Posted By USFN,
Monday, April 12, 2021
Updated: Monday, April 12, 2021
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by Jeffrey R. Fox, Esq.
Rosenberg & Associates, LLC
USFN Member (DC, MD, VA)
A Hampton, Virginia law firm has found itself the target of a class action complaint for alleged violations of the Fair Debt Collection Practices Act (FDCPA). Senex Law, P.C. is being pursued by Virginia Legal Aid Societies (collectively VLAS), including the Legal Aid Society of Roanoke Valley, in a class action complaint for allegedly concealing their status as a debt collector and inflating their attorney fees.
The Plaintiffs’ complaint centers around demand letters generated by Senex. These letters, according to the complaint, are printed by Senex on the property owners’ letterhead and electronically signed by a representative of the owners. The letters mention that Senex has been retained and include a $30 additional charge for attorneys’ fees. The letters do not purport to have been sent by Senex, but by the property owner. Since the letters are sent by the property owners, who own the debt, the letters do not contain the disclosures required by the FDCPA in 15 U.S.C. §1692.
VLAS claims that this absence is unfair to their clients. First, by allegedly concealing their status as a debt collector, Senex deprives renters of the ability to challenge the validity of the debt before the court process begins. Indeed, VLAS’s complaint notes that Senex follows these demand letters with unlawful detainer actions in one to two weeks. VLAS also maintains that the letters overstate the amount of attorney involvement, emphasized by the inclusion of the $30 fee. VLAS alleges that Senex has averaged 650 evictions statewide during the pandemic. VLAS asserts that, with this number of eviction matters across the Commonwealth, Senex cannot engage in any meaningful attorney services.
Senex, along with the Virginia Apartment Managers Association by amicus brief, counter that these actions and procedures of Senex are in line with current law and beneficial to both their clients and consumers. Senex maintains that the letters in question come from their clients and that they are simply providing permissible clerical services to their clients. The mere fact that Senex places the letters in the mail does not mean that the letters are from Senex. Indeed, the renters benefit from this model as Senex is able to keep their costs and their clients’ costs down. If Senex is found to be a debt collector under the FDCPA, the increased costs would make it less likely that law firms would provide these services or property owners seek their services, thus robbing the landlords and the courts of experienced counsel to facilitate the flow of these cases.
The outcome of this case bears watching by everyone practicing in the area of creditors’ rights, not only those in Virginia and the 4th Circuit. Demand letters are the opening step in a process that can span months, years, even decades. An erroneous letter will greatly increase the likelihood that the practitioner and, more importantly, their client will become bogged down for longer than they would otherwise and could result in substantial legal fees. As the processes become more automated, everyone in this area needs to be aware of how to properly comply with the FDCPA to avoid these issues.
As this pandemic comes to an end and various moratoria are lifted, a corresponding uptick in activity should be anticipated. All involved in mortgage banking and similar areas should anticipate that this will be coupled with an increase in scrutiny by both local and national media and watchdog agencies. During the interval that the pandemic has created nationwide, one should take advantage of the time to review practices and procedures to ensure compliance with both legal and ethical standards. Take the time to consider outside resources that may be available, such as training from your local counsel, to review your FDCPA compliance and practices.
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April 2021 e-Update
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