The Seventh Circuit Court of Appeals has struck another blow to the collection industry, imposing an obligation on a debt buyer to monitor its hired collection agency to ensure overall compliance with the FDCPA, and subjecting the debt buyer to independent liability if the debt collector violates the Act.
In Janetos v. Fulton Friedman & Gullace, LLP, plaintiff alleged that a debt collector and its debt buyer client violated Section 1692g of the FDCPA by failing to meaningfully disclose the name of the creditor to whom the debt is owed in the initial communication. The Seventh Circuit reversed the summary judgment entered on behalf of defendants, concluding that because the debt buyer was itself a collection agency under the FDCPA, the debt buyer was liable for the FDCPA violations committed by the debt collector even though the letter was drafted and sent by the agency.
The Court reasoned that a debt buyer is required "to monitor the actions of those it enlists to collect debts on its behalf." The Court imposed an incredibly broad monitoring obligation, as the debt buyer was responsible to monitor all aspects of the debt collector's process, and not just "the specific challenged conduct." In other words, the debt buyer would be liable even if it did not have "actual control over the specific activity alleged to violate the Act."
The take away here - a debt buyer in the Seventh Circuit has an independent obligation to ensure that its collection agents are complying with all aspects of the FDCPA, and that the debt buyer that hires an agency that violates the Act is independently liable for that violation. In sum, the debt buyer is now the insurer of the debt collector's FDCPA compliance.
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