District Court (Wash.) Finds FDCPA Letter Deceptive that Did Not Itemize Debt; Finds Debtor Did Not Waive C&D By Initiating Communication to Debt Collector; Says Law Firm Lost Exemption from Washington Licensing Statute by Saying it was a Debt Collector

In Snyder v. Daniel N. Gordon, P.C., 2012 WL 3643673 (W.D.Wash. 2012), Judge Jones found that a single non-itemized statement of the debt in the debt collector’s initial communication was deceptive because it did not itemize the obligation.

As far as the court is aware, the Ninth Circuit has not directly addressed the issue of whether a debt collector must provide the consumer with a breakdown of the debt’s accrued interest and other fees, as opposed to combining all charges together as a single sum. The Ninth Circuit has held, however, that “[a] debt collection letter is deceptive where it can be reasonably read to have two or more different meanings, one of which is inaccurate.” Id. at 1062 (quoting Brown v. Card Serv. Ctr., 464 F.3d 450, 455 (3d Cir.2006)).  Defendants’ first letter read, in relevant part: “Demand is hereby made upon you for payment in the sum of $18,026.56.” Snyder Mot. at Ex. B. Two subsequent letters made reference to a “Balance Due.” Id. at Exs. C, D. None of the letters provided further detail regarding when or how the balance had been calculated, whether it included interest, or whether interest continued to accrue. The court finds that the “least sophisticated consumer” could have read these letters in at least two different ways. On one hand, an unsophisticated consumer could reasonably conclude that the balance was a fixed amount that would not be subject to further interest, late fees, or other charges. On the other, an unsophisticated consumer could just as reasonably determine that the balance would continue to grow over time as interest accrued. One of those meanings would necessarily be inaccurate. Therefore, the court finds that Defendants’ letters were deceptive as a matter of law.FN2 Courts in other districts have reached the same conclusion on similar facts. See Michalek v. ARS Nat’l. Sys., Inc. ., No. 3:11–CV–1374, 2011 WL 6180498, at *4 (M.D.Pa. Dec.13, 2011) (holding that the term “balance” has more than one meaning); Dragon v. I.C. Sys., 483 F.Supp.2d 198, 203 (D.Conn.2007) (holding that a reference to a “sum certain” was deceptive as a matter of law). The court grants Ms. Snyder’s motion for summary judgment on this issue.

Judge Jones found that the debtor did not waive a ‘do not call’ request by twice initiating calls to the debt collector.  Judge Jones held:

The Ninth Circuit has found that a consumer may waive the protection of § 1692c(c) by calling a debt collector and requesting further information. Clark, 460 F.3d at 1172 (holding that a consumer who called a collector requesting additional information implied consent to receiving a return call, and that the collector did not violate § 1692c(c) by returning the call).  In this case, however, there is no evidence that Ms. Snyder consented to receiving a return phone call, implicitly or otherwise.

Judge Jones found that the debt collection law firm law lost its exemption from Washington’s debt collection licensure statute (exempting attorneys) because its letters stated it was acting as a debt collector, as the mini-Miranda requires:

Defendants admit that they do not have debt collector licenses in Washington, but contend that they are not required to obtain licenses because they are lawyers practicing law. Washington law requires any person acting as a collection agency to apply for and obtain a license. RCW § 19.16.110. Washington law defines “collection agency” as “[any] person directly or indirectly engaged in soliciting claims for collection, or colleting or attempting to collect claims owed or due or asserted to be owed or due another person.” RCW § 19.16.100(2)(a).  Defendants point to a statutory exception to the definition of collection agencies, which excludes “[any] person whose collection activities are carried on in his, her, or its true name and are confined and are directly related to the operation of a business other than that of a collection agency ….“ RCW § 19.16.100(3)(c). “[L]awyers” are among the non-collection agency businesses listed. Id. As several other courts in this District have noted, the exception does not categorically exclude lawyers from regulation. Instead, it excludes only those law firms that collect debts “directly related to the operation of a business other than that of a collection agency.” See Mandelas v. Gordon, 785 F.Supp.2d 951, 960 (W.D.Wash.2011) (discussing other cases from courts in this District, including several in which DNG was the defendant). The letters make it clear that Defendants were attempting to collect the debt on behalf of American Express, a third party creditor. Furthermore, in their three collection letters, Defendants clearly stated that they operated as a debt collector. They emphasized this point in their request for summary judgment on the issue of whether they falsely represented the level of attorney involvement in Ms. Snyder’s case. They cannot argue in one instance that they acted as debt collectors, and in another that they acted as lawyers. The court consequently finds that in sending the collection letters, Defendants acted as a collection agency without a license in violation of RCW § 19.16.110. The court need not decide whether Defendants took other acts (such as suing Ms. Snyder) in DNG’s capacity as a collection agency.