“Competent Attorney” Standard Applies to Letters Sent to a Consumer’s Attorney
Published: October 2, 2008
Court rules that a collection letter sent to a consumer in care of her attorney must be reviewed based on “competent attorney” rather than “unsophisticated consumer” standard.

A recent decision from the Northern District of Illinois found when determining whether a collection letter sent to a consumer's attorney violates the Fair Debt Collection Practices Act (FDCPA), it must be reviewed from the perspective of a “competent attorney,” rather than an “unsophisticated consumer.”

In this case, the debt collector sent a collection letter addressed to the consumer in care of her attorney at her attorney's address. The letter presented the consumer with an offer to settle the account and included language stating if the consumer elected to make a payment by phone, a process and handling fee would be charged for the service. The consumer filed suit against the debt collector asserting the fee referenced in the letter was deceptive, in violation of the FDCPA.

In the Seventh Circuit, FDCPA claims against debt collectors are generally examined from the standpoint of the “unsophisticated consumer.” However, in 2006, the Seventh Circuit adopted a heightened standard of review for communications by a debt collector to a consumer's attorney—the “competent attorney” standard. Under the “competent attorney” standard, “a representation by a debt collector that would be unlikely to deceive a competent lawyer, even if he is not a specialist in consumer law, should not be actionable.”

Since the letter in the instant case was directed to the consumer's attorney, rather than directly to the consumer, the heightened “competent attorney” standard was the proper standard for determining whether the letter was deceptive, rather than the “unsophisticated consumer” standard.

Upon reviewing the language of the letter and the FDCPA, the district court concluded a competent attorney would not be deceived or mislead by the process and handling fee referenced in the letter. Thus, the court held the consumer's claim that the fee violated the FDCPA was not actionable.

Please note this was not a decision on the merits of whether the process and handling fee violated the FDCPA. Rather, the court held even if the fee did violate the FDPCA, no competent lawyer would have been deceived and, therefore the claim must be dismissed.

Additionally, note there is a split of authority as to whether communications sent to a consumer's attorney are actionable under the FDCPA. Although the Fourth Circuit has held communications directed to a consumer's attorney are actionable under the FDCPA, both the Second and the Ninth Circuits have conversely held communications directed to a consumer's attorney are not subject to the requirements of the FDCPA.

This article is provided as a service of ACA's Legal and Government Affairs Department.

Mortgage Applications Decrease
Published: September 25, 2008
Loan application volume dipped 9.3 percent compared with the same week in 2007.

On Sept. 24, 2008, the Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending Sept. 19, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 591.4, a decrease of 10.6 percent on a seasonally adjusted basis from 661.7 one week earlier. On an unadjusted basis, the index decreased 11.1 percent compared with the previous week and was down 9.3 percent compared with the same week one year earlier.

The Refinance Index decreased 11.2 percent to 2043.4 from the previous week and the seasonally adjusted Purchase Index decreased 10.0 percent to 342.2 from one week earlier. The Conventional Purchase Index decreased 10.4 percent while the Government Purchase Index (largely FHA) decreased 8.9 percent.

The four-week moving average for the seasonally adjusted Market Index is up 8.4 percent. The four-week moving average for the seasonally adjusted Purchase Index is up 1.9 percent, while this average is up 17.9 percent for the Refinance Index.

The refinance share of mortgage activity and the adjustable-rate mortgage (ARM) share of mortgage activity remained unchanged from the previous week at 51.6 percent and 4.0 percent respectively.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.08 percent from 5.82 percent, with points remaining at 1.13 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.84 percent from 5.54 percent, with points increasing to 1.17 from 1.12 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 7.01 percent from 6.95 percent, with points decreasing to 0.33 from 0.34 (including the origination fee) for 80 percent LTV loans.

This article is provided as a service of ACA's Creditors International Division.

FTC Testifies Regarding the Call Center Consumer’s
Right to Know Act
Published: September 18, 2008
H.R. 1776 would require call center employees to disclose the location of the call center.

On Sept. 11, 2008, the Federal Trade Commission (FTC) testified before the U.S. House of Representatives' Committee on Energy and Commerce, Subcommittee on Commerce, Trade, and Consumer Protection regarding H.R. 1776, the Call Center Consumer's Right to Know Act.

H.R. 1776, if enacted, would require call center employees to disclose, in telephone calls with consumers, the physical location of the call center. The FTC provided comments on the legislation relating to its scope and enforcement and expressed its willingness to work with the committee as the legislation progresses.

The FTC's testimony specifically noted the underlying purpose of the bill is to provide members of the public with a way to know when they are dealing with an overseas call center. However, as currently drafted, the obligation to disclose a physical location would apply to all entities that have telephone contact with a consumer, whether operating in the United States or abroad.

The commission also noted the ambiguity of H.R. 1776's definition of “call center,” which is defined as “a location that provides customer-based service and sales assistance or technical assistance and expertise to individuals located in the United States via telephone, the Internet, or other telecommunications technology.” The FTC's testimony noted resolution of such ambiguity would help entities potentially subject to the requirements to understand what they must do to comply.

The FTC expressed concern regarding the current language of H.R. 1776, which would require annual certification by every U.S. corporation or subsidiary that “utilizes a call center to initiate telephone calls to, or receive telephone calls from, individuals located in the United States.” The FTC noted this requirement represented a potentially costly burden for any agency tasked with enforcement of the bill. The FTC also expressed concern over the bill's apparent lack of an enforcement mechanism, and the fact the FTC would lack jurisdiction over many entities subject to the bill if passed into law in its current form.

The bill is currently in the House Committee on Energy and Commerce, and is still in the early stages of the legislative process. ACA International's Government Affairs Department will continue to monitor the bill.

View the text of the FTC's testimony.

This article is provided as a service of ACA International's Legal and Government Affairs Department.

Gas Prices Affect Healthcare
Published: September 18, 2008
According to recent reports, more Americans are foregoing healthcare. Some cite high gas prices as a reason.

If it's not the co-pays, high cost of treatment or state of the economy, then gas prices are topping Americans' list of reasons to forego or delay healthcare treatment, according to a Sept. 3, 2008, USA Today article.

Consumers having to travel a significant distance for care frequently are affected the most, prompting many to turn to support groups and grants for assistance.

One group offering transportation assistance is CancerCare, reportedly giving $4.1 billion in assistance for the fiscal year ending in June 2008. About 90 percent of the grants were given to patients for transportation assistance, the article said.

American Kidney Fund is another group helping patients offset gas prices, offering transportation grants up to twice a year for a maximum of $175.

But it's not just patients having to travel significant distances to visit the doctor who are foregoing treatment, according to The Commonwealth Fund, a private foundation promoting “a high performance health system,” more Americans overall are foregoing healthcare.

“Currently, only half of all adults receive the recommended preventative healthcare, including screening for cancer,” The Commonwealth Fund reported. Further, 42 percent of all working age adults were considered uninsured or underinsured in 2007, a seven percent increase over a four-year period starting in 2003.

The Commonwealth Fund Commission produces a “scorecard” for the U.S. healthcare system based on key indicators of health outcomes, quality, access, efficiency and equity. Since the first scorecard in 2006, the U.S. has failed to improve but still spends more than any industrialized nation on healthcare.

The newest scorecard, released in July 2008, showed the U.S. scored an average of 65 out of 100 across 37 key health indicators. The score was slightly lower than the score given in 2006.

The Commonwealth Fund also found that the United States fell from 15th to last among a ranking of 19 industrialized nations when measuring the number of premature deaths that could have potentially been prevented by timely access to effective healthcare, the release said.

This article is provided as a service of ACA International's Healthcare Services Program.

Parents Save Less for Kids’ College Education
Published: September 25, 2008
Sixty-five percent of parents have saved less than $5,000 per child toward college, including 43 percent who have saved nothing at all.

Parents are saving less for their children's college education this year than last year and more people have saved nothing at all, according to the 2008 The State of College Savings survey of 800 parents across regions and income levels conducted by the College Savings Foundation (CSF). But the 30 percent of parents who know the amount they need to save to fund their children's college education are much more likely to succeed in reaching their goals than the 70 percent who admit not knowing.

Fifty-eight percent of parents in-the-know have saved at least $5,000 compared to only 26 percent of those who don't know how much to save. They rely on multiple media sources, college savings calculators, college administrators and financial advisors for information. They are also more likely to employ strategies like saving early, using an automatic savings plan and owning a 529 college savings plan.

Sixty-three percent expect their kids to shoulder debt, the survey found, even though the parents know it will take years to pay off. In fact, 70 percent expect their children to be paying back loans beyond five years and 29 percent beyond 10 years. For 37 percent of parents, student loans will be their number one aid source, as compared to six percent with parental loans. And, even though only a small percent of federal and state grants are merit- based, the survey found that a full 20 percent of parents are relying on federal and state grants as their primary source.

On the savings side of the ledger, 2008 is a bleaker year than 2007, the survey found: 65 percent of parents have saved less than $5,000 per child towards college, including 43 percent who have saved nothing at all. This compares to 54 percent who had saved less than $5,000 in 2007, including 27 percent saving nothing.

Retirement (53 percent) has pulled out ahead of college (45 percent) as a savings goal in 2008, versus 51 percent and 53 percent respectively in 2007; and more people think of saving for homes this year (26 percent) than last year (18 percent).

Foreclosures Increase in August
Published: October 2, 2008
Nevada and California led the nation, with one in every 91 and one in every 130 households receiving a foreclosure filing, respectively..

Foreclosure filings were reported on 303,879 U.S. properties in August, according to the recently released August 2008 U.S. Foreclosure Market Report from RealtyTrac. This is a 12 percent increase from the previous month and a 27 percent increase from August 2007. The report also shows one in every 416 U.S. households received a foreclosure filing during the month.

With one in every 91 households receiving a foreclosure filing in August, Nevada continued to document the nation's highest state foreclosure rate for the 20th consecutive month. Foreclosure filings were reported on 11,706 Nevada properties, a 16 percent increase from the previous month and an 89 percent increase from August 2007.

California continued to document the nation's second highest state foreclosure rate, with one in every 130 households receiving a foreclosure filing in August, and Arizona registered the third highest state foreclosure rate, with one in every 182 households receiving a foreclosure filing during the month.

Other states with foreclosure rates ranking among the top 10 were Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana. Michigan, Georgia, Ohio and Colorado all reported annual decreases in foreclosure activity.

This article is provided as a service of ACA's Creditors International Division.