The federal Fair Debt Collection Practices Act prohibits certain activities performed by “debt collectors” that are deemed harassing or abusive. Under federal nomenclature, a creditor trying to collect money from the party he loaned money to is not a “debt collector” for the purposes of the federal act, however. This is because the federal act was meant to restrict the activities of third-party debt collectors who buy debts from original creditors and then try to collect them.
The California Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act) takes it one step further: Even original creditors are covered by its restrictions, which terms are substantially similar to the restrictions contained in the federal act. Recent legal developments have removed a long-standing ambiguity to further broaden the coverage of the Rosenthal Act.
Davidson v. Seterus, Inc.
Davidson v. Seterus, Inc. was an appeal heard by the California Court of Appeal for which a judgment was issued on March 13, 2018. The issue in the case was whether a mortgage servicer constitutes a “debt collector” under the Rosenthal Act and could therefore be held accountable to the restrictions on the activities of debt collectors contained therein.
Ultimately, the California Court of Appeal ruled against the mortgage servicer defendants, holding it liable under the Rosenthal Act. This judgment is significant because, prior to this case, federal courts had disagreed as to whether mortgage servicers constituted “debt collectors” under the Rosenthal Act.
Since the Rosenthal Act is state law, the California Court of Appeal’s interpretation of the law prevails over the opinions of the federal courts. Although the court represented the Fourth Appellate District of California, its judgment is binding throughout California.
Rosenthal Restrictions on the Activities of Debt Collectors
Mortgage servicers are now required to refrain from the following activities (among others) that are prohibited under the Rosenthal Act:
Using profane language
Failing to disclose their caller identification
Misrepresenting their identity in a manner that costs you money
Calling you incessantly or letting the phone ring off the hook
Frequently visiting you in person
Using or threatening to use physical force
Threatening to assign the debt to a third party and asserting that you will lose your legal defenses that way
Accusing you of committing a crime by non-payment (unless it is true)
Defaming or threatening to defame you to third parties.
Threatening to have you arrested, seize your assets or garnish your wages (unless they can do so legally and actually intend to follow through on their threats)
The Sooner You Act, the Better
The mortgage and banking lawyers at CKB Vienna LLP, are committed to the aggressive and principled representation of our clients. If you are involved in a mortgage or banking dispute or if you would simply like to know what steps you should take to mitigate your legal risk, contact us immediately. The longer you wait, the more the problem will fester.
We can be reached at 909-980-1040 or through our online contact form, to schedule a consultation on your case where we can explore your options and answer your questions. We serve clients throughout Upland, Fontana, Ontario, Chino Hills, Claremont, Rancho Cucamonga, including Alta Loma and Etiwanda.