Question: The Fair Debt Collection Practices Act FDCPA prohibits a creditor
The Fair Debt Collection Practices Act (FDCPA) prohibits a creditor from giving a debtor the false impression that a third party is involved in efforts to collect the debt owed to the creditor. North Shore Agency, Inc., is a debt collection firm. For many years, North Shore and Book-of-the-Month Club (BOMC) had an arrangement under which BOMC would send North Shore the names and addresses of any BOMC customers from whom BOMC had been unable to collect payment. North Shore would then send these customers a letter demanding payment of the sums BOMC had reported to North Shore as due. The demand letters instructed the customers to pay BOMC directly and stated that further collection efforts would be undertaken if payment was not made. If the demand letter to a given customer failed to elicit payment, BOMC would so notify North Shore, which would send a second demand letter. The process could be repeated a third time or even more times until either the customer paid BOMC or North Shore concluded that payment would not be forthcoming unless further collection efforts were made. BOMC paid North Shore a flat fee for every demand letter North Shore sent out. If a series of demand letters did not yield payment, it was up to North Shore whether to drop the matter-something it might often be likely to do because of the relatively small dollar amounts involved-or take other collection action. When North Shore took other collection action that resulted in payment, North Shore would keep 35 percent of the amount collected and remit the remainder to BOMC. Patricia White, a BOMC customer who had not made payment of $18.45, received a demand letter from North Shore. Alleging that BOMC and North Shore had violated the FDCPA, White brought a class action suit on behalf of herself and other similarly situated persons. In view of the frequent tendency of North Shore not to take legal action beyond sending demand letters, did BOMC and North Shore violate the FDCPA prohibition on creating a false impression that a third party is involved in efforts to collect a debt?
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