Fed. Judge 'Green-Lights' Consumer Suit Attacking Bill Collector's Crappy Paperwork In Obtaining State Court Judgment In Credit Card Collection Action

Lexology reports:

• A debtor’s assault on the quality of documentation used by a debt collector to obtain a state court judgment against him in a credit card collection action was held by a Tennessee federal court to be sufficient to state a claim that the debt collector, by filing the state court action, had violated the Fair Debt Collection Practices Act.



• The January 25 decision in Simmons v. Portfolio Recovery Associates, LLC provides yet another example of how collection-related documentation used by the non-mortgage consumer lending industry is increasingly coming under fire. While the case involved FDCPA claims against a debt collector, its analysis could be followed by courts considering claims made under state debt collection laws that mirror the FDCPA prohibitions against creditors collecting their own debts.



• The debtor alleged the debt collector had falsely represented the character, amount, or legal status of the debt in violation of the FDCPA in two ways: (1) as a result of its intentional business decision not to obtain a copy of the written contract or other documentation evidencing the debt prior to filing the state court action, and (2) by submitting an affidavit in support of the action executed by an individual who had no personal knowledge of the statements made in the affidavit, did not review any records of the card issuer, and did not make any other efforts to determine if the debtor actually owed the amounts claimed.

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• [U.S. District] Judge [Thomas A.] Varlan noted that, unlike the claims in prior cases, the complaint in Simmons included allegations that the debt collector made false representations or used deceptive means to collect the debt. Most significantly, even though the judge acknowledged that the debtor had “not pointed to any specific statements in the affidavit about [his] account or the debt that [he] allege[d] to be factually false,” the judge nevertheless found the debtor’s allegations of falsity and a pattern and practice sufficient to survive a motion to dismiss.



• In light of the criticism that has been directed at mortgage foreclosure documentation, it is not surprising there is growing scrutiny by governmental agencies and consumer groups of collection-related documentation used in non-mortgage lending.

For more, see Tennessee Federal Court allows FDCPA claims based on documentation challenge (may require subscription; if no subscription, TRY HERE; or GO HERE - then click the appropriate link).

For the ruling, see Simmons v. Portfolio Recovery Associates, LLC, No. 3:11-CV-280 (E.D. Tenn., Knoxville Div. January 25, 2012).