CFPB files amicus brief in FDCPA lawsuit

Carrasquillo v. CICA Collection Agency Inc.
Date: Jan. 2, 2024

Issue: Whether knowledge of a violation of the Fair Debt Collection Practices Act (FDCPA) is required to be found liable for making a false, deceptive or misleading representation in connection with the collection of a debt.

Case Summary: The Consumer Financial Protection Bureau (CFPB) filed an amicus brief urging the First Circuit to hold that the FDCPA’s prohibition on false, deceptive, or misleading representations, applies even if such representations are made unintentionally and unknowingly.

In 2019, Hernandez Carrasquillo initiated bankruptcy proceedings. CICA Collection Agency was hired to collect the alleged debt from Carrasquillo.  In October 2020, while the bankruptcy was still pending, CICA mailed a collection letter explaining the debt was “due and payable” and Carasquillo could be sued if it was not paid. CICA’s letter did not reference Carasquillo’s pending bankruptcy proceeding.

In 2021, Carrasquillo sued CICA alleging the letter violated the FDCPA for making false statements. Under Section 1692e of the FDCPA, “a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” Carrasquillo claimed the Bankruptcy Code protected him at the time the letter was sent. As a result, the debt could not be due, and a debt collection lawsuit could not commence against him.  CICA filed a motion to dismiss, arguing it did not know Carrasquillo filed for bankruptcy because it had not received notice of the bankruptcy proceedings. CICA asserted it did not intentionally make a false statement and should not be subject to liability. A Puerto Rico federal district court agreed with CICA and dismissed Carrasquillo’s lawsuit. The court concluded the FDCPA did not intend to punish unintentionally false statements.

On appeal, CFPB filed its amicus brief supporting Carrasquillo in the Fifth Circuit. CFPB argued Section 1692e’s prohibition on false, deceptive, or misleading representations is not limited to intentional or knowing representations for three reasons. First, CFPB argued the plain text of Section 1692e does not include a scienter requirement. CFPB emphasized on its face, Section 1692e applies to any false, deceptive, or misleading representation used by a debt collector, with no requirement that the debt collector know or intend to make a false representation before the representation becomes prohibited. Further, CFPB explained nothing in Section 1692e declares that it applies only to representations that a debt collector knows to be false. CFPB emphasized every federal court of appeals to address this issue has held that Section 1692e does not include a scienter requirement.

Second, CFPB argued Congress’ selective inclusion of an express scienter requirement throughout the FDCPA shows that Congress did not intend for Section 1692e to implicitly include such a requirement. CFPB explained that Congress knew how to add a scienter requirement—and did so selectively throughout the FDCPA—but did not include such language in the Section 1692e provisions at issue.

Third, CFPB claimed the district court’s policy concern for including a scienter requirement for all Section 1692e claims is flawed. The district court reasoned that “Section 1692e was not intended to penalize debt collectors for failing to discover a debtor’s bankruptcy.” However, CFPB asserted that whether debt collectors may be held liable for unintentional violations of the FDCPA is for Congress, not the district court.

Additionally, CFPB argued the Bankruptcy Code does not bar Carasquillo’s section 1692e claims. CFPB emphasized Carrasquillo’s claims fall squarely within the terms of Section 1692e. According to CFPB, the fact that the automatic stay provision was the reason that CICA’s statements were false does not make them any less a violation of the FDCPA. Further, CFPB claimed that it is well established that it violates the FDCPA to make a false statement about a debt where some other law is what makes the statement false.

Bottom Line: CICA’s opposition was due on Jan. 26, 2024. However, CICA has filed for an extension to file the brief on Feb. 29, 2024.

Documents: Brief