A summary of this week’s top cases. Editor’s note: This content is available for members only.
7/31/2020 12:30
Each week, ACA International’s Compliance Analysts Laura Dadd, Betsy Clarke and Andrew Pavlik compile relevant case summaries for ACA members. Here is a recap of the cases this week. Members may also submit cases for consideration to our compliance team at [email protected].
Court Denies Bona Fide Error Defense for Re-Reported Debts
The consumer accrued several medical debts, resulting in the debt collector filed a lawsuit. The parties reached a settlement agreement and the debt collector admits that the consumer no longer owes the debts. Over a year later, the consumer reviewed her credit report and found that at least two of the settled debts were being reported as delinquent. The debt collector reported the debts numerous times over the course of nine months.
The consumer sent a letter to the debt collector stating that the debts had been resolved and requested that the debts be removed from her credit report immediately. The consumer attached a copy of the settlement agreement as proof that the debts were settled.
Court Finds Thirty Minutes Between Repossession Attempts not Enough Time for Consumer to Calm Down
A federal district court found that because two repossession attempts separated by at most 30 minutes were really one repossession attempt, it did not need to consider how long after a first repossession attempt a creditor must wait before commencing a second repossession attempt to sufficiently quell emotions and reduce the threat of violence.
The consumer sued its creditor, debt collector, and repossession agent for violations of the FDCPA and the Wisconsin Consumer Act (“WCA”), Wis. Stat. 421, based on the repossession of the consumers’ vehicle. The court considered the issue of whether the debt collector and repossession agent breached the peace under Wisconsin law while repossessing the consumers’ vehicle, thereby violating the FDCPA and WCA, when the first consumer unequivocally objected to the repossession, and the repossession agent returned after 30 minutes and the second consumer allowed the repossession to take place. After the court granted the consumers’ motion for summary judgment, finding the creditor, debt collector, and repossession agent were liable for damages under the FDCPA and the WCA, the debt collector and repossession agent requested the court to certify the case for interlocutory appeal to the 7th Circuit to determine whether, under Wisconsin law, a creditor has the right to undertake nonjudicial recovery of collateral after a debtor’s objection or whether a creditor must pursue judicial remedies.
Seventh Circuit finds Reporting Separate Transactions to a Single Creditor as Multiple Tradelines is Not Unfair Under the FDCPA
The consumers incurred a series of medical debts that they did not pay. The debts were reported separately on the consumers’ credit report by the debt collector. The consumers claimed that reporting the debts in such a manner was unfair and prohibited by § 1692f of the FDCPA. The district court dismissed the consumers’ theory as well as their case. The consumers appealed the court’s decision.
Originally, the consumers claimed that the way the debts were reported had falsely represented the character of the debts and that it was unfair and unconscionable under the FDCPA. However, while the consumers’ case was pending, the U.S. Court of Appeals for the 7th Circuit ruled in Rhone v. Medical Business Bureau LLC, that, “that reporting debts separately, rather than aggregated together, does not misrepresent the “character” of a debt.” After this ruling, the consumers amended their complaint and removed the false representation claim.
Court Finds that Debt Collector Cannot Enforce Arbitration Agreement between Consumer and Creditor
In this case, a consumer incurred an alleged debt with a creditor for damage to a rental car and refused to pay the bill. The debt was assigned to a debt collector for collections. The consumer filed a class action claim against the debt collector for violating Massachusetts state law against frequent debt collection calls. The debt collector attempted to compel arbitration with the consumer because the consumer and the creditor entered into an arbitration agreement at the time of the rental.
Visit the Industry Advancement Fund webpage for more case summaries and news. ACA’s Daily Decision is powered by ACA’s Litigation Advocacy and Compliance Teams.
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