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Suit for Unlicensed Collection Activity


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Hello,

 

I have a case pending against a JDB for several state and federal violations. All of which stem by being unlicensed in my state.

 

In fighting my claims, they responded back with the "minutes" from the meeting of the collection agency board. It appears the board caved to allow "Passive Debt Buyers".

 

The minutes detail a resolution, it does not change the law.

 

I am looking for case law that pretty much says "we only interpret the law, not outside letters,or resolutions"

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I don't think you'll find that, but there might be a case. Is like me going at 100 mph on a school zone and telling the police man when they stop me, hey I just got a letter here from Nascar drivers that says you should always drive at full speed. I mean is pretty much worthless.

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I don't think you'll find that, but there might be a case. Is like me going at 100 mph on a school zone and telling the police man when they stop me, hey I just got a letter here from Nascar drivers that says you should always drive at full speed. I mean is pretty much worthless.

 

Exactly. It is pretty much common sense. But, I was hoping for some case law to seal the deal.

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Hello,

 

I have a case pending against a JDB for several state and federal violations. All of which stem by being unlicensed in my state.

 

In fighting my claims, they responded back with the "minutes" from the meeting of the collection agency board. It appears the board caved to allow "Passive Debt Buyers".

 

The minutes detail a resolution, it does not change the law.

 

I am looking for case law that pretty much says "we only interpret the law, not outside letters,or resolutions"

 

Is it Encore or Midland, MCM etc...?

 

If not list the names of those involved and it will be easier to help you.

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In most states the "collection agency boards" are mostly filled with officers from collection agencies. This is like having convicted felons making laws. At least in Federal Courts previous judicial opinions and even state attorney general opinions can hold more weight than these "boards". In my state it is a "pay for play" type situation for most of these appointments and I'm sure AR may be similar. 

 

A quick search on Google found these two. I'm sure if you look up the other two that you will find similar connections. 

 

http://www.linkedin.com/pub/rusty-guinn/33/461/96b

 

http://www.linkedin.com/pub/jerry-markham/7a/7a7/b07

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From "Sparlin v.Select Portfolio Servicing," (D. Ariz. 2012).  According to the court, there is no PROA for not being licensed in AZ,

 

The lodged Amended Complaint also includes a claim for a violation of Arizona Collection Agency Statutes. However, while an unlicensed collection agency may be guilty of a class 1 misdemeanor, see A.R.S. § 32-1056, the Sparlins have not pointed to any authority for a private cause of action against an unlicensed collection agency acting in Arizona or for an unlicensed collection agency violating the duty to act fairly and honestly with debtors. See generally, W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 36 at 226 (5th ed. 1984) (licensing statutes create no liability if the actor is competent but unlicensed). Rather, Arizona law provides that the "prosecuting officer of a county or city shall prosecute all violations of this chapter occurring within his jurisdiction." A.R.S. 32-1057; see also Grismore v. RJM Acquisitions, LLC, CIV 08-529-PHX-DKD, 2009 WL 806627, *5 (D.Ariz.2009) ("there is no private right of action for the failure to acquire such a license [under A.R.S. § 32-1001 et seq.]"). The Court finds the inclusion of this claim in an amended complaint is futile.

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In Arizona, only the DFI, the Attorney General or  most rarely,the county prosecutor can enforce the penalties for not being licensed. 

 

 

Many times, the DFI will assess civil money penalties for unlicensed collections... many times it's about $2,500 per violation, but there needs to be a large number of complaints in order for that to happen. 

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I could not find any Ark state case law or case law from an Ark fed dist crt or from the 8th cir addressing whether being unlicensed in Ark constitutes an FDCPA violation in attempting to collect on a debt or in suing on a debt.

 

Other courts have ruled on this issue:

 

 

 review of the cases cited by Defendants demonstrates the importance of this distinction. For instance, in the case on which Defendants principally rely, Wade v. Regional Credit Association, 87 F.3d 1098 (9th Cir.1996), the Ninth Circuit held that the defendant's collection activities in Idaho, 665*665 where it was not licensed as a debt collector, did not violate subsections (5) and (10) of § 1692e, or § 1692f of the FDCPA. Id. at 1100-01. The Idaho licensing statute at issue in Wade "prohibits persons from engaging `either directly or indirectly in this state in the business of collecting or receiving payment for others of any account, bill, claim or other indebtedness' without obtaining a permit." Id. at 1100 (citing Idaho Code § 26-2223(2)). Although the defendant's unlicensed collection activities were in violation of state law, the Ninth Circuit held that they were not in violation of the FDCPA. Id. In particular, the court held that the collection notice sent by the defendant was not a threat to take action that could not legally be taken under § 1692e(5), but was instead informational, and a notification that the plaintiff's failure to pay could adversely affect her credit reputation. Id. Likewise, the court dismissed the plaintiff's claim that the statement that the notice was an attempt to collect a debt was a threat, finding instead that the statement was also informational, and further noted that the failure to state that the notice was an attempt to collect a debt would itself have been a violation of § 1692e(11) of the FDCPA. Id. Additionally, the court rejected the plaintiff's claims for misrepresentation under § 1692e(10), because the notice did not contain any representation that the defendant was licensed to collect debts in Idaho. Id. Finally, the court rejected plaintiff's § 1692f claim for unconscionable or unfair collection practices, because "the notice was relatively innocuous, and not `unconscionable' in either the lay or legal sense." Id.

 

Several federal courts have followed Wade in rejecting FDCPA claims based on debt collectors' attempts to collect debts in jurisdictions where they are not licensed to do so. E.g., LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1192 (11th Cir. 2010); Nero v. Law Office of Sam Streeter, P.L.L.C., 655 F.Supp.2d 200, 209 (E.D.N.Y. 2009); Ferguson v. Credit Mgmt. Control, Inc., 140 F.Supp.2d 1293, 1301-03 (M.D.Fla.2001). Other courts have held to the contrary, finding that an attempt to collect a debt the collector is legally barred from collecting constitutes a threat to take action that cannot be legally be taken, or an unconscionable or unfair means of collecting a debt, or both. See, e.g., Goins v. JBC & Assocs., 352 F.Supp.2d 262, 271 (D.Conn.2005); Sibley v. Firstcollect, Inc., 913 F.Supp. 469, 471-72 (M.D.La.1995); Russey v. Rankin, 911 F.Supp. 1449, 1459 (D.N.M.1995); Kuhn v. Account Control Tech., Inc., 865 F.Supp. 1443, 1451-52 (D.Nev.1994); Gaetano v. Payco of Wis., Inc., 774 F.Supp. 1404, 1414-15 (D.Conn. 1990). Neither the Fifth Circuit nor any federal district court in this state has weighed in on this issue.

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Thanks for the reply guys. I cited a few of those cases in my counterclaims.

 

At this point in the case, the plaintiff has given up trying to prove they are not liable under afdcpa,fdcpa, and arkansas deceptive trade practices act. Its pretty much open and shut that if JDB is unlicensed, the violations are there. All I have to do is prove that the Plaintiff violated Arkansas State law by not being licensed. there is not any case law on unlicensed collection activity in the State of Arkansas.

 

 

The Plaintiff's entire defense of not being licensed relies on a meeting last year of the ASBCA. In the meeting, a JDB defense lawyers makes the proposal that "passive debt buyers" be declared exempt from licensure. They provided me with a copy of the "minutes"

 

 

Manny Newberger of Baron & Newberger in Austin, Texas made a presentation regarding debt buyers and then requested that passive debt buyers, i.e., persons or entities that purchase debts then assign them to attorneys or collection agencies for collection, be exempted form the definition of collection agencies found at A.C.A. 17-24-101. Mr. Coply made a motion which was seconded by Mr.Markham that the following language be adopted:

 

IT IS HEREBY RESOLVED that the Arkansas State Board of Collection Agencies recognizes as exempt from the collection agency licensure in Arkansas any entity that purchase or receives an assignment of ownership of a debt that is in default at the time of assignment provided that the debt buyer: 1)does not attempt to collect debts directly either for itself or others; 2) undertakes collection efforts solely through third-party collection agencies or law firms; 3)maintains no place of business in Arkansas. This resolution is not a change in the law; rather it is a clarification of existing law.

 

 

So essentially, an out of state JDB attends a meeting, gives  short presentation on "Passive Debt Buyers" and the Board is now convinced that such "passive debt buyers" are now exempt from licensure. So in their mind, as long as a person/organization exists out of state, and hire a lawyer, they are exempt from all liable. This what the Plantiff is relying on as their sole defense. Here is the response I have thus far. 

 

 

Plantiff, in erroneously arguing that it is exempt from the licensing requirements set forth by A.C.A 17-24-101, relies heavily on the August 15th, 2012 meeting of the ASBCA. In this meeting the Arkansas State Board of Collection agencies made a “resolution” that it recognizes certain organizations as being exempt from licensing requirements. The meeting and the “resolution” are irrelevant to the matters at hand. The State of Arkansas has not changed this law to recognize the exemptions presented in the August 15th, 2012 meeting of the ASBCA. Furthermore, the ASCBCA does not have the power to interpret, change, or alter the meaning of State Laws.

Also, A.C.A 17-24-102, provides an exhaustive list of exemptions. If the State of Arkansas intended to exempt individuals such as the Plantiff from licensing requirements, it would have done so by describing such exemption in 17-24-103.

It is an illogical argument that the court should ignore the plain language of a State statute and consider a meeting or resolution from an organization that does not have the power to change State Laws. 

 

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@

 

You don't necessarily need case law.  The AR statute is specific that debt buyers are collection agencies that are required to be licensed.

 

17-24-101.  Definition.

  As used in this chapter, unless the context otherwise requires, "collection agency" means any person, partnership, corporation, association, limited liability corporation, or firm which engages in the collection of delinquent accounts, bills, or other forms of indebtedness owed or due or asserted to be owed or due to another or any person, partnership, corporation, association, limited liability corporation, or firm using a fictitious name or any name other than its own in the collection of their own accounts receivable, or any person, partnership, corporation, association, limited liability corporation, or firm which solicits claims for collection or any person, partnership, corporation, association, limited liability corporation, or firm that purchases and attempts to collect delinquent accounts or bills.

 

 

Has a JDB sued you, and is this a counterclaim?

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Seek out Coltfan on Debtorboards, he sued and won against a JDB in AR for not being licensed. He can show you the way to kick a$$!  He is from Arkansas.

 

Coltfan has a judgment against him for attys fees in the amt of $30,000 plus costs for bringing a suit in bad faith in violation of the FDCPA

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@

 

I'm assuming that they alleged that they purchased your account?   Is it also shown that the account was in default at the time of the alleged purchase?

 

Yes. To make things clearer.

 

1.) JDB Sues me for alleged overdrawn bank account

 

2.) I respond with answer and counter claims(AFDCPA,ADTPA,Abuse of Proccess,FDCPA) all as a result of not being licensed.

 

3.) Discovery is sent out, requesting Bill of Sale, and signed account agreement. JDB objects to providing it

 

4.) I file motion for summary judgment on counter claims. Undisputed facts are that JDB filed a suit against me seeking to recover a debt, JDB is unlicensed, and JDB alleges the account was in default.

 

5.) JDB responds back to my motion with a motion in opposition, and to dismiss. Ironically, their "undisputed facts", are the matters that have been disputed throughout the whole case(Assignment and Balance). Their sole defense is that in this "meeting" the ASBCA "resolved" the issue, and now passive debt buyers are exempt from licensure.

 

They also use a very strange interpretation of A.C.A 17-24-101:

 

"Defendant's argument fails to consider an important qualification: under Arkansas law a "collection agency" collects, directly, or indirectly, debts owed or due or asserted to be owed or due another"

 

The actual statutes:

 

"collection agency" means any person, partnership, corporation, association, limited liability corporation, or firm which engages in the collection of delinquent accounts, bills, or other forms of indebtedness owed or due or asserted to be owed or due to another or any person, partnership, corporation, association, limited liability corporation, or firm using a fictitious name or any name other than its own in the collection of their own accounts receivable, or any person, partnership, corporation, association, limited liability corporation, or firm which solicits claims for collection or any person, partnership, corporation, association, limited liability corporation, or firm that purchases and attempts to collect delinquent accounts or bills.

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I really think you need to speak to an attorney.  As you said, the meeting didn't make law.   The law hasn't been changed.  However, there's no precedent to support your claim that the failure to get a license results in an FDCPA violation.   I believe it does, but I'm not an attorney or an expert on legal issues.

 

Another reason you need to speak to an attorney is because of the Supreme Court's ruling in Marx v. General Revenue.  In that case, the court ruled that a collection agency that successfully defends itself in an FDCPA case is entitled to recoup their court costs.  If your claim is not successful, and if the CA had to spend some money to defend against your claim, you might be liable for those costs.  Not for their attorney, but for any other costs related to defending themselves.

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@

 

I really think you need to speak to an attorney.  As you said, the meeting didn't make law.   The law hasn't been changed.  However, there's no precedent to support your claim that the failure to get a license results in an FDCPA violation.   I believe it does, but I'm not an attorney or an expert on legal issues.

 

Another reason you need to speak to an attorney is because of the Supreme Court's ruling in Marx v. General Revenue.  In that case, the court ruled that a collection agency that successfully defends itself in an FDCPA case is entitled to recoup their court costs.  If your claim is not successful, and if the CA had to spend some money to defend against your claim, you might be liable for those costs.  Not for their attorney, but for any other costs related to defending themselves.

 

Im seriously considering. The case seems to be getting very complex. 

 

Regarding FDCPA case law, my counterclaims,, as well as MSJ, all have case law that Unlicensed collection activity is a violation of the FDCPA and State Deceptive Trade Practices Act.

Kuhn v. Account Control Technology, Inc 865 F.Supp. 1443 (1994) 

Bradshaw v. Hilco Receivables, LLC, 765 F.Supp.2d 719, 729-31 (D.Md. 2011). (A very good rea,d if you have the time)

Russey v. Rankin, 911F.Supp. 1449, 1459 

 

 

 

At this point, the Plaintiff did not dispute that they are a "debt collector" under the FDCPA. They also offerd no argument to my other counter claims, other than "we are not required to be licenssed)

 

The entire case hinges on proving 1.) Plantiff is unlicensed(Already done, Plantiff admits this) 2.)Plaintiff IS required to be licensed

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c. Debt Buyers

Neither the Arkansas Supreme Court nor the Arkansas Court of Appeals have addressed whether debt buyers are required to obtain a license from the Arkansas Board of Collection Agencies. Although it appears many passive debt buyers obtain a license from the Arkansas Board of Collection Agencies, it is at least arguable that passive debt buyers should not be required to do so. This is because passive debt buyers purchase delinquent accounts and then engage others (who must either be licensed under Ark. Code Ann. §17-24-101 or are exempt from licensing under such provisions, such as attorneys) to attempt to collect these delinquent accounts. Ark. Code Ann. §17-

 

24-301 provides that it is unlawful for a person or entity that is not licensed by the State Board of Collection Agencies to…"purchase and attempt to collect delinquent accounts or bills." It can be argued that because a passive debt buyer does not "attempt to collect" the delinquent accounts it purchases, but instead engages others to do so, A.C.A. §17-24-301 does not require a passive debt buyer to obtain a license.

 

Yes, it is written by a debt collection atty, but  they note that no Ark appellate court has addressed the issue, and they make an argument why passive debt buyers should not be required to get a license.   Just because they are defense attys doesn't automatically make their argument wrong.   Anymore than a consumer lawyer's arguments are always valid just because they are consumer lawyers.  Collection lawyers do win their share of FDCPA claims.

They managed to convince  SCOTUS in "Marx v. General Revenue."  

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Knowing the name of the JDB might help others here help you. Its always a possibility that some judicial opinions may not show up through a general Google Search. Even sites like Justia.com do not list all opinions. You might need to do a search on Pacer. 

 

My state has a similar statement by the collections services board. The only problem is that their statement goes against the state attorney general's opinion and a handful of rulings made by federal judges. Here it is still an open issue and I'm guessing it still may be in AR also. Its not in the best interest of the major debt buyers to put an issue like this in the spotlight, if its an open issue. 

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c. Debt Buyers

Neither the Arkansas Supreme Court nor the Arkansas Court of Appeals have addressed whether debt buyers are required to obtain a license from the Arkansas Board of Collection Agencies. Although it appears many passive debt buyers obtain a license from the Arkansas Board of Collection Agencies, it is at least arguable that passive debt buyers should not be required to do so. This is because passive debt buyers purchase delinquent accounts and then engage others (who must either be licensed under Ark. Code Ann. §17-24-101 or are exempt from licensing under such provisions, such as attorneys) to attempt to collect these delinquent accounts. Ark. Code Ann. §17-

 

24-301 provides that it is unlawful for a person or entity that is not licensed by the State Board of Collection Agencies to…"purchase and attempt to collect delinquent accounts or bills." It can be argued that because a passive debt buyer does not "attempt to collect" the delinquent accounts it purchases, but instead engages others to do so, A.C.A. §17-24-301 does not require a passive debt buyer to obtain a license.

 

Yes, it is written by a debt collection atty, but  they note that no Ark appellate court has addressed the issue, and they make an argument why passive debt buyers should not be required to get a license.   Just because they are defense attys doesn't automatically make their argument wrong.   Anymore than a consumer lawyer's arguments are always valid just because they are consumer lawyers.  Collection lawyers do win their share of FDCPA claims.

They managed to convince  SCOTUS in "Marx v. General Revenue."  

 

I appreciate the opinion. I wish the Arkansas courts would have addressed this matter before. It has been well decided in other states

 

Pretty much identical case.

 

 

Plaintiff argues that it is not a debt collection agency under the New York City statute as it does not collect debts owed or due to another (as required by the statute on its face) but only collects debt due itself. There are no New York State court cases which address the issue of whether an entity can be a debt collection agency even though it collects debts due to itself as opposed to debts due to another. However, as will be explained more fully below, this court finds that the New York City statute's definition of debt collection agency should be interpreted consistently with the definition of debtcollector under a similar federal act, the federal Fair Debt Collection Practices Act (the FDCPA). The federal courts have consistently held that under the FDCPA, entities such as plaintiff which purchase defaulted debt and collect that debt for themselves are debt collectors. As a result, the plaintiff in the instant case would be considered a debt collection agency under the New York City statute.

 

Also:http://www.leagle.com/decision/1993914856P2d58_1901

 

 

 

Here, plaintiff was engaged in a business the principal purpose of which was the collection of debts, it had its place of business located outside this state and was collecting or attempting to collect from consumers who reside within this state on a debt originally owed to a creditor whose place of business was located within this state, and it took the assignment when the debt was in default. Plaintiff is therefore a collection agency subject to the licensure requirements of § 12-14-118, C.R.S. (1991 Repl.Vol. 5A).

 

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