In the debt collections industry, sharing your corporate name isn’t just a good idea.
It is the law.
Debt collectors, when they are trying to collect a debt, must disclose their actual company name. This requirement is codified in 15 USC §1692(e)14, which states:
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.
Recently, the Third Circuit Court of Appeals reversed the dismissal of a case on these grounds. The case is Levins v. Healthcare Revenue Recovery Group, LLC.
The case was a putative class action filed in New Jersey. The Defendants, HRRC, allegedly called to try and collect debts and used the name, “ARS, Account Resolution Services.”
In this case, the Levinses claimed the defendants left several voice messages on their answering machine using the name ARS, instead of their true name. The trial court dismissed the case for failing to state a claim under which relief may be granted.
The Levinses appealed to the Third Circuit and the Third Circuit reversed the trial court and sent the case back to the trial court.
The lesson to be learned from this for people in the debt collection business is know the rules. If HRRG loses, it is not just the verdict for the plaintiffs that will cost them. Under the FDCPA, a prevailing plaintiff can be awarded attorneys fees. In addition, the defense has to bear the burden of their attorney’s fees, regardless of the outcome.
As one attorney I knew was fond of saying, “At $500 an hour, how much justice can you afford?” For a big outfit like HRRG, that number is much higher. For a small shop or a startup, that number can be hit very quickly.
Compliance is not just a good idea. It can save you a lot of money and potentially save your business.
At Capital Compliance Group, we help keep companies in the ARM space compliant. Call us today and see what we can do for you.