Wells Fargo Bank’s use of the name America’s Servicing Company when it was trying to collect an overdue mortgage loan could subject the bank to liability under the Fair Debt Collection Practices Act. According to a federal district court judge, it was irrelevant that the bank did not meet the ordinary criteria for being a debt collector if it used a name other than its own while attempting to collect a debt that already was in default when it was obtained by the bank (Pimental v. Wells Fargo Bank, N.A., Jan. 6, 2016, Smith, W.).
Under the Fair Debt Collection Practices Act, a person ordinarily is considered to be a debt collector if it uses interstate commerce or the mail in a business that has debt collection as its principal activity, or if it regularly engages in the collection of debts owed to another person. A creditor like Wells Fargo would not meet either of those criteria.
Effect of exception. However, there is an exception to these criteria. A creditor that uses a name other than its own when collecting its own debts, in a way that would lead a consumer to believe he was dealing with a third-party debt collector, is considered to be a debt collector (15 U.S.C. §1692a(6)). Because it used the name America’s Servicing Company, Wells Fargo might fit into that exception, the judge said.
The exception made it irrelevant that Wells Fargo’s principal business was not debt collection, the judge said, because that criterion did not apply if a creditor used a different name. It also did not matter that the complaining consumer might not personally have been confused about who was collecting the debt, the judge added, as long as the use of America’s Servicing Company could confuse a hypothetical unsophisticated consumer.
Other decisions irrelevant. The judge also was unimpressed with Wells Fargo’s claim that other courts have “uniformly” determined that Wells Fargo was not to be treated as a debt collector. For one thing, the opinions the bank cited dealt with situations in which the bank had acquired the mortgage before it went into default. Also, the claim that a consumer could have been deceived apparently had not been raised in the other suits.
The case is No. 14-494 S.
Attorneys: John T. Longo (Citadel Consumer Litigation, PC) for Brenda Pimental. Scott C. Owens (Harmon Law Offices, PC) for Wells Fargo Bank N.A.
Companies: America’s Servicing Company; Wells Fargo Bank, N.A.
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