Lack Of Standing Sinks Effort To Squeeze Cash Out Of Consumer; 'Show Me State' High Court: Collector Failed To Show Proper Evidence Of Debt Assignment

Lexology reports:

• A recent Missouri decision in a credit card collection case illustrates the kind of documentation attacks that are increasingly being lodged against the non-mortgage consumer lending industry.



• In its January 17, 2012, opinion in Cach, LLC v. Askew, the Missouri Supreme Court ruled that a debt collector was not entitled to judgment in its favor because the collector had not properly established that it had been assigned the debt in question. Following the card issuer’s acquisition by another bank, the consumer’s credit card account was assigned to a purchaser that subsequently assigned the account to the debt collector.



• At trial, the collector submitted a document purporting to be a bill of sale transferring the account from the acquirer bank to the purchaser.



• The Missouri Supreme Court held that the trial court erred by admitting the bill of sale into evidence based on testimony of the debt collector’s records custodian. More specifically, the court found that the custodian was not a “qualified witness” to lay the foundation for the document to qualify for the business records exception to the hearsay rule.



• According to the court, the custodian failed to show that she had any personal knowledge of how or when the bill of sale was prepared. Without the bill of sale, the debt collector had no competent evidence of the first assignment and therefore failed to show it had standing to bring the collection action, the court found.

For the story, see Missouri High Court scuttles credit card collection action due to problem documentation (may require subscription; if no subscription, TRY HERE - then click appropriate link for the story).

For the ruling, see Cach, LLC v. Askew, No. SC 91780 (Mo. January 17, 2012) (en banc).