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Responding to Consumer-Initiated Inquiry After "Cease" Letter Did Not Violate FDCPA, Eighth Circuit Court Holds

In Scheffler v. Gurstel Chargo, P.A., the U.S. Court of Appeals for the Eighth Circuit rejected a career plaintiff’s attempts to manufacture a Fair Debt Collection Practices Act (FDCPA) claim by baiting a debt collector into discussing the underlying debt following a cease-communications request. Attempts by career plaintiffs and others to bait creditors and debt collectors into unlawful conduct have become increasingly common. While we regularly work with our clients to make sure they are fully prepared to rebut such attempts, creditors and debt collectors should take note that, as this decision illustrates, scurrilous claims of this nature can be successfully defended in litigation.

The plaintiff, Troy Scheffler, is a former debt collector who has spent the last decade regularly litigating FDCPA claims against other debt collectors. In August 2015, he received a garnishment notice from Gurstel, attempting to collect on a 2009 judgment against him. The notice contained a phone number and an invitation to contact Gurstel with any questions. Scheffler called the number, spoke to a collection representative about the underlying debt, and discussed the possibility of settling the debt. Thereafter, Scheffler filed a complaint alleging that Gurstel violated the FDCPA, 15 U.S.C. § 1692c(c), both in sending the garnishment notice and by discussing the debt after having received a cease-and-desist letter from Scheffler.

The district court granted Gurstel’s motion for summary judgment, finding no violation in sending the garnishment notice and characterizing Scheffler’s consumer-initiated inquiry as "an unsubtle and ultimately unsuccessful attempt to provoke [the defendant] into committing an FDCPA violation." The district court cited Eighth Circuit precedent providing that sending a garnishment notice did not violate the FDCPA, and further reasoned that the plaintiff’s conduct and dealings with Gurstel constituted a knowing and voluntary waiver of his cease-and-desist letter.

The Eighth Circuit affirmed both the district court’s ruling and reasoning, noting that it was the plaintiff who voluntarily reached out to the defendant, and that the discussion of the underlying debt happened in response to the plaintiff’s questions about his options with respect to the debt. According to the Eighth Circuit, Gurstel’s representative "fairly answered Scheffler’s questions by stating that Gurstel was willing to settle the debt and asking if Scheffler was interested in doing so. At no point did [Gurstel’s representative] pressure or badger Scheffler in any way."

In so ruling, the Eighth Circuit has joined with the Ninth Circuit in finding "that § 1692c(c) does not prevent a debt collector from responding to a debtor’s post-cease letter inquiry regarding a debt." See Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1171 (9th Cir. 2006). While the Eighth Circuit’s analysis in Scheffler is highly fact-specific, it demonstrates an increasing willingness by courts to scrupulously examine plaintiffs’ conduct when determining the existence of FDCPA violations.

Copyright © by Ballard Spahr LLPNational Law Review, Volume VIII, Number 248


About this Author

Kaplinksy, partner, New York, finance

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

Culhane, Ballard, Partner

John L. Culhane, Jr., is known for his work advising on interstate direct and indirect consumer and residential mortgage loan and leasing programs, through both traditional brick-and-mortar facilities and e-commerce. Before joining Ballard Spahr, Mr. Culhane was associate counsel with Mellon Bank, N.A.; associate counsel with Bank of America NT&SA; and senior attorney (section chief) with the National Credit Union Administration, the federal agency regulating federal credit unions.

Mr. Culhane addresses issues involving licensing, advertising and marketing, application processing, privacy, disclosure, pricing, substantive terms, servicing, collection, portfolio sales, and securitization. His regulatory practice includes preparing clients for banking agency and CFPB compliance examinations and assisting in the defense of attorney general investigations and banking agency and CFPB enforcement actions. His clients have ranged from a multibillion-dollar bank holding company, to one of the nation's largest residential mortgage lenders, to a leading provider of financial institution forms and documentation. Mr. Culhane is a member of the firm's Fair Lending Task Force.

Stefanie Jackman, Ballard Spahr law firm, Partner, financial services institutions lawyer

Stefanie H. Jackman devotes her practice to assisting financial services institutions facing government investigations and enforcement actions, as well as defending them in individual and class action lawsuits. Ms. Jackman regularly handles matters arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA. Ms. Jackman represents clients across the financial services industry, including banks and nonbanks, mortgage banking lenders and servicers, debt collectors and buyers, third-party...

Elanor Mangin, Ballard Spahr Law Firm, Philadelphia, Finance and Litigation Law Attorney

Elanor A. Mulhern handles complex commercial litigation with an emphasis on consumer finance litigation and defending individual and class action lawsuits brought by consumers in the area of data and privacy security. In addition, Elanor has experience in civil ligation related to patents, trademark, copyright, and contract litigation. In 2014, she participated in a multimillion dollar federal court trial disputing the reasonable royalty rates on standards essential patents.