Thinking Out Your Wheelhouse: How Your Practice May Implicate Consumer Protection Laws

As a practicing attorney, most of us operate solely within our niche. We become masters of our wheelhouse and we rarely venture outside of it, except for when the occasion family member is seeking free legal advice. We come to thrive within the one or two areas of law that we practice on a regular basis.

Although comfortable, this type of mindset can prevent you from seeing additional relief for your client and prevent you from capitalizing on potential passive income for your firm. Specifically, causes of action under consumer protection laws are omnipresent and often overlap with several other practices of law. For example, these issues appear in bankruptcy, personal injury, and criminal law.

Bankruptcy

After a consumer debt is discharged in bankruptcy, there are many ways that your consumer client’s rights can be violated. Furnishers of information or the credit reporting agencies themselves are usually the culprits.

Furnishers are the bottom-level suppliers of consumer information, i.e. banks, creditors, retailers, etc. These furnishers provide the credit reporting agencies with the consumer’s information. The furnishers and/or the credit reporting agencies can make errors, creating multiple potential causes of action.

Your client might have a creditor continue trying to collect on a debt that was discharged through bankruptcy, or worse the original creditor sold the debt to a debt collector to collect the bad debt. Either way, this may be a violation of state and/or federal debt collection laws. California law applies to both third-party debt collectors and original creditors, while the federal Fair Debt Collection Practices Act (FDCPA) applies only to third-party debt collectors.

Another potential violation is the inaccurate reporting of the debt on your client’s credit report. After 30 days from the date of the discharge order, your client’s credit reports should reflect the discharged debts as being “discharged in bankruptcy” or “included in bankruptcy.” If your client’s credit report states that the account is “Open”, “Collections”, or “Charged off”, then this will be inaccurate and a violation of the Fair Credit Reporting Act (“FCRA”). Another way the report can be inaccurate is if your client’s credit report reflects that there is an amount due larger than $0.

Therefore, referring bankruptcy clients to a consumer protection attorney can ensure that the client’s debts were properly discharged in bankruptcy, preventing potential problems for the client down the line.

Personal Injury

Personal injury is a broad field that can encompass a lot of different fact patterns. However, one common denominator in most of these cases is a medical bill. The higher the bill, the more likely your client is unable to pay the bill until a settlement is reached. Depending on how the debt collectors handle this, there could be statutory damages that your client is entitled to.

For example, a creditor (i.e. hospital) attempting to collect on a resolved lien may violate California law for trying to collect on a debt that is not valid. The FDCPA does not apply to original creditors, so there would be a federal violation only if a third-party debt collector was involved. There could also be a federal violation if the creditor/debt collector knew that your client was already a represented party.

Also watch out for if your client’s creditors are inaccurately reporting liens to credit reporting agencies. Approximately 45 days after the resolution of all liens, your client should review their credit report to make sure that their credit is not being unlawfully dragged down by resolved liens. This can be done by utilizing the annual free credit report obtainable through the Federal Trade Commission’s website.

Knowingly reporting inaccurate information to credit reporting agencies violates California law. In order to have standing under the FCRA, the consumer would need to dispute the inaccuracy and allow 30 days for the error to be investigated. The dispute should be as specific as possible and include any relevant documentation. Make sure to send these disputes via certified mail.

Finally, a cause of action could arise under the Telephone Consumer Protection Act if collection attempts are made through automated telephone dialing system or prerecorded voice without your client’s consent.

Criminal Law

After being convicted of a crime, many individuals will later seek to have their mistake expunged. The point of expungement is to allow these individuals to turn over a new leaf and grow from their previous mistakes. However, the court’s granting of the expungement and subsequent removal from the public records does not mean that it has been removed from privately held databases that are used by commercial background checkers.

Private background checking companies will download court documents in mass and then store them in their own systems. However, these companies rarely update their privately stored records. So when this individual applies for a job or a rental property, these private background checkers will include the expunged crimes without notating that the conviction has been expunged. This factual scenario creates liability under not only California law and the FCRA, but also under the Investigative Consumer Reporting Agency Act.

A violation can also occur if a record of arrest or criminal complaint that was filed against an individual is reported on their consumer report after a certain amount of time has elapsed. Under the FCRA, these kinds of records cannot be reported more than seven years starting from the date of entry of the charges, not the date of dismissal.

Conclusion

This article is far from an exhaustive list of all the different ways in which consumer protection laws apply to other areas of law. Even within the specific practice areas that were addressed in this article, there are many other ways that a consumer protection violation might arise. However, being able to identify these basic types of issues is key so that you can offer thorough representation and potentially refer your client to a consumer protection attorney.