FDCPA Rulings
In issue 97:07:01 we discussed some of the recent litigation regarding the FDCPA and the collection of NSF checks. Basically, all the cases involve people who were suing companies who have not followed the guidelines of the Fair Debt Collection Practices Act (FDCPA) in their collection efforts The dispute that is basic to all litigation is, "Is a Check a Debt?" If it is, then the FDCPA applies. If not, it doesn't.
In 97:07:01 it was learned that the two main decisions were Zimmerman v HBO Affiliate Group and Bass v Stolper, Koritzinsky, et al. Zimmerman found that a check does not constitute a debt and is therefore not governed by the FDCPA. The Bass decision stated that for the FDCPA to be in effect, there only need be a transaction creating an obligation to pay. If there is such a transaction, the check is in fact a debt and is subject to the FDCPA.
At the time of printing 97:07:01 the trend was toward the belief that a check is not a debt. We studied eight cases from May of 1996 to March of 1997. Two cases found that a check is a debt and subject to the FDCPA and six found that a check is not a debt.
But now the tide is turning. In February of 1997, a case was argued involving a check at a casino. In Ryan v Wexler it was originally decided in 1995 (based on Zimmerman) that a check is not governed by FDCPA. But, after Bass was decided in early 1997, the case was reversed in May of this year.
Another reversal involves Charles v CheckRite, Ltd., a class action suit and one of the cases we told you about in 97:07:01 which found that a check is not a debt and therefore is not governed by FDCPA. But, in June of this year, that decision was reversed too.
Yet another reversal due to Bass was Newman v Boehm, Pearlstein & Bright Limited. It was originally found in 1996 that a check is not a debt and therefore the case was thrown out, but in July of this year, the decision was reversed.
A big problem may be the precedent decision for a check not falling under the FDCPA: Zimmerman v HBO. In that case, the plaintiff pirated television signals so, there really wasn't a transaction. Therefore, the FDCPA didn't apply because there wasn't a contractual agreement to pay. This seems to have clouded the issues in that case and made it difficult to use as a precedent for others.
