Municipal Services Bureau

[cjtx2]

A City in TX contracted with them to collect on a debt related to city code violations. The most the city can do is file a lien.

However, in a dunning letter, MSB claims there could be arrest warrants for non-payment.

The name of the company seems to suggest (to me, a least sophisticated consumer) it is some sort of government agency, but even if that's not the case, the city could not have approved a threat of arrest, which is not even a remedy for city code violations.

MSB also called many times. Obviously, the city code inspectors never had consent to call my number, so they could not possibly authorize MSB to call.

The wording of the letter is not standard and it seems to lack at least one of the mandatory disclosures (or makes it very hard to identify it).

Is this considered a debt within FDCPA? More specifically, are fines considered a debt?

Not sure if the exception for "any officer or employee of the United States or any State" applies. I found some caselaw that identifies the difference between a State and a Municipality employee, where the former has sovereign immunity, whereas the latter does not and is not considered a State employee. 

I have read several comments and apparently MSB does not sue and only makes empty threats. Just considering whether a suit is in order for egregious FDCPA and multiple TCPA violations.

[cjtx2]

This looks to me like overshadowing the right to request validation:

Quote

"... Please contact us at 1-800-616-0166 or 512-454-4757 for additional information and to resolve your court case(s). A minimum of 30 percent down is required; however, we encourage you to remit payment in full unless you dispute the debt owed..."

And then the address for payments is the municipal court and/or the marshall's office (not their own). So is the municipal court misrepresenting whoi is in fact collecting the debt?

[BV80]

10 hours ago, cjtx2 said:

A City in TX contracted with them to collect on a debt related to city code violations. The most the city can do is file a lien.

However, in a dunning letter, MSB claims there could be arrest warrants for non-payment.

The name of the company seems to suggest (to me, a least sophisticated consumer) it is some sort of government agency, but even if that's not the case, the city could not have approved a threat of arrest, which is not even a remedy for city code violations.

MSB also called many times. Obviously, the city code inspectors never had consent to call my number, so they could not possibly authorize MSB to call.

The wording of the letter is not standard and it seems to lack at least one of the mandatory disclosures (or makes it very hard to identify it).

Is this considered a debt within FDCPA? More specifically, are fines considered a debt?

Not sure if the exception for "any officer or employee of the United States or any State" applies. I found some caselaw that identifies the difference between a State and a Municipality employee, where the former has sovereign immunity, whereas the latter does not and is not considered a State employee. 

I have read several comments and apparently MSB does not sue and only makes empty threats. Just considering whether a suit is in order for egregious FDCPA and multiple TCPA violations.

1692a(5)

The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

[WhoCares1000]

Government fines is not considered consumer under the FDCPA because the relationship needs to be consensual (at least in the 7th circuit). Although that circuit does not cover Texas, the lawyers for the collectors can use that as a persuasive argument in a FDCPA case against them. So the FDCPA is out the window.

The TCPA might be available but did you ever give the municipality your cell phone number for any transaction? If you did, then that is consent for the municipality or their agent (in this case, the debt collector), to call you cell phone. You will have to revoke that permission before the TCPA applied.

[cjtx2]

46 minutes ago, BV80 said:

1692a(5)

The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

Clearly a credit card transaction is debt. But the definition does not state who initiates the transaction.

In a city code violation the money subject of the alleged obligation is for household purposes. So the question is whether a fine is a transaction.

[cjtx2]

17 minutes ago, WhoCares1000 said:

Government fines is not considered consumer under the FDCPA because the relationship needs to be consensual (at least in the 7th circuit). Although that circuit does not cover Texas, the lawyers for the collectors can use that as a persuasive argument in a FDCPA case against them. So the FDCPA is out the window.

The TCPA might be available but did you ever give the municipality your cell phone number for any transaction? If you did, then that is consent for the municipality or their agent (in this case, the debt collector), to call you cell phone. You will have to revoke that permission before the TCPA applied.

Thank you. I guess I need to look up caselaw for the 5th circuit. I remember there was an old case about a car that was wrongly towed for city fines and the consumer prevailed using FDCPA. but I don't recall in which circuit it was. The consumer never agreed to some of the charges (possibly storage fees).

There is nothing in FDCPA about a consensual relationship. So it comes down to how the circuit interprets FDCPA.

There was never consent to call the number. It was captured when I called an 800 number for an unrelated matter from the same city department.

[BV80]

37 minutes ago, cjtx2 said:

Thank you. I guess I need to look up caselaw for the 5th circuit. I remember there was an old case about a car that was wrongly towed for city fines and the consumer prevailed using FDCPA. but I don't recall in which circuit it was. The consumer never agreed to some of the charges (possibly storage fees).

There is nothing in FDCPA about a consensual relationship. So it comes down to how the circuit interprets FDCPA.

There was never consent to call the number. It was captured when I called an 800 number for an unrelated matter from the same city department.

I think you’re referring to Pintos v. Pacific Creditors (9th Circuit Court of Appeals).  However, that lawsuit involved the FCRA, not the FDCPA.

To qualify as a debt under the FDCPA, there must be a “transaction”.  What was the transaction?

[cjtx2]

46 minutes ago, BV80 said:

I think you’re referring to Pintos v. Pacific Creditors (9th Circuit Court of Appeals).  However, that lawsuit involved the FCRA, not the FDCPA.

To qualify as a debt under the FDCPA, there must be a “transaction”.  What was the transaction?

You are right, it was Pintos.

According to Merriam Webster, there are at least two definitions of transaction.

- an exchange or transfer of goods, services or funds.

- a communicative action or activity involving two parties or things that reciprocally affect or influence each other.

 

 

So the second definition could easily involve a fine.

Maybe a fine could be stated in terms of an exchange of services and funds.

 

[Pericles]

14 hours ago, cjtx2 said:

However, in a dunning letter, MSB claims there could be arrest warrants for non-payment.

Is this considered a debt within FDCPA? More specifically, are fines considered a debt?

As you've probably already noticed, MSB says that (fines, etc.) are not covered under the fdcpa. From MSB's website;

Quote

Can debt collectors request my Social Security number? 

A debt collector is allowed to request that you verify your Social Security number. It is common practice for debt collectors to verify Social Security numbers in order to ensure that they are speaking with and/or collecting from the right person. 
 

Which debts are covered under the Fair Debt Collection Practices Act (FDCPA)? 

Debts from purchasing a good or service for personal, family, or household purposes are covered under the FDCPA. The purchase does not have to be from a credit transaction, such as buying something with a credit card, and a judgment against a consumer is not required for a debt to be covered under the FDCPA. Debts from purchasing a good or service for business purposes are not covered under the FDCPA. Other forms of debt, such as certain unpaid taxes, fines, and tickets, as well as property tax assessments are not covered under the FDCPA. Similarly, tort claims, past-due child support, alimony, and other support payments are not considered debt under the FDCPA. 

 

Some other cases that have involve a third party collector leveraging some power of the state (prosecution, arrest, etc.);

Breazeale v. Victim Services, No. 15-16549 (9th Cir. 2017) opinion | argument

Bounceback

Although both of the above are not merely fines or fees but also have a nexus to a private debt; a returned check.

For the collection of a debt that is just fines owed to some government entity, the fdcpa might not be useful.

[BV80]

2 hours ago, cjtx2 said:

So the second definition could easily involve a fine.

Maybe a fine could be stated in terms of an exchange of services and funds.

I disagree.  A city code is not an exchange between the city and citizens.  It’s a rule or regulation that must be followed.   The only reason you pay a fine is if you don’t follow the regulation.  That is not an exchange of services and funds. 

[Pericles]

My guess is also that it would probably be difficult to apply the fdcpa to the collection of mere fine debt owed to some government entity.

However, in 2017, the FTC made a determination that a similar collector, American Municipal Services Corp. (AMS) of Dallas, violated the fdcpa while collecting municipal debt.

Quote

AMS sent dunning letters that identified the company as the “Warrant Enforcement Division” or “Municipal Enforcement Division,” suggesting — falsely — that the letters were from a government agency with enforcement authority.

The FTC says they violated the FTC Act and the Fair Debt Collection Practices Act (FDCPA)

Notwithstanding the above, you'd probably also want some federal court precedent in your district.

Some fdcpa attorneys make reference to Municipal Services Bureau, for example; here.  But this appears to be because Navient acquired Gila LLC (MSB) in 2015.  So, the fdcpa attorneys soliciting business regarding MSB collection efforts might be primarily for cases involving student loans.

[cjtx2]

17 hours ago, BV80 said:

I disagree.  A city code is not an exchange between the city and citizens.  It’s a rule or regulation that must be followed.   The only reason you pay a fine is if you don’t follow the regulation.  That is not an exchange of services and funds. 

I think you are referring to a "purchase", but a fine is definitely an exchange.

For example, you are supposed to mow the lawn and keep it shorter than X inches. You pay for the privilege of keeping it longer than X inches. A fine, a transaction?, tomato, tomaito?...

A transaction encompasses everything not just purchases and includes late fees (fines), overdrafts (more fines) , attorney fees not authorized by the agreement (even more fines) and any other penalty (again, fines) that may be tagged to a debt. All of which are covered by FDCPA.

[cjtx2]

15 hours ago, Pericles said:

My guess is also that it would probably be difficult to apply the fdcpa to the collection of mere fine debt owed to some government entity.

However, in 2017, the FTC made a determination that a similar collector, American Municipal Services Corp. (AMS) of Dallas, violated the fdcpa while collecting municipal debt.

Notwithstanding the above, you'd probably also want some federal court precedent in your district.

Some fdcpa attorneys make reference to Municipal Services Bureau, for example; here.  But this appears to be because Navient acquired Gila LLC (MSB) in 2015.  So, the fdcpa attorneys soliciting business regarding MSB collection efforts might be primarily for cases involving student loans.

Thank you for the caselaw references.

The information from the MSB website is self-serving, so it would be to their advantage to claim that they are not covered by FDCPA.

As you stated, the FTC ruled that FDCPA applied to a company collecting exactly the same types of unpaid fines as this one. So I need to look into their reasoning to see why it applies.

Thanks!!!

[Pericles]

3 hours ago, cjtx2 said:

As you stated, the FTC ruled that FDCPA applied ...

The FTC doesn't rule, per se.  They have the power to initiate a court proceeding.  Only a court can rule;

Quote

The FTC files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated final injunctions/orders have the force of law when approved and signed by the District Court judge.

So, when I say that the FTC made a determination, that just means that they decided to allege violation(s) in a complaint.

The FTC's allegation in the AMS complaint (here) is pretty bare;

Quote

38. A “debt,” as defined in Section 803(5) of the FDCPA, 15 U.S.C. § 1692a(5), is “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” Debts for municipal services, including utility bills and emergency medical services bills, are “debts” within the meaning of Section 803(5) of the FDCPA.

No court ever rendered an opinion, because the FTC and AMS settled the case and agreed to a stipulated order (here).

The stipulated order has much broader definitions of the terms "debt" and "consumer";

Quote

B. “Consumer” means any person.
C. “Debt” means any obligation or alleged obligation to pay money whether or not such obligation has been reduced to judgment.

So, the FTC action in the AMS matter is not likely to be of much use in a private fdcpa case (unless, perhaps, the defendant is AMS).

You'll have to check, but I believe that texas doesn't allow any private right of action (through consumer statutes or otherwise) to prosecute deceptive acts, etc.  You can, of course, complain to the FTC or the texas attorney general.

[cjtx2]

5 hours ago, Pericles said:

The FTC doesn't rule, per se.  They have the power to initiate a court proceeding.  Only a court can rule;

True. But an FTC opinion has some weight and/or can be used to make a stronger argument.

The stipulation order is very explicit:

Quote

The Complaint charges that Defendants participated in deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and the FDCPA, 15 U.S.C. § 1692-1692p, in connection with the collection of municipal debts, including court fines, traffic tickets, parking citations, fines for ordinance violations, and debts related to emergency medical services, utility bills, and other city services.

 

5 hours ago, Pericles said:

You'll have to check, but I believe that texas doesn't allow any private right of action (through consumer statutes or otherwise) to prosecute deceptive acts, etc.  You can, of course, complain to the FTC or the texas attorney general.

Actually, the Texas Debt Collection Act  "TDCA" (Tex. Finance Code 392.001 et seq.) allows actions against third party debt collectors as defined under FDCPA. Then there is a tie-in statute, where you can also sue for deceptive trade practices if they violated TDCA.

The city employees can claim government immunity if they acted within their job functions, but the goal is to sue MSB only and sovereign immunity does not extend to a third party debt collector even if they are collecting for a government entity.

 

[cjtx2]

On 10/19/2019 at 3:53 PM, BV80 said:

I disagree.  A city code is not an exchange between the city and citizens.  It’s a rule or regulation that must be followed.   The only reason you pay a fine is if you don’t follow the regulation.  That is not an exchange of services and funds. 

I found a blog related to what you say.

https://blogs.findlaw.com/seventh_circuit/2011/12/city-sanctioned-fines-not-debts-under-fdcpa.html

And the case is:

Gulley v. Markoff & Krasny

While the 7th circuit admits a city fine is a transaction, they claim it is not consensual (and they claim it is from the plain language of FDCPA).

There is nothing in FDCPA related to debts having to be the result of a consensual transaction.

The funny thing is that they use old FTC opinions to justify that fines are not debt. But then the FTC changed its tune!

[BV80]

10 hours ago, cjtx2 said:

I found a blog related to what you say.

https://blogs.findlaw.com/seventh_circuit/2011/12/city-sanctioned-fines-not-debts-under-fdcpa.html

And the case is:

Gulley v. Markoff & Krasny

While the 7th circuit admits a city fine is a transaction, they claim it is not consensual (and they claim it is from the plain language of FDCPA).

There is nothing in FDCPA related to debts having to be the result of a consensual transaction.

The funny thing is that they use old FTC opinions to justify that fines are not debt. But then the FTC changed its tune!

The 7th Circuit is not the only court to apply “consensual”.

First, the court determines whether the obligation arose out of a transaction, i.e., consensual transaction involving an affirmative request and the rendition of a service or purchase of property. debt. St. Pierre v. Retrieval-Masters Creditors Bureau, Inc., 898 F.3d 351, 360 (3d Cir. 2018).

We have held that "at a minimum, a `transaction' under the FDCPA must involve some kind of business dealing or other consensual obligation." party." Fleming v. Pickard,581 F.3d 922, 925 (9th Cir. 2009).

In other words, when we speak of "transactions," we refer to consensual or contractual arrangements, not damage obligations thrust upon one as a result of no more than her own negligence. Hawthorne v. Mac Adjustment, Inc.,140 F.3d 1367, 1371 (11th Cir. 1998).

21 hours ago, cjtx2 said:

I think you are referring to a "purchase", but a fine is definitely an exchange.

For example, you are supposed to mow the lawn and keep it shorter than X inches. You pay for the privilege of keeping it longer than X inches. A fine, a transaction?, tomato, tomaito?...

A transaction encompasses everything not just purchases and includes late fees (fines), overdrafts (more fines) , attorney fees not authorized by the agreement (even more fines) and any other penalty (again, fines) that may be tagged to a debt. All of which are covered by FDCPA.

According to your definition, a fine for a speeding ticket would qualify as an exchange (transaction) for “personal, family, or household purposes”.  Notice late fees and attorney fees are a result of an agreement (contract) between parties.  

The 5th Circuit Court of Appeals has decided a “transaction” involves a purchase. 

Only financial obligations incurred for purchases “primarily for personal, family, or household purposes” qualify as consumer “debt” subject to the rules and regulations of the FDCPA. Garcia v. Jenkins Babb, L.L.P.,569 F. App'x 274, 275 (5th Cir. 2014) (per curiam).

 

13 hours ago, cjtx2 said:

Actually, the Texas Debt Collection Act  "TDCA" (Tex. Finance Code 392.001 et seq.) allows actions against third party debt collectors as defined under FDCPA.

Similarly, “to qualify as a consumer [under the TDTPA], ‘a person must have sought or acquired goods or services by purchase or lease’ and ‘the goods and services purchased or leased must form the basis of the complaint.’” Hurd v. BAC Home Loans Servicing, LP, 880 F. Supp. 2d 747, 765 (N.D. Tex. 2012).

[cjtx2]

4 hours ago, BV80 said:

According to your definition, a fine for a speeding ticket would qualify as an exchange (transaction) for “personal, family, or household purposes”.  

The main distinction is personal v. business. If the involuntary transaction was for a person, as opposed to a business, debt collection for it was supposed to be protected.

 

5 hours ago, BV80 said:

The 5th Circuit Court of Appeals has decided a “transaction” involves a purchase. 

Only financial obligations incurred for purchases “primarily for personal, family, or household purposes” qualify as consumer “debt” subject to the rules and regulations of the FDCPA. Garcia v. Jenkins Babb, L.L.P.,569 F. App'x 274, 275 (5th Cir. 2014) (per curiam).

Thank you for the case references.

There is nothing in the FDCPA definition of debt that mentions purchases. Only financial obligations for personal, family or household purposes from a transaction (which is not required to be voluntary). 

They were supposed to interpret FDCPA liberally to protect non-commercial consumers from abusive debt collection practices, not to look for gotcha's to give the abusers a pass.

5 hours ago, BV80 said:

 

Similarly, “to qualify as a consumer [under the TDTPA], ‘a person must have sought or acquired goods or services by purchase or lease’ and ‘the goods and services purchased or leased must form the basis of the complaint.’” Hurd v. BAC Home Loans Servicing, LP, 880 F. Supp. 2d 747, 765 (N.D. Tex. 2012).

I have a lawsuit from the former Atty General (Abbott), which sued a debt collector under both the TDCA and TDTPA, and asserted that debt collectors provide services to consumers, such as payment plans, refinance, etc. They settled, but I imagine a pleading from the atty gral. must carry some weight.

 

[Pericles]

16 hours ago, cjtx2 said:

But then the FTC changed its tune!

In the AMS matter, the FTC had the advantage of being able to allege violations with regard to all of AMS collection activity, all within a single complaint.

This included both fine and non-fine debt.  The allegations in the complaint regarding "emergency medical services", "utility bills", and "other city services" are arguably in the voluntary purchase (transaction) category.  The FTC also had the FTC act at its disposal.

The non-fine debt collection allegations may have been leveraged by the FTC in order to settle the entire matter.

If you bring a fdcpa action for just the collection of fine debt, you'll have a much tougher row to hoe.

[BV80]

54 minutes ago, cjtx2 said:

I have a lawsuit from the former Atty General (Abbott), which sued a debt collector under both the TDCA and TDTPA, and asserted that debt collectors provide services to consumers, such as payment plans, refinance, etc. They settled, but I imagine a pleading from the atty gral. must carry some weight.

The fact that debt collectors provide services to repay a debt does not change the origin of the debt.  If that were the case, then every debt collected by a debt collector would qualify under the FDCPA.   However, the courts have not made such a ruling.

Courts cite rulings, not allegations.  

[cjtx2]

On 10/21/2019 at 1:56 PM, BV80 said:

The fact that debt collectors provide services to repay a debt does not change the origin of the debt.  If that were the case, then every debt collected by a debt collector would qualify under the FDCPA.   However, the courts have not made such a ruling.

Courts cite rulings, not allegations.  

Thank you! Now I understand why it makes such a difference to state the definitions of debt and debt collector in the pleadings. The TDCA has broader definitions and if you do not plead them or plead FDCPA's instead, you do not get all the protections.

Tex. Fin. Code 392.001(2):

Quote

"Consumer debt" means an obligation, or an alleged obligation, primarily for personal, family, or household purposes and arising from a transaction or alleged transaction.

Here the alleged transaction statement takes care of the voluntary/involuntary part.

Although a third party debt collector is defined with reference to FDCPA's definition, TDCA also has another category for debt collector.  Tex. Fin. Code 392.001(6):

Quote

"Debt collector" means a person who directly or indirectly engages in debt collection and includes a person who sells or offers to sell forms represented to be a collection system, device, or scheme intended to be used to collect consumer debts.