Late last month, the U.S. Court of Appeals for the Sixth Circuit granted summary judgment in a case involving a debt collection action under the Fair Debt Collection Practices Act (FDCPA). In Phyllis Clark v. Main Street Acquisition Corp., the plaintiff-appellant Phyllis Clark allegedly defaulted on a credit card account she opened with Household Bank in 2006. Household Bank then sold "the right to claim the balance owed to Main Street Acquisition Corp.," who in turn hired Slovin & Associates Co., L.P.A. to recover the debt. Included in the documents Slovin provided to Clark as evidence of her outstanding balance was an affidavit from Jason Harrison, assistant vice president of Main Street, in which he said he had "personal knowledge" of the facts stated herein and indicated that the "balance due and owing to Plaintiff by Defendant on the Account is $1,429.24, plus interest at the legal rate per annum from June 30, 2010 and costs."
After settlement negotiations failed, Slovin filed a collection action in Crittenden County, Kentucky, on September 19, 2011, "requesting as relief the outstanding balance and costs." Clark subsequently filed a class action complaint against Main Street in the District Court for the Southern District of Ohio on May 25, 2012, in which she alleged, among other things, that the corporation had violated the FDCPA by the "intentional filings of false affidavits for the purpose of obtaining judgments against debtors in collection law suits and coercing debtors." The district court granted Main Street summary judgment on May 24, 2013.
The appellate court held that such "costs in an unstated amount" are "not a false representation" according to the FDCPA. Court costs as well as "other collection costs related to the default to the extent permitted by law" were "expressly authorized" by the Cardmember Agreement creating the debt. In addition, Harrison's statements in his affidavit that he had "personal knowledge" of the data "were neither misleading nor deceptive." Even though the electronic business records were acquired from the original lender, the appellate court held that "the least sophisticated consumer understands that lenders and debt collectors will by necessity have to rely on business records that they may not have personally created, especially in an age of automated, computerized transactions."
For more, read the full opinion.