and thus are creditors, even though they are not the original creditors.

Taken in isolation, the Santander holding might seem catastrophic for consumers besieged by collection attempts from debt buyers (including such large players as Midland Funding, LVNV Funding, Portfolio Recovery Associates, and others), because the protections of the FDCPA would be unavailable. This would enable debt buyers to use, with impunity, the same harassing and unfair collection methods that “debt collectors” are not allowed to use under the FDCPA.  It is true that the Santander decision is beneficial to some debt buyers at the expense of consumers; however, its impact is limited. Justice Gorsuch carefully points out in the opinion that the court’s decision does NOT mean that debt buyers are NEVER “debt collectors.” Indeed, the text of the FDCPA appears clear that debt buyers ARE “debt collectors” if their “principal purpose … is the collection of any debts.” 15 U.S.C. § 1692a(6). With respect to the largest buyers of defaulted credit card debt–i.e., Midland Funding, LVNV, and PRA–an experienced consumer lawyer should easily be able to prove that their “principal purpose” is debt collection; and they are therefore “debt collectors” subject to FDCPA restrictions.

While the Santander decision does not make the consumer advocate’s job easier, and is likely to spur pernicious innovations in the debt buying and debt collection industry, it is hardly the death knell for the FDCPA. Consumer advocates and watchdogs, including us at Westbrook Law PLLC, will continue to find ways to keep abuses in check.

TJW

Collectors Still Pursuing Debt after Bankruptcy Discharge? It’s Illegal.

Each year, hundreds of thousands of individuals with overwhelming debts file for Chapter 7 or Chapter 13 bankruptcy in order to regain their financial freedom.  The usual goal of bankruptcy is to have one’s debts “discharged,” or declared legally unenforceable and effectively nullified.  This is intended to allow the debtor a “fresh start” to their financial affairs.

But a discharge of debts in bankruptcy does not always stop debt collectors, who may continue to contact the debtor by phone or letter, or even file legal proceedings, after a debt has been discharged.  These post-discharge collection attempts rob the debtor of the “fresh start” he or she fought for in bankruptcy, and are often unlawful, violating various state and federal laws designed to protect consumers from abusive debt collection tactics.

If you are still being chased by debt collectors to pay a debt that was discharged in bankruptcy, Westbrook Law PLLC may be able to make the collection efforts stop, punish the debt collectors for violating the law, and get monetary compensation for you.  Contact us for more information or a free consultation.

If you have not filed for bankruptcy but wonder if it may be right for you, contact us for a referral to a qualified bankruptcy law firm.

TJW

Debtors Bar Seminar Materials Available Here

Yesterday I had the pleasure of presenting on consumer law issues for the Debtors Bar of West Michigan at their annual Martin Luther King, Jr. Day seminar.  My co-panelist, Amanda Narvaes of Drew, Cooper & Anding, and I managed a fairly thorough exposition of Fair Debt Collection Practices Act issues and the Fair Credit Reporting Act, but had to compress the Telephone Consumer Protection Act segment a bit in favor of lunch.  It was a successful event, and I met a number of attendees who are dedicated, as I am, to representing individuals facing serious legal and financial problems.  They confirmed that debtors’ bankruptcy attorneys do in fact frequently spot instances of consumer abuse in their bankruptcy practices.

The seminar packet contained a version of our presentation slides – the link below includes those slides as well as many other links and resources.

I encourage any debtors’ bankruptcy lawyers–whether seminar attendees or otherwise–to get in touch with me if they have questions concerning potential claims they have spotted or are interested in either a potential co-counsel arrangement or referring clients with consumer issues to Westbrook Law.

TJW

www.westbrook-law.net/dbwm