Helping a frind out (Riddle and Associates)

[Dolemite73]

Hi. Though I am new to this site, I am not new to the world of credit repair. anyway, I got a situation I am helping someone with and want to know what you think. So a buddy of mine gets a letter from Riddle and Associates. He lets me know and I find out that they are not licensed in his state to collect. I have my buddy send them a DV and also an email. Here is the original email he sent and faxed:

Gentlemen,

This email is to inform you that pursuant to the FDCPA, I dispute the amount, character and status of account #XXXXXXX in its entirety. I request you validate your accounting of this account. I demand that you ceased all telephone calls to me as they are very inconvenient. You can contact me via US Mail or via email.

Your company has violated the FDCPA and several Illinois state laws by attempting to collect in my state without being licensed or bonded to collect in my state. I will be contacting the appropriate authorities in addition to the Illinois Attorney General and the Utah Attorney General. In addition, I will be pursuing these violations to the full extent of the law. I take my consumer rights serious and will defend them to the end.

In addition to providing me with validation of this account, I demand you make restitution in the amount of $2,000 in statutory, punitive and actual damages for violating the FDCPA, State laws for the following:

15 USC 1692e(10) The use of false representations or deceptive means to collect or attempt to collect a debt by trying to collect on an account while not being licensed/bonded in this state.

15 USC 1692f The use unfair or unconscionable means to collect or attempt to collect any debt by trying to collect on an account while not being licensed/bonded in this state.

15 USC 1692d Engaging in conduct the natural consequence of which is to harass a person in connection with the collection of a debt by trying to collect on an account while not being licensed/bonded in this state.

Various state laws

You have until close of business December 28, 2006 to respond. Failure to respond will result in future action.

So my buddy gets this email back from them:

Please allow me to respond to your allegations.

First, this message should not be construed as an attempt to collect a debt.

It is not. We received your request for validation of the debt and have forwarded the same to our client. If and when our client chooses to provide validation to us, we will forward it to you. Until that time, all collection efforts have been suspended per requirement of the Fair Debt Collection Practices Act and per your demand.

Second, as attorneys we fully comply with the FDCPA and Illinois law. In your message, you specifically refer to the State's licensing requirements for a collection agency. See 225 Ill. Comp. Stat. 425/2.02. We are familiar with the provisions of the statute. I call your attention to two exemptions to the licensing scheme; one for out-of-state collection agencies, and another for licensed attorneys at law. Our law firm and our attorneys fit under one or both of these exemptions as we are not based in Illinois and we are licensed lawyers in several states.

Our firm takes great care to comply with all relevant rules and regulations governing our practice. We do not take allegations of fraud or deception lightly. Any such allegations brought by you would be done in bad faith. I hope this clarifies any misunderstanding you held that would cause you to levy such allegations against us.

If you have any questions please feel free to contact me directly at XXXXXXXXX. Due to the potential disclosure risks inherent in email I request that any further communication you direct towards us be by phone or U.S. Mail.

Once my friend shows me this, I go back to the lab and generate this:

Thank you for your response. Unfortunately, this response is incorrect. The US Supreme Court in Heintz v. Jenkins established that collection attorneys are subject to the FDCPA as debt collectors. The Court stated "For these reasons, we agree with the Seventh Circuit that the Act applies to attorneys who "regularly" engage in consumer debt collection activity, even when that activity consists of litigation". Does the Courts definition not define Riddle and Associates?

If I can direct your attention to 225 ILCS 425/2.03:

"This Act does not apply to persons whose collection activities are confined to and are directly related to the operation of a business other than that of a collection agency, and specifically does not include the following:

1. Banks, including trust departments thereof, fiduciaries, and financing and lending institutions (except those who own or operate collection agencies);

2. Abstract companies doing an escrow business;

3. Real estate brokers when acting in the pursuit of their profession;

4. Public officers and judicial officers acting under order of a court;

5. Licensed attorneys at law;"

I read that to mean that if the Attorney has business other than collections, then this act does not apply to them. So if as you state, Riddle and Associates falls under this statute as exempt, Recovery-USA most certainly does not.

If I can direct your attention to 225 ILCS 425/4, it states:

"No collection agency shall operate in this State, directly or indirectly engage in the business of collecting, solicit claims for others, have a sales office, a client, or solicit a client in this State, exercise the right to collect, or receive payment for another of any account, bill or other indebtedness, without registering under this Act except that no collection agency shall be required to be licensed or maintain an established business address in this State if the agency's activities in this State are limited to collecting debts from debtors located in this State by means of interstate communication, including telephone, mail, or facsimile transmission from the agency's location in another state provided they are licensed in that state and these same privileges are permitted in that licensed state to agencies licensed in Illinois."

Now if I can direct your attention to Utah Title 12-1-1:

"No person shall conduct a collection agency, collection bureau, or collection office in this state, or engage in this state in the business of soliciting the right to collect or receive payment for another of any account, bill, or other indebtedness, or advertise for or solicit in print the right to collect or receive payment for another of any account, bill, or other indebtedness, unless at the time of conducting the collection agency, collection bureau, collection office, or collection business, or of advertising or soliciting, that person or the person for whom he may be acting as agent, is registered with the Division of Corporations and Commercial Code and has on file a good aand sufficient bond as hereinafter specified."

In summary, Illinois does not require a license only if the state the collection agency is located in does not require Illinois agencies to be licensed. This is purely not the case. Utah requires Illinois collection agencies to be licensed, therefore Illinois reciprocates. So your collecting in this states violates the Illinois Collection Agency Act and it violated the FDCPA. Neither Riddle and Associates nor Recovery-USA are licensed in this state to collect. And since I am sure I am not the only Illinois resident that your company has attempted to collect on, there are serious implications here. Your sending me that Dunning notice without being licensed to collect in the state of Illinois violated state and federal law, period.

As it stands right now, I have not alerted and regulatory agencies on this matter (FTC, Illinois Attorney General, Utah Attorney General, Illinois Department of Professional Regulations, etc.). This will no longer be the case. I will be contacting the appropriate agencies on this matter now. And you can best believe that I am not making accusations in bad faith. If need be, I will pursue these issues to the full extent of the law.

If you are not comfortable corresponding by email, you may fax your response to XXXXXXXX. I would recommend using email as the primary means of communication as it is quicker means of reaching an understanding on this matter.

I feel the Illinois statute he originally quotes is only for attorney's who do not "regularly" act as debt collectors. The US Supreme Court has stated as such. And even if they are not defined as debt collectors in this state, there parent company is Recovery-USA and that statute would not apply to them.

Any thoughts, criticisms or comments are appreciated.

[E. Normis Debtor]

Many states do not require attorneys to be licensed as debt collectors. Even though they may be debt collectors as defined by the FDCPA, they haven't violated any state law. Accordingly, there would be no FDCPA violation as there are no pre-emptive federal licensing requirements.

[Dolemite73]

Thanks for the answer. I contend though that they must be licensed especially since they are "regularly" acting as debt collectors (Heintz v. Jenkins). The illinois law they are quoting states:

""This Act does not apply to persons whose collection activities are confined to and are directly related to the operation of a business other than that of a collection agency, and specifically does not include the following:

1. Banks, including trust departments thereof, fiduciaries, and financing and lending institutions (except those who own or operate collection agencies);

2. Abstract companies doing an escrow business;

3. Real estate brokers when acting in the pursuit of their profession;

4. Public officers and judicial officers acting under order of a court;

5. Licensed attorneys at law;"

I bolded the key part. We all know that Riddle and Associates are primarily debt collection attorneys. Since they are primarily collection attorney's, the act DOES apply to them, even though they are lawyers.

[E. Normis Debtor]

You're mixing apples and oranges. They are a debt collector for purposes of the FDCPA, but there are no FDCPA licensing requirements.

They are exempt from the state licensing requirements of a debt collector. If they weren't exempt, you would have a FDCPA violation. As it stands, you don't.

[Dolemite73]

You're mixing apples and oranges. They are a debt collector for purposes of the FDCPA, but there are no FDCPA licensing requirements.

They are exempt from the state licensing requirements of a debt collector. If they weren't exempt, you would have a FDCPA violation. As it stands, you don't.

Thanks for the comments. I am going to have him send a letter to the department that regulates collectors and get their take on it as well. Riddle and Associates and Recovery-USA are the same entity. If what you are saying is correct, then this is a big loophole in the licensing requirements most states enforce on collectors. All a company would have to do is establish a law office and then they are clear from licensing laws.

[Recovering Attorney]

I would argue that the "licensed attorney" reference in the Illinois statute applies only to attorneys licensed to practice in Illinois, so if no one form Riddle is so liensed, the firm would need to be registered before it could dun in your state.

But, I am not sure it is uniformly agreed that "collecting without a license" violates the FDCPA

They take the FDCPA seriously? Go to PACER and see how many times they have been sued in the last 5 years

[direred]

The usual reasons CAs need to be licensed (and/or bonded) has to do with the fiduciary trust put into them by their clients.

Attornies already have that issue covered, thus the lack of requirements in many states to require additional licensing for attornies acting as CAs.

[Dolemite73]

I would argue that the "licensed attorney" reference in the Illinois statute applies only to attorneys licensed to practice in Illinois, so if no one form Riddle is so liensed, the firm would need to be registered before it could dun in your state.

But, I am not sure it is uniformly agreed that "collecting without a license" violates the FDCPA

They take the FDCPA seriously? Go to PACER and see how many times they have been sued in the last 5 years

You make a very good point. Would an attorney licensed in Utah also have to be licensed in Illinois to do business? I would think so.

[hannah]

You make a very good point. Would an attorney licensed in Utah also have to be licensed in Illinois to do business? I would think so.

Check requirements of an attorney by the Illinois State Bar. They may have to be a member of the State Bar in good standing to do "business" in the state.

Also Google, "West Virginia Atorney General, Riddle & Associates" and see what they had to say about it in 2004.

[CarolinaBlueEyes]

for what its worth in NC any laywer who is debt collecting, regardless of the state they practice does NOT have to be licensed or have a permit in our state to go sue here..

If he has a practice in CO he can still file suit here in NC.. without a collections permit.. in short lawyers have carte blanche in this state... just an fyi