Consumers Bait Collectors With New Script to Manufacture FDCPA Claims ("The Debt Collection Drill")

The use of “scripts” by consumers to bait telephone debt collectors into alleged Fair Debt Collection Practices Act (FDCPA) violations is a calculated strategy dating back more than ten years. Typically, a consumer obtains such a script from a consumer attorney or from a website. The consumer will then make an inbound call to a debt collector and read certain questions off of the script, seeking to maneuver the debt collector to make a statement that facially violates the FDCPA. These scripts usually include vague, leading questions about interest or credit reporting. If the debt collector “takes the bait” and makes an unintended mistake, a consumer attorney will sue or send a demand letter to the collection agency shortly after the call. Most collection agencies have in place specific training for collectors to identify and avoid such baiting, focusing on the common scripts and the certain states or geographic areas where such baiting most often occurs.

In the latest episode of The Debt Collection Drill, Moss &  Barnett attorneys John Rossman and Mike Poncin discuss a new baiting strategy by consumers that is resulting in a substantial number of claims and specific strategies for avoiding liability.


  • Mike Poncin: Welcome everybody to another edition of the Debt Collection Drill. I'm Mike Poncin and with me is John Rossman Chair of our Creditors Remedies Practice Group here at Moss & Barnett.
  • John Rossman: Thanks Mike. We have been seeing a number of lawsuits recently and all of the lawsuits appear to be the same and frankly, all the lawsuits appear to be a set up where a consumer presumably has a script that they have been using to bait collectors into FDCPA violations. Mike I think the genesis of this latest version of the baiting script for debt collectors arises from a case out of Missouri from last year and that was the ­Schuller case. Could you share with our listeners what happened in the Schuller case please?
  • Mike Poncin: Yes, exactly. What happens, of course, in all of these set ups and I think we had a podcast actually three years ago or so on set ups so I'm surprised, actually not, that there are still set ups out there. But this is a little different than what we were seeing three years ago. This is one of course a consumer calls in and wants to know when they can make payment, when they have to make payment, asking for a payment plan and this is all within the initial validation period. So then the argument is that if you offer them a payment plan that has the first payment due within their 30-day notice, that the least sophisticated consumer would not understand that they still have a right under the 1692(g) to dispute the debt.
  • John Rossman: And so in essence these baiting calls – and here again I had two of them come across my desk over like a one-hour period last week and really similar allegations like you said. Validation notice is sent out. Consumer calls in during the validation period, indicates to the collector that the consumer would like to pay and then asks when that first payment would be due. The consumer tries to angle the conversation to get the collector to say well we'd like the first payment by the end of the month which inevitably is during the validation period and the argument is that that demand or that request for payment during the validation period overshadows the consumer's right to validation. So Mike I know that 1692(g), the validation section of the FDCPA, does allow for some communications during the validation period. But why would this particular script be so effective for consumers and for bringing lawsuits?
  • Mike Poncin: It's a good question and it's one which I'm not sure there is an easy answer to. It's kind of a case-by-case basis and there are different cases out of the Eastern District of Missouri that talk about this. The big thing that the courts have looked at I mean if you make a payment, if you offer a payment deadline that is within those 30 days, that's where they find a problem. But if you leave an open-ended payment plan, there is not the problem. I guess that leads me to a question back to you. I mean we see in initial letters, we see settlement demands going out and we often see language something like “this settlement offer does not affect or otherwise alter your rights under 1692(g) or the preceding rights that we provided you” or whatnot, however you want to word it. Is that something you think could be given in a phone call? That if your collectors are making an offer that is within the 30-day notice over the phone, that they should say that this offer that I'm making you know keep in mind you still have your rights under that letter we sent out to you?
  • John Rossman: I think that makes a lot of sense. Certainly if you're going to have outbound calls during the validation period, outbound collection calls, you would need to do that. In the Schuller case, the way I read it, was that it was an outbound call although I believe also some inbound calls on that one. But I think as a general matter there should be some training done for collectors and some scripting done so that if there is a call during that validation period and there is discussion of a payment arrangement, that one possibility is that the collector could provide some type of disclosure stating that the consumer still has their rights to request validation under the notice that the consumer had previously received. So Mike with these cases it seems like it's very specific. The cases are coming out of Missouri. The cases are during the validation period and the cases involve a consumer calling in during the validation period and inquiring about a payment arrangement. It's so specific it's something that I think all collectors should be aware of and all collection agencies should be aware of. My guess is that this particular strategy is going to spread beyond Missouri at some point. Certainly the reason for now I think we're seeing so many cases in Missouri is because that is where the Schuller case was and that was the case that held that this verbal request for payment during the validation period could overshadow the validation notice.
  • Mike Poncin: Now I'll ask you kind of an off-beat question that you're probably aren't prepared for but let's see. So we know the Spokeo case with regards to standing and concrete damages. If you call in hoping to trip up a debt collector, do you have concrete and particularized injury and facts sufficient to have standing?
  • John Rossman: Absolutely not. You know in my opinion a majority of these FDCPA cases there is no concrete and particularized injury. I know there has been some case law on what circumstances that standard is actually even required for an alleged FDCPA violation. But certainly in a situation like this I think a Spokeo “concrete and particularized injury” type argument. I also think it would be a great argument to make as far as materiality. Here again, if the consumer were just seeking to bait the collector into a violation, how could the statement that the collector made truly be material, especially if the consumer never had any intention of paying and the whole purpose of the call was to set up an FDCPA violation. Mike let's pivot for a minute and talk about a case that everyone's talking about. We should at least mention it and that's the Pantoja case and that's the case where the 7th Circuit Court of Appeals issued, it's March 29th so just a week or so ago. Mike in that case there was a collection of a debt by means of a letter and there is a very specific out-of-statute disclosure that was given and the court held that that disclosure was not sufficient to apprise the consumer of the fact that the debt was out of statute and facts regarding whether or not the consumer could be sued on the debt. Mike could you give our listeners your take on the Pantoja case and really where we go from here?
  • Mike Poncin: Keep in mind before the Pantoja case there was the McMahon case out of the 7th Circuit and the Buchanan case out of the 6th Circuit and there was also the Asset Acceptance Consent Decree which all provided different out-of-statute disclosure language. In this case the language set forth “because of the age of your debt we will not sue you for it and we will not report it to any credit reporting agency.” Two of the arguments that were faced in this case had to do with, one should it say we will not sue you or we cannot sue you. Are we choosing not to sue you out of the goodness of our hearts is kind of the position the 7th Circuit took or is it because you actually can't sue. We brought this up in an episode just a few months ago I believe and I'm still of the position that saying we will not is actually stronger than cannot, but it leads to the question of should you be putting down cannot and will not despite what the Asset Acceptance Consent Decree provided for. So right now there is kind of some flux but I think in the end there is language being proposed by different folks and I know we're working on a few cases dealing with consumer attorneys on what they think is actually sufficient. And so I think it's still an open-ended issue with regards to how this is going to play out and I guess to turn things back to you John we've only seen this in the 7th and 6th Circuits. What do you think people should be doing in other circuits?
  • John Rossman: Sure and I think it's a good question and I think you really need to take a look at your disclosure. You need to take a look at the entire body of case law that's out there including now the Pantoja case as well as you know you mentioned the McMahon case. There are a number of other cases out there. There is certainly the Asset Acceptance Consent Decree from several years ago. You need to take a look at all these and make some determinations. You also need to look at those state disclosures. A number of states have suggested disclosures as far as what should be used. I know New York and California, West Virginia there are a number of disclosures that are out there and you start looking at those disclosures. You look at the disclosures that some of these courts have said are insufficient and we're really in a time of flux right now with respect to this. I do believe it's a situation where the CFPB does need to get involved. The CFPB does need to issue some guidance on this. I know that the court in the Pantoja case went so far as to say that perhaps there would be no circumstance in which a debt collector could collect on a debt that is past the statute of limitations without it being deceptive. But then the court went on to say but that's not the question before us today. Really concerning language. Certainly with respect to the fact that the consumer goes a certain period of time without making a payment on a debt. In essence some could read this decision as saying that there might be a decision in the future that will say there is no way to collect on it. That isn't what the decision says, to be perfectly clear, but certainly this decision does give some foreshadowing that that could be a decision in the offing. So Mike I definitely think this is something where you need to look at all the circumstances. I know we put together some recommendations for some clients after this. There are a number of different variations on the out-of-statute disclosure. I don't know if this one case, the Pantoja case, necessarily addresses all the different variations and possible disclosures that I've seen out there.
  • Mike Poncin: I'm not 100% convinced that other Circuits are going to agree with this. I keep going back to the 6th Circuit, the Buchanan case, where Judge Kethledge had issued a dissent where he basically said “so let me get this straight we're looking at all these letters from the standpoint of the least sophisticated or unsophisticated consumer but with regard to this one provision we should look at it from the position of the litigious nature of this because we're attorneys, we're judges so we're not supposed to look at it at all from the least sophisticated consumer standard.” His position was that the least sophisticated consumer would not look at that language and think “oh my gosh this or this is going to happen to me.” That those are nonissues with regard to the least sophisticated consumer standard. I'd have to believe that there would be some other judges out there that would side with Judge Kethledge and maybe we'll see more of those cases filed in other jurisdictions. But again, coming up with language to avoid litigation is the foremost, the priority for most of our clients and other agencies.
  • John Rossman: I think what this case has guaranteed is that there is going to be more litigation on this issue and until the CFPB steps in and provides a nationwide disclosure that can be used, we're going to continue to see that litigation. Mike, we are out of time for today. I'd like to thank you for another excellent episode. I'd also like to thank our Executive Producer Jodi Newsom. Jodi is the one who takes out all the “um's” and the “ah's” and makes these podcasts sound so wonderful. I would like to thank her as well for all her great work and we'll look forward to speaking with you next time. Thank you.

Visit the website for this podcast at the Debt Collection and follow us on Twitter @CollectDrill. This program does not create an attorney/client relationship between Moss & Barnett, a Professional Association, or any attorney appearing on this program and any listener. Please remember that we can only give general information and every case is unique Always check with your individual attorney for any specific legal concerns.