The Court of Appeals of Georgia, Second Division, recently held that a debt collector did not violate the federal Fair Debt Collections Practices Act ("FDCPA"), holding that even if the alleged misrepresentations in the debt collector's affidavit were technically false, they were not material and thus failed to state a claim.
A copy of the opinion is available at: Link to Opinion
In August of 2006, a national bank issued a credit card to the debtors, who defaulted by failing to pay the account. In April of 2011, the issuing bank and a debt buying company signed an agreement that provided for the purchase of a list of credit card accounts for six months. The list included the debtors' account.
In December of 2012, the debt buyer sued to recover the balance owed. In February of 2013, after the complaint was filed but before it was served, debt buyer's counsel sent a letter to the debtors demanding the balance owed on the credit card plus the court's filing fee of $206.
The debtors counterclaimed, alleging that the debt buyer violated the FDCPA and the Georgia Fair Business Practices Act.
The parties filed cross-motions for summary judgment and the trial court granted the debt buyer's motion, but denied the debtors' motion. The debtors appealed.
On appeal, the debtors argued that debt buyer misrepresented that it acquired the account by assignment because the debt buyer filed affidavits allegedly "containing false statements regarding the date of the assignments and that the filing of these allegedly false affidavits was actionable under 15 USC § 1692e."
The Georgia Appellate Court held that "[a] debt collector's false or misleading representation must be 'material' in order for it to be actionable under § 1692e of the FDCPA." If a statement would not mislead the least sophisticated consumer test established by the Eleventh Circuit, the Georgia Appellate Court held "it does not violate the FDCA—even if it is false in some technical sense."
The Court rejected the debtors' argument that the "'Bill of Sale' shows a 'charge-off' date of April 15, 2011, whereas an affidavit from [the bank's representative] averred that the date was April 30, 2011" because, contrary to the debtors' argument, "the cited 'Bill of Sale' language refers to the date of the Purchase Agreement, not the date of the 'charge-off.'" Accordingly, the debtors failed to show that "there is anything false about the 'Bill of Sale' language."
The Georgia Appellate Court also rejected debtors' argument that the issuing bank's "Affidavit of Sale" was defective because the representative signed it before the sale took place and the other representative's affidavit was defective "because he did not confirm that the assignment actually transpired that day" because, "[e]ven assuming that one of the [issuing bank's] provided a false statement by reporting that the assignment transpired on June 24, 2011, when it actually occurred on June 27, 2011, or vice versa, the [debtors] have not alleged, much less shown, that they—or anyone else—were 'misled, deceived, or otherwise duped' by the different dates given for the assignment."
The Georgia Appellate Court distinguished a district court case cited by the debtors, "which held that a debt collector, who claimed to have been assigned the consumer's credit card account, made material false statements that he had personal knowledge of the consumer's debt" because, unlike the consumer in that case, "who claimed she was unaware of any obligation owed to the credit card issuer, the [plaintiffs] readily admitted that they had a credit card account with [the issuing bank], and that they owed a monetary obligation on that account."
In addition, the debt buyer in this case "also presented an affidavit and deposition testimony from a company vice president who confirmed that the [plaintiffs'] credit card account was assigned to [defendant]."
The Court found that because the debtors "presented no evidence contradicting the fact that the assignment transpired in June 2011, and they presented no evidence that the different reported dates for the assignment frustrated their ability to intelligently choose their response," the debtors' "FDCPA claim based on the filing of the subject affidavits fails."
The Court also rejected as without merit the plaintiffs' argument that the letter "notifying them that [defendant] was willing to settle their debt for a reduced amount violated 15 USC § 1692e and 1692f because it included an extra $206 for the filing fee and the case was not filed until months later.
While subsection 1692f(1) of the FDCPA "prohibits a debt collector from using any 'unfair or unconscionable means to collect or attempt to collect any debt' including '[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law … [w]hen a debtor has contractually agreed to pay attorney fees and collection costs, however, a debt collector does not violate the FDCPA by stating those fees and costs and including those amounts in the collection letter."
Because the credit card agreement in plain and unambiguous language provided for the recovery of court costs, the debt collector "did not violate the FDCPA by including those amounts in the February 2013 letter."
Finally, the Court rejected the debtors' argument that the $206 filing fee violated the FDCPA because it was not separately itemized and thus could mislead an unsophisticated consumer because "even assuming that [defendant's] failure to itemize the court costs in the February 2013 letter was a false statement, the [plaintiffs] had to point to specific evidence that the omission was material in order to have an actionable FDCPA claim."
Because the debtors never disputed or refuted the amount owed on the credit card account, or the amount of the court costs, the Court held that the debt collector's "omission in the February 2013 letter was not material."
Accordingly, the Court held that the trial court did not err in granting summary judgment to the debt collector, and denying the debtors' motion for summary judgment on their counterclaims. Because the state-law claims were based on the alleged FDCPA violations, which failed as a matter of law, the state law claims failed as well.