The U.S. District Court for the Northern District of Ohio recently ruled against the CFPB in its lawsuit against a debt collection law firm for allegedly misleading consumers through the use of demand letters in the debt collection process. The court found that the CFPB failed to prove by the preponderance of the evidence that the law firm’s demand letters violated the Fair Debt Collection Practices Act and the Consumer Financial Protection Act.
According to the CFPB’s complaint, the law firm allegedly misrepresented that the demand letters were from attorneys and that attorneys were meaningfully involved in the collection of debts, when allegedly there was no such involvement. Thus, the CFPB claimed that the false implication in the demand letters constituted deceptive acts and practices. However, the court found that the demand letters accurately described the identity of the law firm and accurately conveyed the fact that the law firm had been retained to collect the putative debts. In addition, the court noted that the letters did not state that an attorney had reviewed the account, did not mention any potential legal action, nor were they signed by an attorney. Therefore, the letters could not be fairly described as false or misleading for correctly identifying the law firm as the sender, according to the court.
Additionally, the court found that while the demand letters could be interpreted to imply that an attorney was “meaningfully involved” in the debt collection process, there was no violation of law because the law firm’s attorneys were meaningfully and substantially involved in the debt collection process. In particular, the court noted that the law firm employed a “scrubbing” process by which non-attorneys used criteria established by the law firm’s attorneys to distinguish consumers who should not be sent collection letters. Thus, the court found that the demand letters were truthful on their face and that the law firms’ attorneys were meaningfully and substantially involved in the debt collection process both before and after the issuance of the demand letters.
Finally, the court also observed that the law firm had collected debts for the state of Ohio using substantially similar demand letters to the ones at issue, which were approved by then-Ohio Attorney General, Richard Cordray for the state’s collection efforts. Despite the similarities between the letters, the court noted that Cordray nonetheless authorized this lawsuit when he became the head of the CFPB.
The case is CFPB v. Weltman, Case No. 1:17-CV-817, in the U.S. District Court for the Northern District of Ohio.