Lead Opinion
This case requires us to determine if the consumer protections of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., apply to a mortgage lender that has purchased mortgages initially payable to other lenders and, after the homeowners defaulted on their mortgages, hired a law firm to send allegedly deceptive debt collection letters on its behalf. Plaintiffs-Appellants Lori Jo Vincent, Ruth Ann Gutierrez, Linda Garrido, and John Garrido (collectively, the “plaintiffs”) appeal from a judgment of the United States District Court for the Southern District of New York (Koeltl, J.), which granted defendants’ motion for summary judgment on plaintiffs’ TILA claims and denied plaintiffs’ motion for reconsideration of the district court’s (Sprizzo, J.) earlier dismissal of their FDCPA claims against Defendants-Appellees The Money Store, TMS Mortgage, Inc., and HomeEq Servicing Corp. (collectively, “The Money Store”).
With respect to plaintiffs’ FDCPA claims, although creditors are generally not considered debt collectors subject to the FDCPA, the statute contains an excep
Similarly, with respect to plaintiffs’ TILA claims, the district court found that The Money Store could not be held liable under TILA for charging plaintiffs unauthorized fees on their accounts and failing to refund the resulting credit balances. TILA applies only to a “creditor,” which is defined in the statute as the person to whom the debt is initially payable. 15 U.S.C. § 1602(g).
For the reasons set forth below' and resolving all factual disputes in plaintiffs’ favor, we respectfully first hold that the district court erred in concluding that The Money Store was not a “debt collector” under the false name exception to FDCPA liability. Where a creditor, in the process of collecting its own debts, hires a third party for the express purpose of representing to its debtors that the third party is collecting the creditor’s debts, and the third party engages in no bona fide efforts to collect those debts, the false name exception exposes the creditor to FDCPA liability. With respect to the TILA claims, however, we conclude that the district court correctly determined that, because plaintiffs’ mortgage documents did not name The Money Store as the person to whom the debt was initially payable, The Money Store is not a “creditor” under TILA and is therefore not subject to liability. Accordingly, we affirm the judgment of the distinct court, in part, vacate in part, and remand the case for further proceedings consistent, with this Opinion.
BACKGROUND
I. Factual Background
The following facts are drawn from the record before the district court and are undisputed unless otherwise noted:
Plaintiffs-Appellants are homeowners who defaulted on their mortgages. The Money Store, a mortgage lender, serviced the loans on which plaintiffs defaulted.
A. The Plaintiffs’Mortgages
Plaintiff Lori Jo Vincent took out a mortgage loan on her home in Carrollton, Texas on February 16, 1998. She executed a promissory note and a deed of trust with her lender, Accubanc Mortgáge Corporation. In the promissory note Vincent agreed:
In return for a loan that I have received, I promise to pay U.S. $67,600.00 (this amount is called “principal”), plus interest, to the order of the Lender. TheLender is ACCUBANC MORTGAGE CORPORATION. I understand that the Lender may transfer this Note.
J. App’x 851. In addition, the deed of trust states:
Borrower [Vincent] owes Lender [Accu-banc] the principal sum of SIXTY-SEVEN THOUSAND SIX HUNDRED and NO/lOO — Dollars (U.S. $67,600.00). This debt is evidenced by Borrower’s note dated the same date as this Security Instrument (“Note”), which provides for monthly payments, with the full debt, if not paid earlier, due and payable on March 1, 2028. This Security Instrument secures to Lender [Accubanc]: (a) the repayment of the debt evidenced by the Note, with interest, and all renewals, extensions and modifications of the Note....
J. App’x 857. Neither the promissory note nor the deed of trust mentions The Money Store.
At the time of the loan’s execution on February 16, 1998, Accubanc gave Vincent the disclosure statement required by TILA, 15 U.S.C. § 1631.
On April 5, 1997, plaintiff Ruth Gutierrez took out a mortgage loan on her home in Stockton, California. Gutierrez executed a note and deed of trust identifying the lender as First Financial Funding Group and using language very similar to the loan documents described above for Vincent’s mortgage. Again, neither of these documents mentions The Money Store. At the time First Financial and Gutierrez executed the loan, First Financial also gave Gutierrez the TILA-required disclosure statement. Two days later, on April 7, 1997, First Financial assigned and endorsed the note and deed of trust to The Money Store. Gutierrez’s first loan payment was due on May 10, 1997, meaning that Gutierrez’s first payment, unlike Vincent’s, was not due until after the loan had been assigned to The Money Store.
On May 22, 1996, plaintiffs Linda and John Garrido took out a $100,000 mortgage loan on their home in Huntington Station, New York. The promissory note they executed on that date again used language similar to the notes applicable to the other loan transactions, and listed FHB Funding Corporation as their lender. The Garridoses additionally signed a mortgage that referenced the note and identified FHB Funding as the “Lender” and the Garridoses as the “Borrower.” Once again, neither the note nor the mortgage mentions The Money Store. Like Vincent and Gutierrez, the Garridoses also received the TILA-required disclosure statement from FHB Funding at the time they executed the loan. Three weeks later, on June 13, 1996, FHB Funding assigned and endorsed the note and mortgage to The Money Store. The Garridoses’ first loan payment was due on July 1, 1996, ie., two weeks after the loan had been assigned to The Money Store.
B. The Breach Letter Program
By agreement dated April 17, 1997, The Money Store contracted with Moss Codilis to prepare and mail breach notices to borrowers who, like plaintiffs, had defaulted on their loans. Such notices inform homeowners that they are in default and are generally a prerequisite before mortgage lenders like The Money Store can foreclose on a borrower’s property. Labeled the “Breach Letter Program” Moss Codilis “generate® the thirty (30) day breach letters based on information provided [by The Money Store] within [a] ... spreadsheet.” J. App’x 336 (Letter of Agreement). In return, Moss Codilis received fifty dollars (later thirty-five dollars) for each breach letter generated. Outside of the Breach Letter Program, the firm performed no role in The Money Store’s collection of its debts.
Moss Codilis promoted the Program to lenders as a means of leveraging its status as a law firm to encourage repayment of loans from borrowers in default. The promotional materials state:
This program allows the client to send breach letters on attorney letterhead at a reasonable cost. Most of these costs are recovered through the reinstatement of the loans which is at a higher level as a result of the impression which the attorney breach letter makes.... It is ... an excellent collection tool.
J. App’x 682. At least one executive at The Money Store confirmed at his deposition that the purpose of the Breach Letter Program was “to hopefully gain the attention of the borrower, since it was coming from the law firm[ ].” J. App’x 271-72 (deposition of John Dunnery, The Money Store Vice President).
' The letters, which were printed on Moss Codilis letterhead, state that “this law firm” has been “retained” in order to “collect a debt for our client,” and that the “this firm has been authorized by [The Money Store] to contact you” and “provide[] notice that you are in default” on the mortgage. J. App’x 652-56. The letters further state that if the default is not resolved within 30 days, then
our client shall accelerate the entire sum of both principal and interest immediately due and payable, and invoke any and all remedies provided for in the Note and Security Instrument, including but not limited to the foreclosure sale of the property.
J. App’x 652. Finally, the letters state that, with limited exceptions, “[a]ll communication about this matter must be made through [The Money Store].”
Moss Codilis’s work for The Money Store was supervised by Christina Nash and, after July 1999, Valerie Bromley, who assisted Ms. Nash in sending breach letters on The Money Store’s behalf. According to Moss Codilis, one of its partners, Leo Stawiarski,' bore primary responsibility for the legal aspects of the firm’s work for The Money Store, and supervised Ms. Nash in all aspects, legal and non-legal, of her work. The breach letters were “jointly drafted” by Nash and The Money Store’s legal department.
The parties disagree markedly as to the nature of the tasks that Moss Codilis performed for The Money Store. Each marshals evidence supporting its respective position. Although characterizing itself as a law firm, Moss Codilis describes the Breach Letter Program as an “exercise in mass processing” that involved little to no legal or otherwise independent judgment. In particular, Moss Codilis represented to the district court that “the only element of the Breach Letter Program that required legal analysis was the drafting of language for the breach letter templates to ensure that they were in compliance with applicable state and federal laws.” Vincent v. Money Store (Vincent II), No. 03 Civ. 2876(JGK),
For their part, plaintiffs assert that “Moss Codilis[’s] role in the default process ... began and ended with the mass generation of the breach letters.” Appellants’ Br. 12. Plaintiffs further note:
Apart from the breach letters themselves, Moss Codilis had no authority to initiate contact with debtors, no right to negotiate payment plans, no right to settle for any amount other than what Money Store said was in default, and no right to bring any legal action. If the breach letters sent out by Moss Codilis failed to elicit payment, it was Money Store — not Moss Codilis — who would then determine whether the matter should be referred out to their network of foreclosure counsel....
Id. (citations and internal quotation marks omitted). Moreover, plaintiffs point to Nash’s deposition testimony where she stated that if a debtor contacted her with regard to “a legal matter” she “escalated” it by referring the matter to The Money Store instead of handling it herself.
In contrast to the foregoing, The Money Store contends that Moss Codilis did more than simply print and mail letters. In addition to Moss Codilis’s role in reviewing the breach letters for their compliance with the FDCPA, The Money Store notes that Nash testified at her deposition that she was the primary drafter of the breach letters, with attorneys for The Money Store limited to “review[ing] [the letters] for format.” Further, The Money Store points to Nash’s deposition testimony that Moss Codilis conducted an independent review of the data on delinquent borrowers sent to it by The Money Store, and that “if there was questionable data, those loans were pulled and sent back to The Money Store.” J. App’x 80-81 (testifying that questionable data includes things like “incomplete borrower information or incomplete address information,” as well as data suggesting that the borrower was not actually in default on his or her loan obligations). Stressing Moss Codilis’s independence, The Money Store asserts that when Moss Codilis disagreed with The Money Store’s request to send a breach
The Money Store also notes that the breach letters invited debtors to contact Moss Codilis if they wished to verify the debt or the identity of their creditors. Pursuant to that invitation, Nash testified that she directly corresponded with The Money Store’s debtors and their attorneys around one hundred times. Nash testified that on occasion she corresponded with a debtor’s bankruptcy counsel and attorneys at The Money Store with regard to a debtor’s bankruptcy proceedings, as well as whether the debts in question had been discharged in bankruptcy. When legal action against a debtor was necessary, The Money Store claims that lawyers “affiliated with” Moss Codilis handled the legal proceedings through their own practices.
II. Procedural History
On April 24, 2003, plaintiffs filed the instant action in the district court alleging that The Money Store had violated provisions of the FDCPA and TILA. Plaintiffs argued that the breach letters were unlawful under the FDCPA because they “creat[ed] the false impression that a third party had been hired to collect the debt” and “falsely implied] that a law firm had been retained by the Money Store to collect the debt and was authorized to commence legal action against the borrower.” With respect to their TILA claims, plaintiffs claimed that The Money Store had charged their accounts for fees and expenses which it had no right to collect, and had failed to refund the overcharges as required by TILA. Neither the FDCPA claims nor the TILA claims were asserted against Moss Codilis. Separately, plaintiffs brought a number of claims against The Money Store and Moss Codilis under Colorado and California state law.
By Order dated December 7, 2005, the district court (Sprizzo, J.) granted summary judgment to The Money Store plaintiffs’ FDCPA claims, relying on its prior decision in the separate, related case of Mazzei v. Money Store,
Following Judge Sprizzo’s death this case was reassigned to Judge Koeltl on January 9, 2009. The Money Store subsequently moved for summary judgment on plaintiffs’ TILA claims, arguing that it was not a “creditor” as defined by the
Plaintiffs timely appealed the dismissal of their TILA and FDCPA claims against The Money Store.
DISCUSSION
“We review a district court’s grant of summary judgment de novo,” Lombard v. Booz-Allen & Hamilton, Inc.,
I. FDCPA Liability
We start with plaintiffs’ FDCPA claims against The Money Store. Congress enacted the FDCPA “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). To further these ends, the FDCPA “establishes certain rights for consumers whose debts are placed in the hands of professional debt collectors for collection.” De-Santis v. Computer Credit, Inc.,
Under our prior precedent, the plaintiffs have a triable claim that Moss Codilis’s breach letters violated section 1692e’s prohibition on the “use of false, deceptive, or misleading representation^] ... in con
We have previously addressed the scope of the FDCPA’s so-called false name exception only once before, in Maguire v. Citicorp Retail Services. In Maguire, the creditor, Citicorp, used the name “Debtor Assistance” in its collection letters, which was the name of its in-house collection unit.
We found that the letterhead in Ma-guire created the impression that a third party called “Debtor Assistance” was collecting Citicorp’s debt, and that the evidence in the record was unclear as to whether the plaintiff would have known that Debtor Assistance was affiliated with Citicorp. We therefore held that the letters were potentially misleading enough to trigger the application of the false name exception. Accordingly, we reversed the district court’s grant of summary judgment, and remanded for further proceedings. See id. at 236-38. Maguire did not, however, address the situation we are confronted with here: whether the false name exception can be invoked when the credi
To resolve this question of statutory interpretation, we begin with the statutory text. See Gross v. FBL Fin. Servs., Inc.,
Turning to the latter two elements, in Maguire we described three ways that these elements could be satisfied: (1) the creditor uses a name that falsely implies that a third party is involved in collecting its debts; (2) the creditor pretends to be someone else; or (3) the creditor uses a pseudonym or alias. Maguire,
Because neither “use” nor “collect” is defined in the statute, see 15 U.S.C. § 1692a, we give these terms their ordinary meaning. Taniguchi v. Kan Pac. Saipan, Ltd., — U.S. -, -,
Here, the relevant affirmative action by The Money Store was retaining Moss Codilis for the express purpose of sending breach letters that appeared to be attorney collection letters to its debtors. Although we did not address what constitutes sufficient affirmative action by the creditor in Maguire, an analogous case from the Seventh Circuit, Boyd v. Wexler, makes clear why the alleged- misrepresentation of Moss Codilis’s role here can be attributed to The Money Store’s “use” of Moss Codilis’s name in the breach letters.
The plain meaning of “collect” in the context of debts is “[t]o gather (contributions of money, or money due, as taxes, etc.) from a number of people.” 1 The Compact Edition of the Oxford English Dictionary 465; see also The American Heritage Dictionary of the English Language New College Edition 261 (“To call for and obtain payment of’); Webster’s Third International Dictionary 444 (“[T]o receive, gather, or exact from a number of persons or other sources”). This definition, while useful to the inquiry, is ultimately ambiguous as applied to the facts of any particular case. It does not define how involved a debt collector must be before we can fairly say it is gathering money on behalf of the creditor.
We reject The Money Store’s contention that by generating and mailing the breach letters alone, Moss Codilis was “collecting or attempting to collect” The Money Store’s debts. Under our holding in Ma-guire, if The Money Store had simply purchased letterhead from Moss Codilis and sent out the debt collection letters on Moss Codilis letterhead, The Money Store would be liable. See Maguire,
Our rejection of this argument is supported by the Federal Trade Commission’s interpretative guidance on section 1692e(14), which prohibits a debt collector from “us[ing] ... any business, company, or organization name other than the (collector’s) true name.” See FTC, Statements of General Policy or Interpretation Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed.Reg. 50,097, 50,107 (Dec. 13, 1988).
A creditor violates this section if he uses the name of a collection bureau as a conduit for a collection process that the creditor controls in collecting his own accounts.... A creditor does not violate this provision where an affiliated (and differently named) debt collector undertakes collection activity, if the debt collector does business separately from the creditor (e.g., where the debt collector in fact has other clients that he treats similarly to the creditor, has his own employees, deals at arms length with thecreditor, and controls the process himself).
Id. (emphasis added).
The Seventh Circuit’s approach to creditor liability lends further support to this “conduit” test.
First, the Court of Appeals noted that the attorney’s review of the debtor information provided by the creditor was “ministerial” in nature, and “did not call for the exercise of professional judgment.” Id. at 636. In particular, the court' noted that the attorney who signed the letters:
did not make the decision to send a letter to a debtor; [the creditor] did.... To the extent [the attorney] eliminated some names from the list of delinquent debtors that [the creditor] provided (based on anything more than obvious gaps or errors in [the creditor’s] information), the record suggests that he did so based solely on the discovery that the debtor had declared bankruptcy, had already been sent a letter, or lived in one of three states which would not permit a letter of the kind that Dickerson had prepared.... [T]his was purely a categorical assessment rather than one calling for an individualized, discretionary assessment....
Id. at 635-36. The court also noted that: (1) the attorney did not have access to debtors’ files, but rather was simply given basic information on debtors by the creditor, id. at 636; (2) the collection letter sent to debtors “was a form letter that the firm ... prepared and issued en masse” in an “assembly line fashion,” id. at 637 (noting that the creditor referred around 2,000 accounts to the attorney each month); (3) the attorney “played barely more than a
Similarly, in White v. Goodman, the plaintiffs sued the debt collection agency as a “flat-rater” under section 1692J who was not attempting to actually collect the debts owed, and sued the creditor under the false name exception. White,
We therefore hold that, when determining whether a representation to a debtor indicates that a third party is collecting or attempting to collect a creditor’s debts, the appropriate inquiry is whether the third party is making bona fide attempts to collect the debts of the creditor or whether it is merely operating as a “conduit” for a collection process that the creditor controls. Id.; 53 Fed.Reg. at 50,-107. This is a question of fact. In this ease, at the summary judgment stage, we cannot find as a matter of law that Moss Codilis was engaged in such bona fide efforts. Moss Codilis described its Breach Letter Program as an “exercise in mass processing.” Resolving the disputed issues of fact in favor of plaintiffs, the sole function of the Program appears to have been to allow creditors to falsely represent to debtors that debt collection letters were “from” a law firm that had been retained to collect the delinquent debt.
Viewed in this light, the jury could conclude that the letters received by plaintiffs appear to be “from” The Money Store in every meaningful sense of the word. The Money Store reviewed and maintained possession over its debtors’ files. ■ According to Nash, Moss Codilis merely received spreadsheets from The Money Store containing the information of debtors who The
Notwithstanding its limited involvement, Moss Codilis sent out letters to plaintiffs stating that “this law firm” has been “retained” in order to “collect a debt for our client.” The jury could find that this falsely implied that Moss Codilis was attempting to collect The Money Store’s debts and would institute legal action against debtors on behalf of The Money Store if the debtors did not resolve the delinquency. Thereafter, plaintiffs argue that Moss Co-dilis performed virtually no role in the actual debt collection process — besides the essentially ministerial tasks of verifying the debt with The Money Store, informing debtors of the identity of their creditor, and verifying whether a debtor’s debts had been discharged in bankruptcy.
Indeed, the facts here, taken in the light most favorable to plaintiffs, are nearly identical to Nielsen, where the Seventh Circuit found:
Having reached [the] conclusion [that the attorney, Dickerson, violated sections 1692e(S) & (10) ], the actual source of the letter is obvious. It was Household [the creditor] that selected the debtors to whom Dickerson’s letter was to be sent. It was Household that provided the information that Dickerson needed regarding the identity of the debtor and the amount of his or her delinquency in order complete the letter. It was Household on which Dickerson relied for the determination that the debtor was indeed delinquent and therefore an appropriate recipient of the letter. It was Household that reserved the right to approve issuance of the letters. It was ultimately Household that handled all responses to Dickerson’s letter. And it was Household that decided what further action (including legal action) would be taken in the wake of Dickerson’s letter.
Nielsen,
We therefore conclude that a jury could find that Moss Codilis was not collecting The Money Store’s debts and instead acted as a mere “conduit” for a collection process that The Money Store controlled.
II. TILA Liability
We next turn to plaintiffs’ claims that The Money Store violated the Truth in Lending Act. Plaintiffs contend that The Money Store violated section 1666d of TILA by failing to refund credit balances owed to them on their accounts. See 15 U.S.C. § 1666d (‘Whenever a credit balance in excess of $1 is created in connection with a consumer credit transaction ... the creditor shall ... refund any part of the amount of the remaining credit balance, upon request of the consumer.”); see also 12 C.F.R. § 226.21 (implementing regulation). Specifically, plaintiffs argue that The Money Store charged their accounts unauthorized fees and expenses in excess of that permitted under state law, resulting in credit balances that defendant failed to refund.
TILA seeks to “protect ... consumers] against inaccurate and unfair credit billing and credit card practices” and promote “the informed use of credit” by “assuring] a meaningful disclosure” of credit terms. 15 U.S.C. § 1601(a). It imposes general liability only on creditors and greatly circumscribes the liability of assignees. See 15 U.S.C. §§ 1640(a); 1641(e). TILA defines a “creditor” as a person who both:
(1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement.
15 U.S.C. § 1602(g). This definition “is restrictive and precise, referring only to a person who satisfies both requirements” of the provision. Cetto v. LaSalle Bank Nat’l Ass’n,
In addition to this statutory definition of a “creditor,” the Federal Reserve Board’s “Regulation Z” interprets the second prong of TILA’s definition of creditor as applying to only “[a] person ... to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.” 12 C.F.R. § 226.2(a)(17)(i); cf. Gambardella v. G. Fox & Co.,
We agree with the district court that The Money Store is not “the person to whom the debt arising from the consumer credit transaction [was] initially payable on the face of the evidence of indebtedness,” 15 U.S.C. § 1602(g), and is therefore not a “creditor” under TILA with respect to the transactions at issue here. Specifically, the district court correctly rejected plaintiffs’ central argument that the loans in question were “initially payable” to The Money Store “because the assignments to The Money Store Defendants occurred before the funds were disbursed to [some of] the plaintiffs and before [those] plaintiffs made their first loan payments.” Vincent v. Money Store, No. 03 Civ. 2876(JGK),
While all the Notes were eventually assigned to The Money Store, the Federal Reserve Board’s Official Staff Commentary to Regulation Z provides that “[i]f an obligation is initially payable to one person, that person is the creditor, even if the obligation by its terms is simultaneously assigned to another person.” 12 C.F.R. pt. 226, supp. I, at 300 (2000). The Notes in question here were not even simultaneously assigned to The Money Store. Each of the assignments took place by means of a separate endorsement, commenced after the Notes had been fully executed.
Plaintiffs are correct that, at least with respect to the Gutierrez and Garrido Notes, these assignments occurred before the first payment was due on the loan— and so, in a literal sense, the “initial payment” was made to The Money Store. This, however, is irrelevant under the Federal Reserve Board’s Commentary to Reg
Although we conclude that the district court correctly determined that The Money Store is not a “creditor” under TILA, we note that plaintiffs have identified an apparent oversight in the statute. Specifically, the provision of TILA plaintiffs claim The Money Store has violated, section 1666d, requires a “creditor” to “credit the amount of [any] credit balance [over $1] to the consumer’s account” and “refund any part of the amount of the remaining credit balance, upon request of the consumer.” 15 U.S.C. § 1666d(A)-(B). We agree with plaintiffs that restricting the application of section 1666d to the initial lender does not make much sense. Unlike most of TILA’s provisions, which require creditors to make certain disclosures to debtors at the time of a loan’s execution, see, e.g., id. §§ 1604, 1631-51, section 1666d imposes obligations on creditors throughout the life of the loan. Indeed, we can think of no reason why Congress would require a credit balance in a consumer’s account be refunded only if the balance was maintained by the original creditor and not a subsequent assignee. Moreover, as plaintiffs note, given the widespread prevalence of mortgage loan originators selling such loans for securitization, this definition renders section 1666d inapplicable to a substantial number of mortgage loans.
Legislative history suggests that this gap may be an unintended consequence of congressional reform to TILA. See Union Carbide Corp. & Subsidiaries v. Comm’r,
In its initial Report accompanying the amendments to TILA, the Senate Banking, Housing, and Urban Affairs Committee explained as follows:
This [amendment] eliminates two uncertainties under present law as to an as-signee’s liability for an original creditor’s violation of the act. Under present law, an assignee is generally liable only where a violation is “apparent on the face” of the disclosure statement. What types of violations are covered is unclear. This section provides that violations are apparent on the face of a disclosure statement when disclosures are inaccurate or incomplete based on the statement or other documents involved, and where incorrect terminology is utilized.
In addition, this section eliminates ambiguity on the question of assignee liability for rescission by stating explicitly that a consumer’s exercise of this right is effective against an assignee. Without such protection for the consumer, the right of rescission would provide little or no effective remedy.
S.Rep. No. 96-73, at 18 (1979), 1980 U.S.C.C.A.N. 280, 296.
During the hearings held on the precursor reform bill, the Truth In Lending Simplification and Reform Act, the testimony related to the issue of assign-ee liability focused almost exclusively on disclosure requirements. For example, testifying in support of the amendment, the American Bankers Association noted that decisions by federal courts of appeals had complicated situations where multiple parties financed loans, and that limiting the definition of creditor to the initial creditor “clarifies] that only one creditor must make disclosures.” Truth in Lending Simplification and Reform Act: Hearing on S. 108 Before the S. Comm. On Banking, Housing, and Urban Affairs, 95th Cong. 84-85 (1979) (emphasis added) (statement of David S. Smith, on behalf of the Am. Bankers Ass’n); see, e.g., Meyers v. Clearview Dodge Sales, Inc.,
One issue that spawned extensive litigation is who must make the disclosures if there is more than one creditor in the transaction. The Board recommends that only one disclosure statement be required and that the obligation to disclose be placed upon the creditor to whom the obligation is made payable on its face. This provides a simpl[e] mechanical rule for creditors to follow and should insure that consumers get the required disclosures.
Id. at 96 (statement of Robert Evans, Nat’l Consumer Fin. Ass’n) (quoting testimony of Federal Reserve Board Governor Jackson).
Based on the foregoing, it appears reasonable to conclude that when Congress amended TILA, its primary concern was limiting assignee liability for an initial creditor’s violations of TILA’s disclosure requirements. Indeed, in the same breath, the Senate Banking Committee Report clarified that consumers could continue to exercise their right to rescission against assignees, in the absence of which the right “would provide little or no effective remedy.” S.Rep. No. 96-73, at 18; see also 15 U.S.C. § 1635(a) (debtor has right to rescind any credit transaction that creates a security interest in the debtor’s principal dwelling within three business days); Consumer Information: Hearings Before the Subcomm. on Consumer Affairs of the H. Comm, on Banking, Finance, and Urban Affairs, 95th Cong. 152-53 (1977) (statement of Christian S. White, Assistant Director for Special Statutes, FTC) (requesting amendments to TILA to ensure rescission provisions can be enforced against assignees). But by changing the definition of “creditor” to exclude assignees without also creating an explicit carveout for a consumer’s ongoing right to be refunded a credit balance, consumers cannot rely on TILA as a remedy to force an assignee to refund a credit balance, as is the case here.
Section 21. Return of Customer Credit Balances. A series of FTC actions against large creditors who were holding millions of dollars of their customer’s unpaid refunds focused attention on the problems addressed by section 21. This section adds to the present law the responsibilities of paying such balances after six months and of taking reasonable steps to trace the consumer’s present address if it has changed. This section also expands these. obligations. to all ‘creditors’ although that term is considerably circumscribed by Section 2 of § 2802. The obligations of TILA §165 should also run to assignees.
Truth in Lending Simplification and Reform Act: Hearing on S. 108 Before the S. Comm, on Banking, Housing, and Urban Affairs, 96th Cong. 43-44 (1979) (emphasis added).
“It is well established that when the statute’s language is plain, the sole function of the courts — at least where the disposition required by the text is not absurd — is to enforce it according to its terms.” Lamie v. U.S. Trustee,
CONCLUSION
Accordingly, the district court’s judgment is AFFIRMED in part, VACATED in part, and REMANDED for further proceedings consistent with this Opinion.
Notes
. The district court's decision refers to 15 U.S.C. § 1602(f). Since then, subsection (f) has been recodified at subsection (g).
. TILA requires creditors to disclose clearly certain terms of a mortgage, including, inter alia, the annual percentage rate and finance charge. See 15 U.S.C. § 1632; see also 15 U.S.C. § 1604; 12 C.F.R. §§ 226.17-20.
. Specifically, the breach letters explain that the debtors could contact Moss Codilis to: (1) dispute the debt in writing, at which point Moss Codilis represented that it would obtain verification of the debt and mail it to the debtor; (2) request the contact information for the original creditor; or (3) request in
. Based on the submission by both parties of discovery materials from the Mazzei case, the district court converted defendants’ motion to dismiss into a motion for summary judgment. See Fed.R.Civ.P. 12(d); Chambers v. Time Warner, Inc.,
. Although plaintiffs initially appealed the dismissal of their state law claims against Moss Codilis, plaintiffs have since abandoned those claims, as plaintiffs' counsel represented at oral argument that Moss Codilis has dissolved and is no longer doing business, rendering the prosecution of any such claims pointless. Oral Arg. Tr. at 19.
. In determining whether language in a collection letter is "false, misleading, or deceptive” under section 1692e, we have held that courts must look to whether a reasonable "least sophisticated consumer” would be misled by it. Clomon,
In addition, although not asserted by plaintiffs, there would have likewise been a triable claim as to whether Moss Codilis violated 15 U.S.C. § 1692j, which prohibits:
[T]he practice commonly known as "flat-rating,” in which an individual sends a delinquency letter to the debtor portraying himself as a debt collector, when in fact he has no real involvement in the debt collection effort; in effect, the individual is lending his name to the creditor for its intimidation value, often in exchange for a "flat” rate per letter.
Nielsen v. Dickerson,
. We are aware that Webster’s Third New International Dictionary has not garnered the greatest respect from a majority of the Justices of the Supreme Court, see e.g., Tanigu-chi,
. The dissent argues that our holding today “will prove vexing” over time because a creditor could hypothetically be held liable under the FDCPA "merely for hiring a debt collector whose practices are deemed inadequate in some respect.” Dissent at 118. This fear is unwarranted. It ignores entirely our discussion of what the false name exception's "use” element requires. We repeat, for emphasis: the exception does not create backdoor vicarious liability for creditors.
. In finding the false name exception inapplicable here, the district court relied in part on our statement in Maguire that "[t]he triggering of the FDCPA does not depend on whether a third party is in fact involved in the collection of a debt, but rather whether a least sophisticated consumer would have the false impression that a third parly was collecting the debt.” Mazzei,
. Where the text of the statute is ambiguous, we frequently resort to legislative history to assist us in interpreting the provision. See United States v. Dauray,
. Or alternatively, The Money Store sent the letters in sealed, stamped envelopes to Moss Codilis with the note "please mail.”
. Although the FTC Staff Commentary is likely not entitled to Chevron deference, we look to the FTC's informal opinions as persuasive authority. See Gulley v. Markoff & Kras-ny,
. The dissent finds this guidance unhelpful because it addresses section 1692e(14) and does not explicitly cite section 1692a(6)’s false name exception. Dissent at 116-17 n. 6. We think this is a cramped interpretation of FTC's guidance. The guidance addresses how section 1692e(14) applies to creditors, and, in our view, thus implicitly relies on section 1692a(6)'s false name exception to explain how a creditor can be held liable as a debt collector for violating section 1692e(14).
. The district court here appeared to apply a more stringent version of the test outlined by the FTC. Specifically, in Mazzei, the district court concluded, inter alia, that The Money Store did not "own[] and control[] the debt collector, rendering it the creditor's alter ego.” See Mazzei,
.So far as we can tell, aside from Maguire, Taylor, and the Seventh Circuit case law discussed here, no other federal court of appeals has addressed the scope of the false name exception in a precedential opinion.
. The dissent suggests that we are creating an "odd liability gap” where a party in Moss Codilis's shoes could be "too involved in collection to be flat-raters under § 1692j, but not involved enough to be ‘actually’ collecting or attempting to collect any debts ... under § 1692a(6).” Dissent at 117. The only way out of this gap, according to the dissent, is if we intend that the bona fide standard is simply the inverse of § 1692j's flat-rating standard. We mean precisely that, as did the Seventh Circuit in White when it explained that "if [the debt collection agency] were a flat-rater, [the creditor] might be liable under section 1692a(6).” White,
The dissent characterizes this as an "implausible construction of § 1692j,” Dissent at 117, hut we disagree. Although the dissent relies on the word "furnishes” in section 1692j to mean that a debt collection agency that "sends” the forms to the debtor cannot be held liable as a flat-rater, we are not persuaded that such a narrow reading is correct. See, e.g., Nielsen,
. We do not reach plaintiffs' argument that we should adopt the Seventh Circuit’s approach to the false name exception for the specific situation where the third party is held out by the creditor as an attorney. Under this approach, the Seventh Circuit asks whether the third-party has exercised his independent judgment as an attorney in reviewing each debtor's individual case before sending out a letter. See Nielsen,
. The dissent argues that we are conflating "the deception of a creditor who uses a third party's name with the deception of a third-party debt collector who falsely claims to be acting as an attorney.” Dissent at 111. We are not. Quite the contrary, it is the dissent that conflates section 1692a(6)’s false name exception, which can be invoked where the creditor falsely "indicate[s] that a third person is collecting or attempting to collect [its specific ] debts,” with the general definition of "debt collector,” which is defined as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6) (emphasis added). Thus, a person can be a debt collector by regularly collecting debts or being involved in a debt collection business even though that person does not collect the debt at issue in a given case.
. Plaintiffs argue in the alternative that summary judgment was inappropriate here be
Concurrence Opinion
concurring:
Unsurprisingly, I concur in the Court’s judgment and agree with its reasoning. I write separately to address the argument regarding the false name exception to creditor liability under the FDCPA that the majority opinion declined to address as unnecessary. See supra, at 104 n. 17. Specifically, I agree with the Seventh Circuit that where a creditor uses the name of a lawyer or law firm to represent falsely that an attorney has been retained to collect the creditor’s debt, the false name exception should apply if the lawyer misre
As the majority opinion notes, where the third party is held out by the creditor as an attorney retained to collect the creditor’s debts, the Seventh Circuit asks whether the third-party has exercised his independent judgment as an attorney in reviewing each debtor’s individual case before sending out a letter. See id. Our Circuit has applied an identical standard to whether an attorney debt-collector has engaged in deceptive practices in violation of section 1692e to the question of whether to pierce creditor immunity under section 1692a(6)’s false name exception. Compare id., with Miller v. Wolpoff & Abramson, L.L.P.,
My reasoning is simple. We have previously held that the focus of the false name exception — indeed, the focus of the entire FDCPA — is on what the “least sophisticated consumer” believes to be true based on the representations made in the debt collection letter. See Maguire v. Citicorp. Retail Servs., Inc.,
One may object that such an approach may expose a creditor to liability where the creditor hired a debt collector to collect its debts, but the debt collector impersonated an attorney on his own accord. Not so. As the Court’s opinion explains, a creditor must be “actively engaged in [the] misrepresent[ation]” to “use” the name of another and be held liable under the false name exception. Supra, at 99-100. If the creditor is not involved in misrepresenting the debt collector as an attorney, then the false name exception does not apply. Accordingly, if such a case presents itself, I believe we should follow Nielsen.
Concurrence Opinion
concurring in part and dissenting in part:
Finding “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors,” 15 U.S.C. § 1692(a) (emphasis added), Congress enacted the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., (“FDCPA” or “Act”), “to eliminate [such] practices, to ensure that debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA
There is one narrow exception to this rule: the Act treats as a debt collector “any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.” 15 U.S.C. § 1692a(6). This “false name” exception thus limits creditor liability to those creditors who collect their own debts while operating under a pseudonym or name of another— perhaps on the theory that such creditors, by freeing themselves of any motivation to protect their own names, have become sufficiently like debt collectors as to merit FDCPA regulation. See Harrison v. NBD Inc.,
Or at least not until today. The majority now interprets the FDCPA as imposing liability not just on those creditors who deceptively employ false names to collect their own debts, but also on those who take the unremarkable step of hiring a debt collector to collect their debts — so long as that debt collector is, in the majority’s view, insufficiently involved in “bona fide ” collection efforts. See Maj. Op. at 91, 103. Today, the majority’s approach conflates the deception of a creditor who uses a- third party’s name with the deception of a third-party debt collector who falsely claims to be acting as an attorney. More fundamentally, its “bona fide ” test will over time sow ambiguity into an otherwise'straightforward statutory scheme, auguring both difficult line-drawing exercises for future courts and uncertain liability for creditors who contract with debt collectors to collect those creditors’ debts. I therefore respectfully dissent from the majority’s determination that the district court erred in granting summary judgment on Plaintiffs-Appellants’ FDCPA claim. I concur in the judgment that The Money Store is not a “creditor” under the Truth in Lending Act, 15 U.S.C. § 1601 et seq.
L
The FDCPA defines “debt collector” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). Failure to comply with the Act’s requirements exposes such persons to civil liability. See id. § 1692k(a). One such requirement is that a debt collector “may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” Id. § 1692e. This includes “[t]he false representation or implication that any individual is an attorney or that any communication is from an attorney.” Id. § 1692e(3).
In contrast, creditors, defined in relevant part as persons “who offer[ ] or ex
The term “debt collector” ... includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.
Id. § 1692a(6).
The FDCPA further provides that “flat-raters” — third persons who assist a creditor in using a false name by “providing a form which creates the false impression that someone (usually a collection agency) besides the actual creditor is ‘participating’ in collecting the debt,” White v. Goodman,
(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.
(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 1692k of this title for failure to comply with a provision of this subchapter.
15 U.S.C. § 1692j.
II.
As relevant here, plaintiffs Lori Jo Vincent, Ruth Ann Gutierrez, and Linda and John Garrido brought a putative class action against The Money Store on behalf of themselves and all others similarly situated alleging violations of the FDCPA in “attempting to collect amounts purportedly owed on residential home equity loans.” J.A. 33-34. The record is devoid of evidence, however, that The Money Store itself ever communicated with any of the named plaintiffs regarding their loan defaults, much less that it attempted to collect money from them “using any name other than [its] own.” 15 U.S.C. § 1692a(6). Instead, each plaintiff received a letter from Moss, Codilis, Stawiar-ski, Morris, Schneider & Prior, LLP (“Moss Codilis”). These letters informed each debtor of his or her default, noting variously that Moss Codilis had been “retained,” “authorized,” or “designated” to contact the debtor regarding the status of the account.
Moss Codilis prepared and sent these letters pursuant to an April 1997 agreement between it and The Money Store. In
The Money Store, in turn, committed in the Letter of Agreement to provide Moss Codilis “with access to books, records, databases, investor guidelines, and files necessary for the completion of contract duties.” The Money Store reserved the right to “initially and from time to time review and approve sample forms of the breach letters ... based on the format of the breach letter only.” The Agreement memorializes the Money Store’s objectives in connection with its arrangement with Moss Codilis:
1. Meet all federal, state, agency and investor requirements;
2. Reduce [The Money Store’s] costs of handling defaulted loans;
3. Develop process improvements;
4. Reduce losses on defaulted loans;
5.Obtain training for current staff.
Neither party disputes that Moss Codi-lis, with The Money Store’s assistance, drafted template breach letters to comply with applicable state and federal laws; that Moss Codilis thereafter generated over 88,000 breach letters from 1997 through 2000, using information regarding defaulted loans provided by The Money Store; and that the firm had numerous follow-up communications with debtors and their lawyers, both orally and in writing
III.
Neither party disputes that Moss Codilis drafted, printed, and mailed letters informing the plaintiffs that they owed money to The Money Store and that they should promptly pay that money back. Nor does either party dispute that these letters provided Moss Codilis’s contact information and that Moss Codilis had follow-up communications with some of the letters’ recipients. Yet despite these undisputed facts, the majority holds that a reasonable fact finder could conclude that Moss Codilis
According to the majority, § 1692a(6)’s false name exception applies when: “(1) the creditor is collecting its own debts; (2) the creditor ‘uses’ a name other than its own; and (3) the creditor’s use of that name falsely indicates that a third person is ‘collecting or attempting to collect’ the debts that the creditor is collecting.” Maj. Op. at 98. I take no issue with this test, which accurately reflects what the text of § 1692a(6) requires. My disagreement is rather with the majority’s reformulation of it, and in particular regarding its third element: that the use of the third party’s name “falsely indicates” that the third party “is ‘collecting or attempting to collect’ the debts that the creditor is collecting.”
Despite its use of the term, the FDCPA never specifies what activities are sufficient to constitute “collecting or attempting to collect” a debt. Nor, as the majority observes, does the term easily lend itself to a precise definition. See Maj. Op. at 100-01. We need not delineate the outer boundaries of “collecting or attempting to collect” a debt, however, in order to conclude that the false name exception does not apply in this case. For while the FDCPA may not precisely define what does or does not constitute “debt collection,” that does not affect our ability to determine on this record what is potentially misleading — what is potentially “false” — about the use of Moss Codilis’s name in the letters sent to plaintiffs. And that, as the very structure of the FDCPA establishes, simply does not encompass whether Moss Codilis was “collecting or attempting to collect” plaintiffs’ debts.
As the majority notes, what is potentially deceptive about the letters sent to the plaintiffs is their implication that Moss Codilis attorneys had been retained as attorneys to collect the plaintiffs’ debts when in reality Moss Codilis did little more than input plaintiffs’ information into a mass-processed form letter. See Maj. Op. at 96-97 & n. 6. This may violate the FDCPA provision prohibiting debt collectors from using any “false, deceptive, or misleading representation or means in connection with
But a debt collector’s misrepresentation of its involvement in collecting a debt as an attorney is different from a creditor’s misrepresentation of its involvement in collecting a debt as a debt collector. Section 1692e suggests as much, as it requires defendants to be “debt collectors” under the Act before they can be liable for misrepresenting their involvement as an attorney in the first place. See 15 U.S.C. § 1692e, e(3). Even if Moss Codilis’s breach letters may have falsely suggested that it was collecting or attempting to collect plaintiffs’ debts as an attorney, such suggestion equates in no way at all with the different proposition that Moss Codilis also falsely claimed that it was collecting or attempting to collect plaintiffs’ debt. For as made evident by the very structure of the FDCPA, the question whether Moss Codilis was collecting or attempting to collect plaintiffs’ debt is separate and apart from the question whether it was involved in that collection in a legal capacity.
Once this is established, it also becomes clear that Moss Codilis’s breach letters did not in fact falsely indicate that Moss Codi-lis was collecting or attempting to collect plaintiffs’ debts. For while the presence of Moss Codilis’s name on the letters may have indicated a number of things, the record establishes that it could have falsely indicated only one thing: Moss Codilis’s involvement in the collection as a law firm. And as explained above, collecting or attempting to collect a debt in a legal capacity is not the same as “collecting or attempting to collect a debt” generally. Consequently, no reasonable fact finder could conclude that the use of Moss Codi-lis’s name falsely indicated that it was collecting or attempting to collect a debt as the third element of the false name exception requires.
That the use of Moss Codilis’s name on the letters did not falsely indicate anything other than its involvement as a law firm is proven ’through a simple hypothetical question: if Moss Codilis’s name did not suggest that it was a law firm, what would have been deceptive or misleading about its presence in the letters? Put differently, what would Moss Codilis’s name have indicated about its involvement in collecting plaintiffs’ debt that was not true? That Moss Codilis drafted the letter? It did. That Moss Codilis mailed out the letter? It did that too. That Moss Codilis was an independent entity, distinct from The Money Store? It was.
Recognizing this difference between involvement as an attorney and involvement in “collecting a debt” also reveals the flaw in the majority’s analysis. The majority, in determining whether Moss Codilis “collected or attempted to collect” a debt, does not attempt to define that term’s exact meaning under the FDCPA. Rather, it notes that under this Circuit’s holding in Maguire v. Citicorp Retail Services, Inc.,
What this analysis ignores is that the letter in Maguire and the letters in this case are deceptive for different reasons. In Maguire, the letters falsely suggested that their sender was someone other than the creditor; here, the letters may falsely suggest that the sender, Moss Codilis, was involved in collection as an attorney. The difference between this case and Maguire, therefore, is more than “merely changing the return address”: it is changing the return address and changing the name on the letterhead to that of a law firm. As mentioned above, if Moss Codilis’s name did not suggest that it was a law firm, then the use of its name in the breach letters would not falsely indicate anything — Moss Codilis did, after all, draft and mail the letters. In Maguire, meanwhile, even though the third party’s name did not suggest that it was a law firm, its presence on the letters still suggested that a third party had sent them — which it had not — thus rendering the letters inherently deceptive.
Further supporting a distinction between this case and Maguire is that the FDCPA draws the exact same distinction in § 1692j, the flat-rating provision. That section’s language clearly anticipates that a flat-rater does not itself communicate with debtors. To the contrary, § 1692j states that a flat-rater “design[s], compile[s], and fumish[es]” deceptive forms knowing that they “[will] be used ” to create the false belief that someone other than the creditor is participating in the collection of a debt. Id. § 1692j(a) (emphases added). Notably, a flat-rater does not “send” the forms to the debtor, nor is the flat-rater the one that actually “uses” the forms to deceive the debtor. This is all in addition, of course, to § 1692j’s admonition that whoever’s name is on the deceptive form must not also be participating in the debt collection. Id.
Given the lack of support in either our own decisions or the text of the FDCPA for the conclusion it reaches here, the majority understandably looks to the case law of other circuits. The cases it cites, however, are either inapposite or unpersuasive.
The Fifth Circuit’s opinion in Taylor v. Perrin, Landry, deLaunay & Durand,
The majority departs from this straightforward application of the FDCPA. It articulates its reformulated test for determining whether a creditor has used another’s name so as deceptively to suggest this third party’s involvement in collecting the creditor’s debts as “whether the third party is making bona fide attempts to collect the debts of the creditor or whether it is merely operating as a ‘conduit’ for a collection process that the creditor controls.” Maj. Op. at 103. But this “bona fide ” collection standard appears nowhere in the text of the FDCPA. And unless the majority intends it as simply the inverse of § 1692j’s flat-rating standard — an implausible construction of § 1692j — the “bona fide ” standard creates an odd liability gap within the FDCPA: parties like Moss Co-dilis may be too involved in collection to be flat-raters under § 1692j, but not involved enough to be “actually” collecting or attempting to collect the debts at issue.
It is by no means evident why we should interpret the FDCPA, contrary to the most obvious meaning of its terms, to provide such a safe harbor for potentially bad actors. Nor is it evident why, after having previously noted the “economic necessity of mass mailing in the debt collection industry” and observing that such mailings “may sometimes be the only feasible means of contacting a large number of delinquent debtors,” Clomon,
The approach announced today will prove vexing, I fear, as future courts struggle with determining whether a creditor, supposedly exempt from the FDCPA and despite always acting in its own name, is nevertheless subject to it merely for hiring a debt collector whose practices are deemed inadequate in some respect.
. As the majority acknowledges, such notices are generally a first step in the debt collection process and are a prerequisite in virtually all residential mortgages to commencing any action to enforce lien rights. See Maj. Op. at 93.
. Among other things, Moss Codilis provided debt verification information to debtors upon request, as well as information regarding the identity of original creditors, as it committed to do in the breach letters. As the majority acknowledges, Christina Nash, who supervised Moss Codilis's work for The Money Store, also testified that she communicated with debtors’ bankruptcy counsel and with attorneys at The Money Store concerning both bankruptcy proceedings and the discharge of debts in bankruptcy. See Maj.Op. at 93.
. The majority asserts that I am conflating the false name exception with the general definition of debt collector, see Maj. Op. at 105 n. 18, but I am not. Moss Codilis is a debt collector for the purpose of the FDCPA’s general definition, which provides (again) that a debt collector is "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). The problem here is not whether Moss Codilis is a debt collector. The problem is that The Money Store cannot be liable for deceptively collecting its own debts using Moss Codilis’s name by virtue of Moss Codilis’s debt collection efforts — as the majority holds — without departing from the most obvious meaning of the FDCPA’s false name exception. That exception holds a creditor liable only when "in the process of collecting his own debts,” the creditor falsely "uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.” 15 U.S.C. § 1692a(6). It does not provide for creditor liability for hiring a debt collector who deceives debtors about its involvement as an attorney.
. Specifically, and as the majority describes, the letters in Maguire were sent by and bore the letterhead of "Debtor Assistance,” which was an in-house collection department for the creditor, Citigroup. Maguire,
. The majority also provides the hypothetical that "The Money Store sent the letters in sealed, stamped envelopes to Moss Codilis with the note 'please mail.' " Maj. Op. at 101 n. 11. I would concede that, because the presence of a third party's letterhead might suggest that the third party drafted the letter as well as sent it, the false name exception might apply in such a situation. Since, however, it is undisputed that Moss Codilis did draft the letters sent to the plaintiffs, we need not address this issue.
.Nor is the majority's citation of Federal Trade Commission ("FTC”) interpretive guidance helpful. As an initial matter, the language that the majority cites is not interpreting § 1692a(6), but rather § 1692e(14), which prohibits acknowledged debt collectors from “[t]he use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.” See FTC, Statements of General Policy or Interpretation Staff Commentary on the Fair Debt Collection Practices Act, 53
. The majority insists, in a footnote, that its bona fide debt collection standard is the inverse of the flat-rating standard — so that assuming The Money Store is liable pursuant to the false name exception, Moss Codilis's activities amounted to flat-rating. Maj. Op. at 103 n. 16. But the majority is incorrect in arguing that this is anything but an implausible construction of § 1692j. For Moss Codilis did not “furnish [a] form” to The Money Store "knowing that such form would be used to create the false belief in a consumer that a person other than the creditor” was participating in The Money Store's debt collection “when, in fact such person” was "not so participating,” as § 1692j requires. Instead, it is undisputed that Moss Codilis participated in The Money Store's debt collection efforts by, among other things, drafting template breach letters to comply with the laws of the
. The majority claims this fear is unwarranted and arises out of a failure to consider its discussion of what the false name exception’s "use” element requires. Maj. Op. at 99 n. 8. With respect, I don't think so. The majority asserts that its use element requires "that there must be some active involvement in the misrepresentation by the creditor” and that the "relevant affirmative action” by The Money Store was "retaining Moss Codilis for the express purpose of sending breach letters that appeared to be attorney collection letters to its debtors.” Maj. Op. at 99. In other words, the majority in its discussion of this element again conflates the deception of a creditor who collects its own debts while using a pseudonym or name of another with the different deception of a third-party debt collector who falsely claims to be acting as an attorney. This approach can only sow confusion into an otherwise straightforward FDCPA provision.