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February 2016

Gordon & Rees New Jersey Team Obtains Dismissal of Federal Consumer Claims

Gordon & Rees New Jersey partner Peter G. Siachos and associate Matthew P. Gallo obtained complete dismissal of a federal lawsuit against a client that manages and services domestic and international consumer debt portfolios for credit grantors and debt buyers. The U.S. District Court for New Jersey found there were no plausible claims under the Fair Debt Collection Practices Act (FDCPA) and various state consumer protection statutes regarding the client’s actions when the plaintiff attempted to dispute her account with the client.

The claims stemmed from the client’s interactions with a "debt counselor" the plaintiff hired to improve her credit and dispute loans. The debt counselor sent via facsimile a limited power of attorney to the client, which allegedly authorized the debt counselor to dispute and resolve the outstanding account on behalf of the plaintiff. The debt counselor initiated a telephone call to the client to dispute the account on behalf of the plaintiff. The client allegedly refused to allow the debt counselor to verbally dispute the debt, and instead, insisted that the plaintiff be present for any phone call to dispute accounts. Additionally, the client required that the plaintiff dispute all accounts in writing. The plaintiff claimed these acts violated the FDCPA and consumer protection statutes.  

The district court found that the client's refusal to allow the debt counselor to dispute the plaintiff's account was not a violation of any law. Likewise, the Court found that it was neither unfair nor unconscionable that the client required that plaintiff herself dispute her account and make all credit disputes in writing. Finally, the Court found that because the debt counselor (and not the client) had initiated the phone call, the claims did not fall within the domain of the FDCPA. The lawsuit was dismissed with prejudice. 

The client was especially pleased with this result as the plaintiff’s counsel and the plaintiffs' bar in general have sued the client in lawsuits in multiple jurisdictions on substantially similar grounds. The client hopes that the precedent created by this decision will prove to be useful in defending existing and future suits against them. 

Peter G. Siachos