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PETERS v. AT & T CORP.

March 30, 1999

ANDREW PETERS, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF
v.
AT & T CORPORATION, GC SERVICES LIMITED PARTNERSHIP, DLS ENTERPRISES, INC., AND GC FINANCIAL CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Bucklo, District Judge.

MEMORANDUM OPINION AND ORDER

Andrew Peters brought this class action against AT & T Corporation ["AT & T"], GC Services Limited Partnership ["GC Services"], DLS Enterprises, Inc. ["DLS"], and GC Financial Corporation ["GC Financial"], for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. All of the parties move for summary judgment. For the following reasons, all of the motions are denied.

Background

This lawsuit arises from a letter Mr. Peters received from GC Services regarding his overdue balance with AT & T. The letter was written on GC Services letterhead, and reads as follows:

DEAR MR ANDREW PETERS:

WE HAVE BEEN INFORMED THAT YOU PRESENTLY HAVE A LONG

OVERDUE BALANCE (NOTED ABOVE) FOR AT & T LONG DISTANCE TELEPHONE SERVICE. THEY HAVE ASKED U.S. TO HELP RESOLVE THIS MATTER.

YOU HAVE BEEN A VALUED CUSTOMER TO AT & T, AND THEY ARE ANXIOUS TO HAVE YOU SETTLE YOUR ACCOUNT WITHOUT FURTHER COLLECTION ACTIVITY. PLEASE MAIL YOUR PAYMENT PROMPTLY ALONG WITH THE BOTTOM PORTION OF THIS LETTER — TO AT & T IN THE ENCLOSED ENVELOPE.

IF YOU FAIL TO SETTLE THIS ACCOUNT, FURTHER COLLECTION ACTIVITY WILL BE TAKEN BY U.S. OR ANOTHER AGENCY. THANK YOU FOR YOUR PROMPT ATTENTION TO THIS MATTER. IF YOU HAVE ANY QUESTIONS CONCERNING THIS ACCOUNT, PLEASE CONTACT YOUR AT & T BUSINESS OFFICE AT 1-800-532-7486.

The letter directs Mr. Peters to make his check or money order payable to AT & T. The address, but not the phone number, for GC Services is included in the letterhead. The class of plaintiffs has received similar letters.

AT & T's strategy for collecting past due debts can be summed up as follows. If debtors do not pay money owed to AT & T& after it sends its own delinquency notices, AT & T hires a professional debt collector, such as GC Services. AT & T electronically transmits to GC Services the amount owed by the debtor as reflected in AT & T's records. AT & T then pays GC Services a $0.54 per account fee for GC Services' initial collection efforts ("Stage I"), which include sending form letters such as the one received by Mr. Peters. If debtors do not respond, AT & T hires either GC Services or another debt collector and pays that debt collector a contingent fee to perform further collection activities ("Stage II").

The plaintiffs allege that Stage I of AT & T's collection scheme is misleading and subjects AT & T, GC Services, and the general partners of GC Services to liability as debt collectors under the FDCPA. All of the parties have filed motions for summary judgment.

AT & T and GC Services

The FDCPA holds debt collectors liable for deceptive practices. Although a creditor is generally exempt from liability under the FDCPA when it collects its own debts, a creditor becomes a debt collector within the meaning of the statute when, "in the process of collecting his own debts, [he] uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts." 15 U.S.C. § 1692a(6). The plaintiffs argue that AT & T merely used GC Services' name to collect its own debts, and is therefore a debt collector under the FDCPA. The plaintiffs further argue that AT & T's efforts to suggest that GC Services is involved in collecting debts is misleading in violation of 15 U.S.C. § 1692 (e).*fn1 In its cross-motion for summary judgment, AT & T argues that GC Services was actually hired to help AT & T collect debts, and that GC Services was involved in debt collection. According to AT & T, AT & T is ...


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