Murphy, Sandra M., Esq.

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Center for Consumer Law and Education Events CLE EventsMay 22nd, 2:45 PMThe West Virginia Consumer Credit & ProtectionActSandra M. Murphy Esq.Bowles RiceFollow this and additional works at: https://researchrepository.wvu.edu/ccle-eventsPart of the Consumer Protection Law CommonsThis Event is brought to you for free and open access by the The Center for Consumer Law and Education at The Research Repository @ WVU. It hasbeen accepted for inclusion in Center for Consumer Law and Education Events by an authorized administrator of The Research Repository @ WVU.For more information, please contact ian.harmon@mail.wvu.edu.Recommended CitationMurphy, Sandra M. Esq., "The West Virginia Consumer Credit & Protection Act" (2019). Center for Consumer Law and EducationEvents. 11.https://researchrepository.wvu.edu/ccle-events/CLE/ConsumerLaw2020/11The West Virginia Consumer Credit & Protection ActSandra Murphy, EsquireBowles Rice45West Virginia Continuing Legal Education is sponsored by the West Virginia University College of Law.  WVCLE does not render any legal, accounting, or other professional services. Its programs and publications are designed solely to help attorneys maintain their professional competence. The attorney using WVCLE publications or orally conveyed information in dealing with specific legal matters should also research original sources of authority. In no event will the authors or the publisher be liable for any direct, indirect or consequential damages resulting from the use of this material. Copyright © 2019West Virginia Continuing Legal Education All Rights Reserved 46The West Virginia Consumer Credit & Protection ActOverview of Debt Collection Provisions and Recommended Best PracticesW. Va. Code §§ 46A-2-122, et seq.May, 2019 | www.bowlesrice.comImportant Definitions• DEBT COLLECTOR – “Any person or organization engaging directly orindirectly in debt collection.”W. Va. Code § 46A-2-122(d).• DEBT COLLECTION – “Any action, conduct or practice of soliciting claimsfor collection or in the collection of claims owed or due or alleged to beowed or due by a consumer.” W. Va. Code § 46A-2-122(c).47Important Definitions• CONSUMER – “Any natural person obligated or allegedly obligated topay any debt.” W. Va. Code § 46A-2-122(a). Broad definition• CLAIM – “Any obligation or alleged obligation of a consumer to paymoney arising out of a transaction in which the money, property,insurance or service which is the subject of the transaction is primarilyfor personal, family or household purposes.” W. Va. Code § 46A-2-122(b) (emphasis added). More limitedThreats or CoercionSection 46A-2-124 of the Act generally prohibits engaging in debt collection “by means of any threat, coercion or attempt to coerce” a consumer.– Cannot use violence or threat of violence– No false accusations– Cannot threaten arrest or garnishment of wages48Oppression and AbuseSection 46A-2-125 of the Act generally prohibits collector from “unreasonably oppress[ing] or abus[ing] any person” in connection with collections. – No profanity– Must disclose accurate identity– Cannot act with intent to annoy/ harassNOTE:  This section prohibits the unreasonable oppression or abuse of “any person,” and therefore is not limited to the consumer.  Oppression and AbuseThe Act specifically prohibits calling any person more than thirty (30) times per week or engaging any person in telephone conversation more than ten (10) times per week, or at unusual times or at times known to beinconvenient, with intent to annoy, abuse, oppress or threaten any personat the called number.NOTE:  If debt collector knows debtor works the night shift, do not call during the day.49Oppression and AbuseIn 2015, the West Virginia Legislature amended § 46A-2-125 to clarify that oppression and abuse allegations against a debt collector will be evaluated objectively, “from the standpoint of a reasonable person.”  See § 46A-2-125(d). Under the amendment, debt collectors “shall assume that the convenient time for communicating with a consumer” is after 8:00 a.m. and before 9:00 p.m.  Id.Unreasonable PublicationSection 46A-2-126 of the Act prohibits debt collector from “unreasonably publiciz[ing] information relating to the alleged indebtedness or consumer.”– Do not call debtor’s employer– Do not disclose indebtedness to debtor’s family members– No “Deadbeat Lists”50Fraudulent, Deceptive or Misleading RepresentationSection 46A-2-127 of the Act prohibits debt collector from using “fraudulent, deceptive or misleading representation[s] or means to collect or attempt to collect claims or to obtain information concerning consumers.” – No false identities in collections– No exaggerating the amount of the claimUnfair or Unconscionable MeansSection 46A-2-128 is an important provision of the Act.  It generally prohibits debt collector from using “unfair or unconscionable means to collect or attempt to collect any claim.”  Its subsections go on to list specific examples of prohibited conduct. 51Unfair or Unconscionable MeansThe subsection we have encountered repeatedly in litigation prohibits:• Any communication with a consumer made more than three businessdays after the debt collector receives written notice from the consumeror his or her attorney that the consumer is represented by an attorneyspecifically with regard to the subject debt. W. Va. Code § 46A-2-128(e)(the “Representation Provision”)Unfair or Unconscionable MeansThe Representation Provision does contain a defense.  Specifically, there is no liability under the Provision where the debtor’s attorney “fails to answer correspondence, return phone calls or discuss the obligation in question.”  W. Va. Code § 46A-2-128(e).52Unfair or Unconscionable MeansIn light of the Representation Provision, the debt collector should stop collections activities if it receives written notice that a consumer is represented by an attorney. Deceptive or Oppressive Telephone CallsSection 46A-2-129a of the Act is relatively straightforward.  It prohibits debt collector from “plac[ing] a telephone call or otherwise communicat[ing] by telephone with a consumer or third party, at any place, including a place of employment, falsely stating that the call is ‘urgent’ or an ‘emergency.’” 53Damages, Civil Penalties and Litigation CostsViolations of the Act provide the consumer with “a cause of action to recover actual damages.” The consumer has also “a right in an action to recover…a penalty of $1,000 per violation,” which “shall not exceed the greater of $175,000 or the total alleged outstanding indebtedness.”  W. Va. Code § 46A-5-101(1). Damages, Civil Penalties and Litigation CostsIn addition, the Act also affords consumers:• A debt cancellation remedy – Requires willfulnessW. Va. Code § 46A-5-105• A litigation costs remedy – In court’s discretionW. Va. Code § 46A-5-10454Affirmative DefensesThere are three affirmative defenses in the Act that a debt collector may invoke:• The “bona fide error” defense (but requires procedures in place to avoiderror)• An attorney fees defense• Creditor or debt collector remedy defense (i.e., recognizing error andfixing it on notice before debtor complains)Right to CureIn 2017, the West Virginia Legislature added an important provision to the Act providing debt collectors with the right to cure alleged violations.  W. Va. Code § 46A-5-108– Consumer must inform of alleged violations and give creditor opportunity tocorrect before escalating litigation55Best PracticesFollow these recommendations to help steer clear of liability.• Always disclose to the consumer the legally correct name of the entityattempting to collect the claim.• State the amount of the debt accurately in communicating with theconsumer.Best Practices• Communicate only with the consumer about their account. Nobad language, threats, or accusations toward the consumer, theiremployer, or their friends and family.• If the consumer reveals that they have a lawyer, ask the consumerto provide the lawyer’s name, address and telephone number inwriting.  In the meantime, cease collections activitiesimmediately.56Best Practices• If the consumer reveals they are filing for bankruptcy, ceasecollections activities immediately.• Limit the number and frequency of collections telephonecalls and letters to West Virginia consumers.• Perform collections calls at reasonable hours, i.e., between8 a.m. and 5 p.m. EST, even though the Act condones alarger calling window.Best Practices• Regarding collections calls, be aware and thoughtful of shift workersand others with non-traditional work schedules.• Continually train and test employees regarding compliance with theWest Virginia Act.• Keep accurate records of collections activities, including collections calllogs, notes, and recordings.  Such records are extremely useful indefending unlawful debt collection actions.57Best Practices• Treat bankruptcy claims thoughtfully and ensure accounts are codedcorrectly.  No collections activities may occur where a debtor hascommenced bankruptcy proceedings.• Add consent to forms allowing for calls to consumer cell phonenumbers.• Be thoughtful of out-of-state consumers as West Virginia laws may notbe applicable.Best Practices• Identify consumers who actively serve in the military; different rulesmay apply.• Likewise, where a consumer has died, special rules apply for making aclaim of the consumer’s estate.• Be mindful of self-collection rules for magistrate court.58Best Practices• Review and revise collections policies and procedures with counsel.Review and revise the policies and procedures annually to keep upwith changing laws and to determine whether the policies andprocedures have improved West Virginia operations and limited WestVirginia lawsuits.Thank you!Sandra M. Murphysmurphy@bowlesrice.com(304) 347-1131www.bowlesrice.com@bowlesbanklaw59DisclaimerThese materials are presented with the understanding that the information provided is not legal advice.Due to the rapidly changing nature of the law, information contained in this presentation may becomeoutdated or obsolete.Anyone using information contained in this presentation should always research original sources ofauthority and update this information to ensure accuracy when dealing with a specific matter. Noperson should act or rely upon the information contained in this presentation without seeking theadvice of an attorney.www.bowlesrice.com60

The West Virginia Consumer Credit & Protection Act

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The West Virginia Consumer Credit & Protection Act

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