A debt collector who communicates a misrepresentation of an amount owed on a consumer debt – though only to the consumer’s attorney – may still be liable under the FDCPA.
Ms. Allen had a mortgage and when she neglected to make her final-month payment, the lender, LaSalle Bank, filed a foreclosure action against her through its attorneys, Fein, Such, Kahn & Shepard, PC (“FSKS”). Ms. Allen’s attorney requested loan information from FSKS to determine her defense strategy. FSKS stated that she owed more than what state law allowed as a result of the foreclosure. However, the inflated amounts were only communicated to her attorney.
In response, Ms. Allen filed a class action lawsuit alleging that FSKS could not charge certain fees and that those excess fees violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. FSKS defended claiming in part that because it had only communicated the excess charges to Ms. Allen’s attorney, she could not claim that she was, in fact, misled. FSKS argued that its unlawful conduct should have been overlooked when the conduct was filtered through a consumer’s attorney.
In January 2011, the Court of Appeals ruled that the FDCPA does not permit a debt collector to inflate a debt with bogus charges. A debt collector may still violate the FDCPA even if the bogus charges are only communicated to a consumer’s attorney.
Allen ex rel. Martin v. LaSalle Bank, NA, 629 F. 3d 364 (3d Cir. 2011).