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Determining Meaningful Involvement

  • Written by Fred N. Blitt

mug blittIn being asked to determine if a particular movie was so obscene as to be to banned, Supreme Court Justice Potter Stewart famously wrote that while he could not intelligibly define obscenity, “I know it when I see it.” Fast forward 50 years, the collection industry finds itself on the wrong end of the same definitional conundrum.

In Bock v. Pressler & Pressler, the court concluded that Pressler violated the FDCPA for failing to be “meaningfully involved” in the process of filing collection lawsuits. The court explained, “whatever reasonable attorney review may be, a foursecond scan is not it.” Further, the court stated that a “rapid look-over of the complaint … cannot really be considered a careful review of the complaint, let alone an exercise of the professional skills of a lawyer.”

Further, the CFPB filed an amicus brief in Pressler and contended that the Court need not decide precisely what steps an attorney must take to ensure the representations he/she makes when filing a debt-collection complaint. Rather, the CFPB stated that the attorney must be meaningfully involved in the case and reach a professional judgment that filing of the lawsuit is warranted and not deceptive.

For attorneys practicing in the area of legal debt collections, we are all hoping for rules that we could easily follow. However, the reality of today’s situation is more like, “you’ll know it when you see it.”

What is Meaningful Attorney Involvement?

While the case law and recent litigation involving collection law firms provides few guidelines on an affirmative definition of meaningful involvement, we do know a number of things as of the drafting of this article. An attorney must be involved in the process in which a lawsuit is prepared and that a cursory (think four second) review of the matter is not good enough. The use of legal assistants and technology have been discussed by the court and CFPB; however, there have been no clear directions given. In my opinion, a detailed process as to how the system of preparing and signing a lawsuit must be developed; and an attorney must be involved in the process.

Bright Spots and Bright Lines in the Consent Decrees

In September 2015, well-publicized consent decrees were issued involving major players in our industry. In the aftermath of these decrees, it became clear that major changes were on the way, impacting everyone from debt purchasers to original creditors to collection law firms. While different to some degree, both of the decrees are consistent on a number of topics. First, the CFPB had concerns that original creditors who sell debt do not warrant their balances and often provide little or no documentation, as well as making it difficult and expensive to receive documents after sale of the debt. Second, that to proceed to suit, plaintiffs and their attorneys must be able to substantiate the debt with original account level documentation, with the consumer’s name, last four digits of the account number, the balance and in certain circumstances, the terms and conditions applicable to the debt. Third, it requires a full, authenticated chain of title. Fourth, either a document signed by the consumer opening the account or evidence of a purchase, payment or other use of the account.

These consent orders, while not defining “meaningful involvement” provide some insight as to what specifically the CFPB is looking for as part of the collection process. Further, while these consent orders only involve two large debt purchasers, everyone in the industry is looking to them for guidance. These companies have a few months to change their processes to meet the terms of the consent orders. As such, collection law firms must address these changes within their own organizations.

A Way Forward

At the NARCA Fall conference in Washington, DC, NARCA’s immediate past president Joann Needleman helped organize meetings with the CFPB which were attended by Director Richard Cordray along with many of his staff. While it was clear from these meetings that the goal of the CFPB is to protect consumers, it was less clear that they understood debt collection lawyers agree with that goal. We must continue to educate on the importance that debt collection plays in our nation’s economy, keeping costs of lending lower, which benefits all consumers. We look forward to receiving rules that are clear, easy to follow, and that are mindful of each state’s rules of ethics and respect the codes of civil procedure.

Fred N. Blitt, Esq., is a partner with Blitt and Gaines, PC in Illinois and Couch, Conville and Blitt in Louisiana. He is past president of NARCA.