## Facts

- Homeowners defaulted on mortgage loans that were owned and serviced by The Money Store, which had acquired mortgages initially payable to other lenders.
- The Money Store hired a law firm, Moss Codilis, to send borrowers default/breach letters.
- The letters used Moss Codilis letterhead and signatures and suggested attorney involvement in collection activity.
- Plaintiffs alleged Moss Codilis’s role was largely automated and ministerial, with little or no meaningful attorney review, while The Money Store effectively controlled collection.
- Plaintiffs filed a putative class action asserting (1) FDCPA violations under the false-name exception and (2) TILA violations tied to post-default fees and credit-balance practices.
- The district court dismissed the FDCPA claims against The Money Store (finding it was not a “debt collector” and did not use a name other than its own) and later granted summary judgment to The Money Store on the TILA claims (finding it was not a TILA “creditor” because the loans were initially payable to others).

## Issues

1. Whether a creditor/servicer can be treated as a “debt collector” under the FDCPA’s false-name exception when collection letters on law-firm letterhead allegedly create a misleading impression of third-party collection.
2. Whether a mortgage purchaser/servicer qualifies as a TILA “creditor” when the loan instruments were initially payable to a different lender.

## Decision

- The Second Circuit vacated the dismissal of the FDCPA claims against The Money Store and remanded for further proceedings.
- The court held the record permitted a factfinder to conclude The Money Store used Moss Codilis’s name in a way indicating a third party was collecting debts that The Money Store was, in substance, collecting itself.
- The Second Circuit affirmed summary judgment for The Money Store on the TILA claims.
- The court held The Money Store was not a TILA “creditor” because it was not the entity to whom the debt was initially payable on the face of the loan documents.

## Legal Principles

- FDCPA false-name exception: A creditor may fall within the FDCPA’s definition of “debt collector” if, in collecting its own debts, it uses another name that would indicate to the least sophisticated consumer that a third party is collecting.
- In applying the false-name exception, courts assess both (1) how the communication would be understood by consumers and (2) whether the purported third party’s involvement is substantial or merely nominal.
- TILA “creditor” status requires that the defendant be the person to whom the debt is initially payable on the face of the evidence of indebtedness; later purchase or servicing of the loan, without more, does not satisfy the definition.

## Conclusion

The Second Circuit reinstated FDCPA claims premised on alleged law-firm name lending that could mislead borrowers into believing an independent collector was involved, but it rejected TILA liability because the mortgage purchaser/servicer was not the party to whom the loans were initially payable.


Vincent v. The Money Store, 736 F.3d 88 (2d Cir. 2013)