"Technology May Assist Borrowers In Holding Banks Liable for Excessive Phone Calls"

Banking Alert

West Virginia banks have recently become the targets of lawsuits filed by customers in default on their loans for alleged violations of consumer laws based on repeated telephone calls by the bank to the borrower.  Particularly troubling are recent claims involving a lender’s unanswered phone calls to a delinquent borrower.  In these cases,  plaintiffs’ attorneys provide their clients with a “caller I.D.” device that tracks the number of calls and the time of day that the calls are made.  Courts in West Virginia have held that unanswered, auto-dialed calls to the residence of a borrower are “communications” within the meaning of the West Virginia Consumer Credit Protection Act (“WVCCPA”), exposing lenders to potentially significant liability.

These cases can have serious consequences for banks.  If a borrower is able to prove that the bank’s activities in collecting on the debt have violated the WVCCPA, then the consumer may be entitled to statutory damages, attorneys fees and cancellation of the debt.  Violations of the WVCCPA carry a maximum fine of $1000 per violation (which may be adjusted by the consumer price index), and the method by which a court calculates damages arising from multiple violations can subject a bank to substantial monetary liability.  The recovery can be significant if the borrower can show the bank made a number of unanswered, auto-dialed calls.  One case filed in West Virginia involved in excess of 200 hundred phone calls to the borrowers residence.  

WVCCPA Provisions

At issue are two provisions of the WVCCPA, one that prohibits communication with a borrower who is represented by an attorney and another that prohibits abusive conduct including repeated phone calls. 

  First, W.Va. Code §46A-2-128(e) provides that the following conduct constitutes unfair or unconscionable means to collect or attempt to collect any claim:

    Any communication with a consumer, whenever it appears that the consumer is represented by an attorney and the attorney's name and address are known, or could be easily ascertained, unless the attorney fails to answer correspondence, return phone calls or discuss the obligation in question or unless the attorney consents to direct communication.


Second, W.Va. Code §46A-2-125 provides that:

    No debt collector shall unreasonably oppress or abuse any person in connection with the collection of or attempt to collect any claim alleged to be due and owing by that person or another.  Without limiting the general application of the foregoing, the following conduct is deemed to violate this section:
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    (d)    Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously, or at unusual times or at times known to be inconvenient, with intent to annoy, abuse, oppress or threaten any person at the called number.

Plaintiff’s attorneys invoke these provisions to allege violations of the WVCCPA when a lender makes several calls to a customer to collect on a debt or when the lender makes repeated automated unanswered calls to a borrower.  Customers are being advised by their legal counsel to use caller I.D. and other technology to track the number of calls and the time of each call.  Some plaintiffs’ attorneys provide their clients with a device that tracks the number of calls and the time of day that the calls are made.  In addition, a bank customer can obtain a copy of his phone record to substantiate the calls. 

The damages that a customer may be awarded are significant.  As explained below, it is possible for a consumer to be awarded more than $4,000 (as adjusted by the consumer price index) for each telephone call.

Damages for Violation of WVCCPA

The WVCCPA allows for recovery of multiple civil penalties in a single action.  The penalties for violation of the WVCCPA are severe and include payment of statutory damages, attorneys fees, expenses and costs of litigation, and cancellation of the debt. 

W.Va. Code § 46A-5-101(1) allows for actual damages not less than $100 and not more than $1000 for each violation of the WVCCPA.  Each violation of the WVCCPA creates a single cause of action to recover a single penalty.  These penalties are aggregated together when there are multiple violations.  In addition, the WVCCPA allows a court to adjust the damages to account for inflation from the time that the WVCCPA became operative in 1974 to the time of the award of damages in an amount equal to the consumer price index.  The current consumer price index is multiplied by the damage amount under § 46A-1-101(1) to determine the current damages amount.  Applying this provision in a case decided in 2009, the court multiplied the damages by a factor of four (the increase in the CPI) to increase the borrower’s damages from $404.13 to $4,081.30 per violation.

The WVCCPA also permits a court to award all or a portion of the costs of litigation, including reasonable attorney fees, court costs and fees, to the consumer in any claim brought under the WVCCPA applying to illegal, fraudulent or unconscionable conduct or any prohibited debt collection practice.  However, if the court determines that a claim is brought in bad faith and for the purposes of harassment, the court may award to the defendant reasonable attorney fees.  See, W.Va. Code § 46A-5-104 (2010).

The WVCCPA also allows the court to cancel the debt if the debt is not secured by a security interest where the creditor has willfully violated the provisions of the WVCCPA applying to illegal, fraudulent or unconscionable conduct or any prohibited debt collection practice.  See, W.Va. Code § 46A-5-105.  This remedy is in addition to any actual damages that the court may award. 

West Virginia banks should examine their current debt collection practices in light of these recent technological developments.  Banks should be particularly careful not to create a pattern of behavior that may be construed as repetitious, continuous, or abusive.  Liability for violations of the WVCCPA can be substantial, and accordingly, banks should take steps to ensure their debt collection practices do not violate the WVCCPA.