Do I Have a Right to Sue a CA?

[Trilivonel]

I was wondering if I do because I sent out a validation letter on July 15, 2002 and according to my state's Attorney General Office (NY), once I send out the letter by law the CA is not allowed to contact me until they can validate the debt. The CA did not/has not contacted me and proceeded to get a judgment against me. I wasn't notified of the court date so that I could defend myself. Also was it my job or the CA's job to report the item as being disputed?

[bingo]

What you need to do first is get your file from the courthouse and see how they say you were served and was the service in accordance with state law. If not, you've grounds to petition the court to vacate the judgment. Be careful about filing a lawsuit now. There are some Federal Court cases that say filing a lawsuit is not continued collection activity.

[Trilivonel]

<blockquote>Originally posted by bingo

What you need to do first is get your file from the courthouse and see how they say you were served and was the service in accordance with state law. If not, you've grounds to petition the court to vacate the judgment. Be careful about filing a lawsuit now. There are some Federal Court cases that say filing a lawsuit is not continued collection activity.

</blockquote>

I'm kind of confused about your last sentence. What is meant by continued collection activity?

[bingo]

What I mean is, a lawsuit can proceed even if validation has not been sent. Do a "google search" using Sprouse vs City Credits. They can file a lawsuit without validating first.

I'd suggest first things first. See if you can get the judgment vacated before you do anything else.

[cookiemnster]

<blockquote>Originally posted by bingo

What I mean is, a lawsuit can proceed even if validation has not been sent. Do a "google search" using Sprouse vs City Credits. They can file a lawsuit without validating first.

I'd suggest first things first. See if you can get the judgment vacated before you do anything else.

</blockquote>

I thought they could file, but they had to get a stay or something until they could provide validation. Spears v. Brennan addresses this, I think.

[bingo]

Spears vs Brennan is binding on lower courts in In. The Sprouse case I refered to is from a Federal Court. It says you may file a lawsuit at anytime put, you must stay the proceedings until validation is provided. But, here's the catch. The defendant must request validation. If they don't, the lawsuit can proceed.

[cookiemnster]

<blockquote>Originally posted by bingo

Spears vs Brennan is binding on lower courts in In. The Sprouse case I refered to is from a Federal Court. It says you may file a lawsuit at anytime put, you must stay the proceedings until validation is provided. But, here's the catch. The defendant must request validation. If they don't, the lawsuit can proceed.

</blockquote>

Well, see, in this case, the poster DID request validation, and then they got a judgment against him. Also a little different from your statement "a lawsuit can proceed even if validation has not been sent."

That could be misleading, was my point.

[Swede]

<blockquote>Originally posted by bingo

Spears vs Brennan is binding on lower courts in In. The Sprouse case I refered to is from a Federal Court. It says you may file a lawsuit at anytime put, you must stay the proceedings until validation is provided. But, here's the catch. The defendant must request validation. If they don't, the lawsuit can proceed.

</blockquote>

The case you're referring to - Sprouse v. City Credit Corp. - was decided on 11/2000 in the district court for the southern distric of Ohio Western Division and not in Federal Court (unless there's an appeal I'm not able to get). It does not hold more bearing than - Spears v. Brennan-which was decided in the court of appeals of Indiana on 3/2001.

[bingo]

Take another look. The heading is U.S. Disrict Court.

[bingo]

OK, I'm way confused. I looked in the Validation thread and you're talking about entering into an agreement with the debt collector. WHen did you actually send a validation letter? Was it after you entered the agreement?

[Anonymous]

while I take issue with the decision of the court I can see the point being made:

it seems that Sprouse never requested validation from CCC or Engle

it seems that Engle is not with CCC rather he is an atty for the OC

the difference here from Spears v Brennen is that Engle did not seek a judgement within 30 days, only advised that Sprouse had to answer the suit within 28 days under Ohio law.

I don't think this is a major blow to us... I could be wrong though...

Sprouse and Sprouse both signed a consent decreeing that they DID OWE the debt so I don't see what their beef is, how can they request validation when they already admitted to owing the debt.

---

I still don't like the ruling

[bingo]

I think the ruling is important because you see a lot of theories on web sites that first comunication can't be a lawsuit and, a lawsuit is continued collection activity. Obvisously, this case and some of the cases the ruling sites blows this idea sky high.

I think it means CA's will start getting more aggressive because they know many people will panic when a lawsuit is actually filed and you see there is a finite number of days to respond. It's one thing to talk tough on an internet message board but it's an entirely different situation when you realize you're truely under the gun and you've a creditor who is very serious about being paid.

I just think it is one more decision along with the E-Signature Act that is chipping away at the Wollman letter and other protections of the FDCPA.

[troubledconsumer]

what is the E signature act?

[calawyer]

It is trouble. Big time. If Swede doesn't beat me to it, I'll post a link tomorrow.

[Swede]

<blockquote>Originally posted by calawyer

It is trouble. Big time. If Swede doesn't beat me to it, I'll post a link tomorrow.

</blockquote>

I got your back, babe!!

ESIGN became effective October 1, 2000 and gives legal weight to contracts entered into electronically. Here's a press release at the FTC site discussing it

Joint FTC/Commerce Department Report Released on "Reasonable Demonstration" Requirement of ESIGN

No Amendment of the Statute Recommended at this Time

The Federal Trade Commission and the U.S. Department of Commerce's (Commerce) National Telecommunications and Information Administration (NTIA) today released a report they prepared jointly at the request of Congress regarding the benefits and burdens of the "reasonable demonstration" requirement of the consumer consent provision contained in the recently enacted Electronic Signatures in Global and National Commerce Act (ESIGN). The report states that "it is reasonable to conclude that, thus far, the benefits of the consumer consent provision of ESIGN outweigh the burdens of its implementation on electronic commerce . . . It preserves the right of consumers to receive written information required by state and federal law. The provision also discourages deception and fraud by those who might fail to provide consumers with information the law requires that they receive." The report further concludes that ESIGN's reasonable demonstration requirement "appears to be working satisfactorily at this stage of the Act's implementation," and recommends that Congress take no action at this time to amend the statute.

ESIGN ensures that contracts entered into electronically will be legally effective and valid, and that consumers who enter into contracts electronically have the same protections they have when contracting in the "brick and mortar" world. To preserve these consumer protections, ESIGN mandates that information legally required to be in writing can be made available electronically to a consumer only if he or she affirmatively consents to receive the information electronically, the business clearly and conspicuously discloses specified information to the consumer before obtaining his or her consent, and the consumer's consent is conveyed in a manner that "reasonably demonstrates" that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent.

To determine the impact of the reasonable demonstration requirement on both consumers and businesses, Congress tasked the FTC and NTIA with submitting a report within 12 months of the Act's enactment addressing any benefits provided to consumers by the procedures required by Section 101©(1)©(ii), and any burdens imposed on electronic commerce by the requirement; whether the benefits outweigh the burdens; whether the absence of the procedure required by Section 101©(1)©(ii) of the Act would increase the incidence of fraud directed against consumers; and suggesting any revisions of the provision deemed appropriate. The agencies solicited comments from the general public, consumer representatives and the electronic commerce business community to address these questions. They also held a public workshop on April 3 of this year to provide interested parties an opportunity to develop and exchange their views.

The data collected, which were summarized and analyzed in the report released today, show that the general consensus of the workshop participants and commenters was that not enough time has passed since the law took effect to: 1) allow consumers or businesses to experience the full effect of the provision; 2) develop sufficient empirical data to evaluate quantitatively whether the benefits of implementation outweigh the burdens; and 3) determine whether the lack of the type of procedure required by the consumer consent provision would lead to an increase in deception and fraud against consumers.

However, based on the information collected, the agencies do conclude in the report that thus far the benefits of the provision outweigh the burdens of its implementation on electronic commerce and that the provision appears to be working satisfactorily at this stage of the Act's implementation. Finally, almost all participants in the agencies' study recommended that, for the foreseeable future, "implementation issues should be worked out in the marketplace and through state and federal regulations" and that "Congress should take no action at this time to amend the statute."

The Commission vote to approve the report and transmit a copy to Congress was 5-0.

And here's an opinion letter on how it applies to the FCRA

FCRA Staff Opinion Brinckerhoff - Zalenski

May 24, 2001

Walter Zalenski, Esquire

Weil, Gotshal & Manges

1815 L Street, NW - Suite 700

Washington, DC 20036

Dear Mr. Zalenski:

This responds to the letter from your firm(1) ("the letter") asking the staff's views on how Section 101 of the Electronic Signatures in Global and National Commerce Act ("ESIGN Act")(2) relates to Section 604(a)(2) of the Fair Credit Reporting Act ("FCRA").(3) As described in more detail below, generally, Section 101 of the ESIGN Act gives legal force to electronic signatures, contracts, and other records. Section 604(a)(2) of the FCRA permits a consumer reporting agency to provide a consumer report when it is "in accordance with the written instructions of the consumer to whom it relates."

The letter cites a staff opinion letter (Landever, 10/12/99) -- issued prior to enactment of the ESIGN Act -- in which we stated our view that an electronic "mouse click" did not constitute "written" authorization by the consumer under Section 604(a)(2) of the FCRA. The letter asked us to confirm that the ESIGN Act, in effect, changes that result such that "the FCRA's requirement that an individual give written authorization to obtain a consumer report may be satisfied by obtaining such authorization in electronic form, whether it be via e-mail, mouse click 'yes' or by other electronic means."

Section 101(a) of the ESIGN Act sets forth the following general rule:

(a) . . . Notwithstanding any statute, regulation, or other rule of law (other than this title and title II), with respect to any transaction in or affecting interstate or foreign commerce -

(1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form . . .(4)

Therefore, electronic signatures, contracts, or other records relating to transactions are not unenforceable or invalid solely based on their electronic format. Moreover, with respect to the reach of this provision, under Section 106(13) of the ESIGN Act, the term "transaction" is defined as "an action or set of actions relating to the conduct of business, consumer, or commercial affairs between two or more persons . . ."(5) This broad definition of "transaction" appears to include the scenario described in the letter where a business that needs a consumer report on an individual includes in a contract or application form clear authorization by the individual to obtain his or her consumer report.(6) Thus, under the ESIGN Act, a consumer's electronic authorization may not be denied legal effect solely based on its electronic nature.

Section 101(e) of the ESIGN Act sets forth a significant additional provision applicable to this issue:

Notwithstanding subsection (a), if a statute . . . requires that a contract or other record relating to a transaction in or affecting interstate or foreign commerce be in writing, the legal effect, validity, or enforceability of an electronic record of such contract or other record may be denied if such electronic record is not in a form that is capable of being retained and accurately reproduced for later reference by all parties or persons who are entitled to retain the contract or other record.(7)

In our view, because Section 604(a)(2) of the FCRA requires "written instructions," the consumer's electronic authorization is a "record" that must be "capable of being retained and accurately reproduced for later reference" for the benefit of the consumer. While a consumer's consent is not invalid merely because it is communicated in electronic form, that electronic authorization must be in a form that can be retained and retrieved in perceivable form, as specified by Section 101(e) of the ESIGN Act.

In addition, as noted above, Section 604(a)(2) of the FCRA provides a permissible purpose for a consumer reporting agency to provide a consumer report based on the "written instructions" of the consumer. In any case where the issue is whether a permissible purpose exists under Section 604(a)(2) of the FCRA, a key factor in the result -- regardless of whether paper or electronic communications are used -- will be the extent to which the consumer's "instructions" are clear.(8) In our view, a consumer's "electronic signature" under the ESIGN Act is one acceptable method of providing "written instructions" under Section 604(a)(2) of the FCRA.(9) However, whether any other method, and whether (as stated in the letter) an "e-mail, mouse click 'yes' or . . . other electronic means," clearly conveys the consumer's instructions, will depend on the specific facts of the situation.

The opinions set forth in this informal staff letter are limited to the provisions of the FCRA and ESIGN Act expressly discussed above. As staff views, they are not binding on the Commission. These views may be modified as the law develops under the ESIGN Act.

Sincerely yours,

Clarke W. Brinckerhoff

Endnotes:

1. Sheldon Feldman, who is no longer with the firm, submitted the letter.

2. 15 U.S.C. § 7001 et seq. The ESIGN Act (Pub. L. No. 106-229, 114 Stat. 464) was signed into law on June 30, 2000, and became primarily effective on October 1, 2000.

3. 15 U.S.C. § 1681b(a)(2).

4. 15 U.S.C. § 7001(a).

5. 15 U.S.C. § 7006(13).

6. Of course, an individual's written consent for a consumer report would be unnecessary if, for example, he or she applies for credit or insurance, or initiates another type of transaction (e.g., renting an apartment) that provides a clear permissible purpose under Section 604(a)(3) of the FCRA. 15 U.S.C. § 1681b(a)(3).

7. 15 U.S.C. § 7001(e). Under Section 106(4) of the ESIGN Act, an "electronic record" is "a contract or other record created, generated, sent, communicated, received, or stored by electronic means." 15 U.S.C. § 7006(4) Under Section 106(9) of the ESIGN Act, a "record" is "information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form." 15 U.S.C. § 7006(9).

8. The "written instructions of the consumer" terminology of Section 604(a)(2), as applied to one fact situation in the paper context, is discussed in the enclosed staff opinion letter (Shibley, 06/08/99).

9. Under Section 106(5) of the ESIGN Act, an electronic signature is an electronic "sound, symbol, or other process" that is executed or adopted by a person "with the intent to sign the record." 15 U.S.C. § 7006(5).

[calawyer]

Somebody pick me off the floor. Swede got to it before I did.

The real trouble with this law is that consumers will unknowingly agree to receive electronic notices from creditors by signing some boilerplate language in a form contract. I've already heard stories about people doing this when they don't even own a computer. Next thing they know, a notice of default is sent electronically and they don't have a clue.

Be careful out there.

P.S. Thanks Swede!