Wisconsin Consumer Law Statutes and Claims
Gwendolyn G. Connolly, Esq.
April 9, 2009
I.
Wisconsin Consumer Act
A.
Ch. 421 - General Provisions and Definitions
1.
Purposes - § 421.102(1) and (2):
a.
Chapters 421 to 427 shall be liberally construed and applied to
promote their underlying purposes and policies.
b.
The underlying purposes and policies of chs. 421 to 427 are:
(1)
To simplify, clarify and modernize the law governing
consumer transactions;
(2)
To protect customers against unfair, deceptive, false,
misleading and unconscionable practices by merchants;
(3)
To permit and encourage the development of fair and
economically sound consumer practices in consumer
transactions; and
(4)
To coordinate the regulation of consumer credit
transactions with the policies of the federal consumer credit
protection act.
2.
Exclusions- § 421.202
a.
Consumer credit transaction which exceed $25,000
b.
First Lien Mortgages
c.
Agricultural related transactions
d.
Business transactions
3.
Venue - § 421.401
a.
Where consumer resides or is served
b.
Where collateral is located
c.
Where transaction occurred
B.
Ch. 422 - Consumer Credit Transactions
1.
Disclosure requirements - § 422.301 (inclusion of TILA)
2.
General WCA disclosure requirements - § 422.302.
3.
No Blank writings - § 422.304
4.
Accountings - § 422.306
5.
Anti Holder in Due Course - § 422.407
a.
What is Holder in Due Course
b.
FTC Contract Language
6.
Referral transactions - § 422.416
a.
Jack pot
b.
ATCP violations
7.
Credit Services Transactions - § 422.501 et seq.
a.
ECOA
b.
Jackpot claim
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C.
D.
E.
Ch. 423 - Consumer Approval Transactions and Consumer Rights
1.
Right to Cancel - § 423.201 et seq.
a.
When does it apply (1)
face to fac transaction - away from business
(2)
direct mail solicitation
(3)
direct phone solicitation
b.
What is it
(1)
3 day right to revoke
(2)
in writing
(3)
Mitigation of right
2.
UDAP provision - § 423.301 et seq.
a.
Compare with § 100.18
b.
Has broader application
c.
Jackpot remedy
Ch. 424 - Consumer Transactions - Insurance
1.
Use in Insurance Sales in Auto Transactions
a.
Credit Life
b.
Credit Disability
Ch. 425 - Consumer Transaction - Remedies and Penalties
1.
Unconscionability - § 425.107
2.
Pleadings - § 425.109
3.
Repossession - § 425.201 et seq.
a.
Only collateral - § 425.203
b.
Collateral and deficiency - § 425.205
(1)
(1g) 15 day notice
(2)
Certified Mail
4.
Voluntary Surrender - § 425.204
a.
Confirm what was done
b.
Jackpot remedy
5.
Non Judicial Remedy
a.
Repossession
(1)
Voluntary surrender
(2)
Judgment obtained
(3)
Restraining order
(4)
(1g) notice
b.
Wrongful repo
(1)
Disturbing the peace
(2)
Enter a dwelling
c.
Jackpot
6.
Remedies
a.
Liberal construction
b.
Punitives
c.
Bona Fide Error defense
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d.
e.
F.
G.
H.
II.
Statutory remedies
Jackpot remedy
(1)
Void
(2)
Return of payments
(3)
No further payments
f.
Limitations
(1)
One year after the last violation
(2)
Two years after consummation of agreement
(3)
One year after last payment
(4)
Two years after last payment, with open ended credit
(5)
And, in no case later, than six years after last violation
g.
Attorney Fees - § 425.308
h.
Miscellaneous
(1)
Parole Evidence Rule is inapplicable
(2)
Personal liability for corporate officers
Ch. 426 - Consumer Transactions - Administration
1.
Injunctions - § 426.209
2.
Class Actions - § 426.110
Ch. 427 - Consumer Transaction - Debt Collection
1.
Who it covers - § 427.103
a.
Broader
b.
Compare to FDCPA
2.
Prohibited Practices - § 427.104
a.
Extensive
b.
Compare to FDCPA
3.
Remedies - § 427.105
Ch. 428 - First Lien Real Estate and Other Mortgage Loans
Unfair Deceptive Acts and Practices
A.
Purpose of Wis. Stat. § 100.18: Fraudulent Misrepresentations
1.
Wis. Stat. § 100.18 was enacted as a prohibition against deceptive
advertising, and meant to protect the public from all untrue, deceptive or
misleading representations made in sales promotions, including
representations made in face-to-face sales where no media advertising is
involved. Grube v. Daun, 173 Wis. 2d 30 (Ct. App. 1992) review denied,
497 N.W.2d 130.
2.
Wis. Stat. § 100.18 does not purport to impose a duty to disclose, but,
rather, prohibits only affirmative assertions, representation or statements of
fact that are false, deceptive or misleading. Tietsworth v. HarleyDavidson, Inc., 270 Wis. 2d 146, 677 N.W.2d 233 (2004).
3.
Wis. Stat. § 100.18 creates a distinct statutory cause of action; it does not
merely add a remedy for common law misrepresentation claims. Kailin v.
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Armstrong, 173 Wis. 2d 30, 496 N.W.2d 106 (Ct. App. 1992).
B.
Untrue, deceptive or misleading statements
1.
The most widely used provision of the statute is Wis. Stat. § 100.18(1):
“No person, firm, corporation or association, agent or employee there of, with intent to
sell, distribute, increase the consumption of or in any wise dispose of real estate,
merchandise, securities, employment, service or anything offered directly or indirectly, to
the public for sale, hire, use or other distribution must not make any advertisement,
announcement, statement or representation which contains any assertion, representation
or statement of fact which is untrue, deceptive or misleading.”
2.
Under Wis. Stat. § 100.18 the representations need not be public. The
statute also applies to oral representations made in private conversations
with prospective purchases. One person may constitute the “public” under
the statute. State v. Automatic Merchandisers, 64 Wis. 2d 659 (1989).
3.
When conflicting inferences can be drawn, the determination of whether a
promise is deception, misleading or untrue under the statute is a question
of fact that must be determined by the trier of fact. Dorr v. Sacred Heart
Hosp., 228 Wis. 2d 425, 597 N.W.2d 462 (Ct. App. 1999).
4.
Determination of untruthfulness does not require proof of public reaction.
Tim Torres Enterprises, Inc. v. Linscott, 142 Wis. 2d 56, 416 N.W.2d 670
(Ct. App. 1987), review denied 143 Wis. 2d 953, 419 N.W.2d 562.
5.
Dealer who advertised eggs for sale as being “from Nelson’s Certified Egg
Farm”, when no such farm existed and who received his eggs from farmers
in general, was guilty of fraudulent advertising. 17 Op. Atty Gen. 631
(1928).
6.
Puffery
a.
Advertisement contained deceptive statement of fact that
appearance and performance of washer and dryer set was the “best”
and “finest” state a claim under this section; advertisement could
be read to represent that advertised set was the “best” or “finest”
produced by manufacturer, and thus statement was no necessarily
puffing and its truth and falsity could be determined. State v.
American T.V. and Appliance of Madison, Inc., 146 Wis. 2d 292
430 N.W.2d 709 (1988).
b.
Manufacturer’s advertising material describing motorcycle engine
as “premium” quality, “a masterpiece,” and 88 cubic inches “filled
to the brim with torque and ready to take you thundering down the
road” was classic advertising puffery, that was non-actionable at
common law and under Wis. Stat. § 100.18. Tietsworth v. HarleyDavidson, Inc., 270 Wis. 2d 146, 677 N.W.2d 233 (2004).
C.
Deceptive Pricing
1.
Wis. Stat. § 100.18(2)(a)(1) prohibits deceptive pricing by retailers. If a
retailer fails to state the price or amount which must be paid for the
property or services included in a sale, if the advertisement or
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D.
E.
F.
representation does not refer to the price of the property or services as the
“regular price.” The price must be set forth clearly, conspicuously, and in
such a manner that the total price may be readily ascertained.
2.
Under Wis. Stat. § 100.18(2)(a)(2), it is deceptive for a retailer to sell the
property for services at more than the regular price or fail to state any other
condition to the receipt of the property if the advertisement or
representation refers to the price of the property or services as the “regular
price.”
3.
A retailer may not mark up the regular price of the property or services to
be purchased. Wis. Stat. § 100.18(2)(a)(3).
4.
A retailer may not substitute property or services of inferior value or
quality for the property or services which must be purchased. Wis. Stat. §
100.18(2)(a)(4).
Pricing of Motor Fuel
1.
Wis. Stat. § 100.18(6) and (7) address pricing of motor fuel.
2.
The signage must be uniform. Wis. Stat. § 100.18(6).
3.
Prices stated must be in effect for 24 hours after they are posted. Wis. Stat.
§ 100.18(6).
Bait and Switch Tactics
1.
Any publication, dissemination or circulation in a newspaper or other
publication or written media, as well as over the radio or television station,
of an advertisement, announcement, statement or representation relating to
the purchase, sale, hire, use or lease or real estate, merchandise, securities,
service or employment which is part of a plan or scheme where the intent
is not to sell, purchase, hire, use or lease the real estate, merchandise,
securities, service or employment as advertised is a violation of the statute.
Wis. Stat. § 100.18(9)(a).
2.
Newspaper, television, radio and businesses which communicate a UDAP
are exempt from this provision, if they disseminate the information in
good faith and without knowledge of the falsity or deceptive character
publishes, or causes to be published or takes part in the publication of such
advertisement. Wis. Stat. § 100.18(9)(b).
3.
Bait and switch selling tactics are difficult to prove. The Plaintiff must
establish a plan or scheme not to sell the merchandise as advertised. In
State v. American T.V. and Appliance of Madison, Inc., 146 Wis. 2d 292
(1988), the fact that an appliance dealer advertised a lesser quality washer
and dryer set, displayed them next to a higher priced washer and dryer set,
and sold very few of the lower priced set did not create the inference of a
bait and switch scheme.
Enforcement and Remedies
1.
Public Enforcement: The Department of Agriculture, Trade and Consumer
Protection (DATCP) is the governmental entity which enforces Wis. Stat.
§ 100.18. However, this is not the exclusive method of enforcement. Wis.
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G.
III.
Stat. § 100.18(11)(a).
2.
Private Remedies
a.
Any person suffering pecuniary loss may recover such loss, costs
and reasonable attorney’s fees. Wis. Stat. § 100.18(11)(b)(2).
b.
Any person suffering pecuniary loss because of a violation of any
injunction issued under this section may recover twice the amount
of such pecuniary loss, costs and reasonable attorney’s fees. Id.
c.
The damages provision of this section requires a causal connection
between the practice found to be illegal and the pecuniary losses
suffered. Tim Torres Enterprises, Inc. v. Linscott, 142 Wis. 2d 56,
416 N.W.2d 670 (Ct. App. 1987), review denied 143 Wis. 2d 953,
419 N.W.2d 562.
d.
Damages provision of this section requires some proof beyond
content of advertisement itself to establish that plaintiff was in fact
damages by it. Id.
e.
The economic loss doctrine, under which if contractual
expectations are frustrated because of a defect in the subject matter
of the contract and the only damages are economic losses, the
exclusive remedy lies in contra t, does not apply to the false
advertising statute. Kailin v. Armstrong, 252 Wis. 2d 676, 643
N.W.2d 132 (2002).
f.
Wis. Stat. § 100.18 does not apply to the insurance business. Wis.
Stat. § 100.18(12)(a). However, Chapter 424 does create its own
UDAP violation for the sale of insurance in consumer transactions.
g.
Wis. Stat. § 100.18 does not apply to any real estate broker or
salesperson unless the salesperson has directly disseminated the
false or misleading information. Wis. Stat. § 100.18(12)(b).
Time Limitations for Claims.
1.
Actions under Wis. Stat. § 100.18 are barred after three years. Wis. Stat. §
100.18(11)(b)(3).
2.
The statute barring a claim is a statute of repose, and thus the cause of
action for false advertising accrues when the fraudulent representation is
made. Kain v. Bluemound East Indus. Park, Inc., 24 wis. 1d 172, 635
N.W.2d 640 (Ct. App. 2001).
3.
Discovery rule does not apply to a claim under Wis. Stat. § 100.18.
Skrupky v. Elbert, 189 Wis. 2d 31, 526 N.W.2d 264 (Ct. App. 1994).
Unfair Trade Practices in Business
A.
Generally, Competition and Trade Practices
1.
Methods of competition in business and trade practices in business shall be
fair. Unfair methods of competition in business and unfair trade practices
in business are hereby prohibited. Wis. Stat. § 100.20(1).
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a.
B.
When term "unfair trade practice" was added to "unfair methods of
competition in business" in this section, mantle of protection
against unfair practices was extended beyond those engaged in
making or selling same or similar products, and authorized
agriculture department to protect those, other than business
competitors, injured or affected by unfairness in trade practices.
HM Distributors of Milwaukee, Inc. v. Department of Agriculture,
55 Wis. 2d 261, 198 N.W.2d 598 (1972).
b.
Schemes which can cause loss of money and victimization of third
persons clearly fall within term “unfair trade practices.”HM
Distributors of Milwaukee, Inc. v. Department of Agriculture, 55
Wis. 2d 261, 198 N.W.2d 598 (1972)
c.
Lease provision requiring tenants to indemnify landlord for costs
and attorney fees incurred in enforcing lease violated regulation
prohibiting as an unfair trade practice the inclusion of any clause
requiring a tenant to pay a landlord's attorney fee and costs and
rendered lease unenforceable; holding lease unenforceable by
landlord, rather than severing illegal provision, not only advanced
intent underlying regulation, but prevented regulation's objectives
of eliminating tenant intimidation and effectively promoting
private tenant enforcement actions from being wholly undermined.
Baierl v. McTaggart 245 Wis.2d 632 ,629 N.W.2d 277 (2001).
2.
The authority of this statute is limited by the definition of business found
in Wis. Stats. § 93.01(1 m) which excludes banking, insurance, and the
activities of utilities and telecommunications carriers that are regulated by
the Public Service Commission.
3.
Most of these rules provide consumer protection for individual consumers
and do not apply to business to business transactions.
Methods of Unfair Competition
1.
“It is an unfair trade method of competition in business to represent the
retailing of merchandise to be a selling-out or closing-out sale if the
merchandise is not of a bankrupt, insolvent, assignee, liquidator, adjuster,
trustee, personal representative, receiver, wholesaler, jobber,
manufacturer, or of any business that is in liquidation, that is closing out,
closing, or disposing of its stock, that has lost its lease or has been or is
being forced out of business, or that is disposing of stock on hand because
of damage by fire, water, or smoke. This subsection does not apply to any
"closing-out sale" of seasonal merchandise or any merchandise having a
designated model year if the person conducting the sale is continuing in
business.” Wis. Stat. § 100.20(lm).
2.
“It is an unfair method of competition in business or an unfair trade
practice for a person who sells new motor vehicles to compare new motor
vehicle selling prices, including the offered prices or the actual sale prices,
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C.
to the manufacturer's suggested retail price for that vehicle unless it is
clearly and conspicuously disclosed that the latter price is a manufacturer's
suggested retail price and may not represent actual sale prices.” Wis. Stat.
§ 100.20(lr).
3.
“It is an unfair trade practice for a person to provide any service which the
person has the ability to withhold that facilitates or promotes an unfair
method of competition in business, an unfair trade practice in business, or
any other activity which is a violation of this chapter.” Wis. Stat. §
100.20(lt).
4.
Intentional fraud, as applied to cases of unfair competition, consists of the
fact that defendants deliberately and intentionally simulated plaintiff's
products in a manner calculated to deceive the general public, as regards
contention that accounting for profits may only be had when intentional
fraud is discovered. Kickapoo Development Corporation v. Kickapoo
Orchard Co., 231 Wis. 458, 285 N.W. 354 (1939).
Enforcement and Remedies
1.
Public Enforcement.
a.
The Department of Agriculture, Trade and Consumer
Protection may issue general orders forbidding methods of
competition in business or trade practices in business which are
determined by the department to be unfair. The department, after
public hearing, may issue general orders prescribing methods of
competition in business or trade practices in business which are
determined by the department to be fair. Wis. Stat. § 100.20(2)(a).
b.
DATCP “may issue a special order against any person, enjoining
such person from employing any method of competition in
business or trade practice in business which is determined by the
department to be unfair or from providing service in violation” of
the statute. Further, DATCP “after public hearing, may issue a
special order against any person, requiring such person to employ
the method of competition in business or trade practice in business
which is determined by the department to be fair.” Wis. Stat. §
100.20(3).
2.
Private Cause of Action
a.
Any person suffering pecuniary loss because of a trade practices
violation by any other person of any order issued under this section
may sue for damages therefor in any court of competent
jurisdiction and shall recover twice the amount of such pecuniary
loss, together with costs, including a reasonable attorney's fee.
Wis. Stat. § 100.20(5). Wisconsin courts recognize that the private
right of attorney under Wis. Stats. § 100.20(5) provides more than
an individual right of action. Shands v. Castrovinci, 115 Wis. 2d
352, 240 N.W. 2d 506 (1983).
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b.
c.
d.
e.
f.
g.
There must be a causal connection between the violation and the
pecuniary loss suffered. Where builder, who installed defective
siding on building, violated rule of department of agriculture
forbidding certain trade practices, but owners of realty did not offer
any evidence to show that they suffered any pecuniary loss because
of builder's violation of the rule, builder was not liable to owners of
realty. U.S. v. Schumacher,154 F. Supp. 425 (D. Wis. 1957).
Landlord/Tenant cases are considered differently. Once it is
determined that landlord has violated regulations dealing with
return of tenant's security deposit, tenant suffers a "pecuniary loss"
in amount of security deposit regardless of amount of damages
landlord may recover on a counterclaim; determination as to
whether tenant suffered pecuniary loss and amount of loss must be
made prior to and independent from any consideration of landlord's
counterclaim. Moonlight v. Boyce , 125 Wis.2d 298, 372 N.W.2d
479 (Ct. App. 1985).
There must be an actual payment in order to have pecuniary loss.
Automobile repair shop customer could not claim pecuniary loss
entitling him to double damages for having paid repair bill
submitted by shop which had violated motor vehicle repairs
regulation requiring written estimate for repairs exceeding $25
where customer had cancelled check prior to payment. Huff and
Morse, Inc. v. Riordon, 118 Wis. 2d 1, 345 N.W.2d 504 (Ct.
App.1983).
Purchasers of time-share who were induced to purchase by a
referral selling plan in which the benefits of the plan could not be
conferred prior to completion of the sale were entitled to double
damages in addition to rescission of the time-share contract under
time-share statute, where statute explicitly allowed for remedy of
recision in addition to any other remedies available. Pliss v.
Peppertree Resort Villas, Inc., 264 Wis. 2d 735, 663 N.W.2d 851
(Ct. App. 2003).
The plaintiff is entitled to all equitable damages. Because this
statute is a consumer protection statute and contains no limitation
on trial court's exercise of its equity jurisdiction, a court has the full
scope of equitable remedies available to it to fashion relief for the
parties injured as result of the acts and practices involved in the
action. State v. Excel Management Services, Inc., 111 Wis. 2d 479
(1983).
Wis. Stats. § I 00.20 may provide a consumer with an argument in
a contract action that the entire contract should be voided. A motor
vehicle service contract may be voided where the shop does not
adhere to ATCP 132. Huff & Morse, Inc. v. Riordin, 118 Wis. 2d
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D.
E.
1, 345 N.W.2d 504 (Ct. App. 1984). But, the shop may recover the
reasonable value of the services under quantum meruit, not to
exceed the agreed amount. Huff and Morse, Inc. v. Riordon, 118
Wis. 2d 1, 345 N.W.2d 504 (Ct. App.1983). However, in the
context of the residential rental practices code, an appellate court
recently held if the violating clause is non-essential, then the clause
should be severed and the remaining contract is valid and
enforceable. In this case, a clause in the lease requiring the tenant
to pay the landlord’s attorneys fees in violation of the code was
held nonessential, the violating clause was severed, and the
remaining contract enforced. Baierl v. McTaggart, 2000 WI App I
93.
Time Limitations for Claims.
1.
No statute of limitations is stated in the Wis. Stat. § 100.20.
2.
Presumably, the general six year statute of limitations would apply.
General orders are directed toward any persons engaged in the business activity
pursuant to Wis. Stats. § 100.20(2). These orders are promulgated as
administrative rules in accordance with Wis. Stats. ch. 227.
Academic material unfair trade practices, see section ATCP 128.01 et seq.
Art prints and multiple art, sales practices, see section ATCP 117.01 et seq.
Basement waterproofing unfair trade practices, see section ATCP 111.01 et seq.
Chain distributor schemes, see section ATCP 122.01 et seq.
Contested case proceedings, settlement, see section ATCP 1.24.
Coupon sales promotions, see section ATCP 131.01 et seq.
Environmental labeling of recycled, recyclable, or degradable products, special orders,
see section ATCP 137.09.
Freezer meat and food service plan trade practices, see section ATCP 109.01 et seq.
Gasoline advertising, see section ATCP 113.01 et seq.
Home improvement trade practices, see section ATCP 110.01 et seq.
Home solicitation selling, see section ATCP 127.01 et seq.
Leaf tobacco, buying and selling, see section ATCP 104.01 et seq.
Mobile home parks, see section ATCP 125.01 et seq.
Motor vehicle repair, see section ATCP 132.01 et seq.
Payments to milk producers, failure to justify discrimination, see section ATCP 100.986.
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Price comparison advertising, see section ATCP 124.01 et seq.
Price discrimination and related practices, see section ATCP 102.01 et seq.
Real estate advertising, advance fees, see section ATCP 114.01 et seq.
Recycled, recyclable or degradable products, environmental labeling of products, see
section ATCP 137.01 et seq.
Referral selling plans, see section ATCP 121.01 et seq.
Residential rental practices, see section ATCP 134.01 et seq.
Telecommunications and cable television services, see section ATCP 123.01 et seq.
Telephone solicitations, no-call list, see section ATCP 127.82.
Vegetable procurement trade practices, see section ATCP 101.01 et seq.
Work recruitment schemes, see section ATCP 116.01 et seq.
IV.
Other issues
A.
Civil Theft
1.
Treble Damages
2.
Attorneys Fees/Costs
B.
Torts
1.
Battery
2.
False Imprisonment
3.
Conversion
4.
Bailment
C.
Breach of Contract
1.
Sales Contract
2.
Financing Contract
a.
FTC Holder Rule
b.
The Federal Trade notice:
NOTICE: Any Holder of this Consumer Credit Contract Is Subject to All Claims
and Defenses Which the Debtor Could Assert Against the Seller of Goods or
Services Obtained Pursuant Hereto or with the Proceeds Hereof. Recovery
Hereunder by the Debtor Shall Not Exceed Amounts Paid by the Debtor
Hereunder.
V.
Fair Debt Collection Practices Act
A.
Who is a Debt Collector?
1.
15 U.S.C. §1692a(6): A “debt collector” is a person who “regularly
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B.
C.
D.
E.
F.
collects or attempts to collect directly or indirectly, debts owed or due...”
General application:
1.
The Act does not require compliance from a person who does not
“regularly” engage in debt collection. Further, the Act only applies to
consumer debts. It does not apply to business transactions.
2.
Entities which are generally excluded from the FDCPA:
a.
Creditors (collecting their own debts), i.e. retail stores, banks,
finance companies; (note: this is not true of ch. 427 of the Wis.
Consumer Act)
b.
Assignees (before default) (i.e. car finance companies, mortgage
servicing companies)
c.
Government employees;
d.
Business debts; and
e.
Non-profit credit counseling services.
Employees of a debt collector may be individually liable, with their employer, for
violations of the FDCPA. 15 U.S.C. §1692a(6)(A). Likewise, both the debt
collector agency and an attorney collecting on his behalf are individually liable for
the attorney’s violations. Ditty v. CheckRite, Ltd., 937 F. Supp. 1320 (D. Utah
1997).
While creditors are exempt from FDCPA coverage, when they use a fictitious
name they will be subject to liability under the Act. 15 U.S.C. §1692a(6). The
implication of using a false name is that the creditor is not collecting but rather
that a third party debt collector is contacting the debtor.
Likewise, repossession and foreclosure companies and others whose principal
business is to enforce security interests are liable under the FDCPA. 15 U.S.C.
§1692a(6).
Lawyers
1.
Lawyers were included within the ambit of the FDCPA in a 1986
amendment passed by Congress. An attorney who regularly collects
consumer debts is now subject to the FDCPA. The lawyer must provide
validation notices, debt collection notices, and refrain from contacting
third parties.
2.
Special considerations: The FDCPA contains a venue provision which
requires debt collectors to bring suit only in the district where the
consumer signed the contract upon which the debt is based. Actions to
enforce interest against property may only be brought where the property is
situated. Any less protective state law is preempted.
3.
The notice and validation rights and of the debt collection purpose are
required in a litigation context even if the first communication is service of
a Summons and Complaint. It is not material that the initial
communication occurs through litigation. The notice and validation rights
are required regardless of the debt collector’s preference to litigate rather
than send a demand letter.
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4.
G.
H.
I.
Pitfalls for lawyers:
a.
Threatening to sue when no intention or ability to do so;
b.
Misrepresentation the source of the collection letter or attorney’s
involvement;
c.
Imposing specious deadlines;
d.
Misleading representations as to the effect of litigation; and
e.
Filing suit other than in the court permitted by 15 U.S.C. §1692i.
“Debts” Covered by the FDCPA
1.
Statute: 15 U.S.C. §1692a(5): “Any obligation or alleged obligation of a
consumer to pay money arising out of a transaction in which the money,
property, insurance or services which are the subject of the transaction are
primarily for personal, family or household purposes, whether or not such
obligation has been reduced to judgment”.
2.
The key elements of a debt are:
a.
Natural person;
b.
A transaction;
c.
Involving money, property, insurance or services; and
d.
For personal, family or household purposes.
Collection Activities Under the FDCPA
1.
FDCPA covers all direct or indirect actions or attempts to collect debt,
including mistaken or alleged consumer debts.
Strict Liability
1.
The FDCPA is a strict liability statute - Hartman v. Meridian Fin. Servs.,
Inc. 191 F. Supp. 2d 1031 (W.D. Wis. 2002); Booth v. Collection Experts,
Inc., 969 F. Supp. 1161 (E.D. Wis. 1997);
2.
Liability will attach without regard to intent or knowledge or the
willfulness of the violation.
3.
The exception to strict liability, which includes an analysis of intent or
knowledge, of claims under 15 U.S.C. §1692d(5), 1692e(4)(5).
4.
A few courts have balked at imposing the FDCPA strict liability on
collection agencies when a misrepresentation was based upon erroneous
information provided by a creditor. See Jenkins v. Heintz, 124 F. 3d 824
(7th Cir. 1997).
Connolly - 13