On February 24, Judge Dale Kimball of the United States District Court for the District of Utah granted in part and denied in part a defendant debt collector’s motion for judgment on the pleadings. Plaintiffs Karl Buhler and Reginald Benoit, two Utah residents, filed a lawsuit against BCG Equities (BCG), claiming that it violated the Fair Debt Collection Practices Act and the Utah Consumer Sales Practice Act (UCSPA) by filing debt collection actions against each plaintiff individually, despite not being registered with the State of Utah as a collection agency. While the Court agreed that plaintiffs had adequately pled a violation of the FDCPA, it granted BCG’s motion as to plaintiffs’ UCSPA claims because plaintiffs failed to allege an affirmative misrepresentation and failed to plead requisite intent to engage in deceptive practices.

In 2019, BCG filed two separate debt collection actions against Buhler and Benoit. BCG obtained default judgments in each and attempted to garnish each plaintiff’s wages. During this time, BCG allegedly was not registered with the State of Utah to collect debts as required by the Utah Collection Agency Act. Because of its unregistered status, plaintiffs claimed that BCG took action it legally could not take in violation of the FDCPA.

The Court agreed. It rejected BCG’s argument that distinguished registering statutes from licensing statutes; the former, per BCG, requiring “a lower level of adherence.” The Court plainly ruled that “a credit collection agency violated Utah law when it filed suit to collect debts while unregistered with the State[.]”

Notably, the Court clarified that failing to register in and of itself was not a violation of the FDCPA. Rather, by filing debt collection actions as an unregistered entity, BCG “took action that it could not legally take,” thus violating the FDCPA.

Regarding the state law claim, the Court found that plaintiffs’ allegations were lacking. Specifically, because the law requires an affirmative representation of registration status, a failure to disclose such status did not violate the UCSPA. Further, the Court held that plaintiffs’ allegations regarding intent were conclusory. The Court granted BCG’s motion as to this claim.