The Eighth Circuit Court of Appeals has joined at least five of its brethren in establishing a materiality component to claims made under the Fair Debt Collection Practices Act.
The Eighth Circuit last week upheld a lower court summary judgment in favor of a collection agency that was sued for allegedly violating the FDCPA.
A copy of the ruling in Hill v. Accounts Receivable Services, LLC, can be accessed by clicking here.
The plaintiff in this case, Paul Hill, was sued by the defendant, Accounts Receivable Services, for an unpaid medical debt on behalf of the defendant’s client. Hill challenged the authenticity of exhibits supplied Accounts Receivable Services that documented the assignment of the account, and won. Hill subsequently filed a lawsuit against Accounts Receivable Services, alleging that the agency violated Section 1692(e) of the FDCPA, which states, in part, “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” That section includes a subpart, which includes a prohibition on threatening “to take any action that cannot legally be taken or that is not intended to be taken.”
The lower court ruled that because the statements made by Accounts Receivable Services were not material, they did not rise to the level of an FDCPA violation. Hill appealed that ruling and the Eighth Circuit has joined a number of other Appeals Courts in ruling that a statement must be material in order to constitute an FDCPA violation.
Losing the original lawsuit it filed against Hill does not mean that Accounts Receivable Services automatically violated the FDCPA by filing the suit in the first place.
Among the statements that Hill alleged were false were:
- although the conciliation court complaint alleged that Hill owed $3,687.62 on an account stated, that amount included statutory interest that would not have been on the account stated Hill received
- one of the documents submitted to the conciliation court falsely stated that Accounts Receivable is a division of Allina
- two documents stated that the assignment was “hereby” made from Allina to Accounts Receivable, which could not be true because only one document could assign the rights
- one document stated that Accounts Receivable was to “select an experienced agency to pursue collection of the accounts,” which it did not do
From the Eighth Circuit’s ruling:
Accounts Receivable’s inadequate documentation of the assignment did not constitute a materially false representation, and the other alleged inaccuracies in the exhibits are not material.
From a review of the case by Hinshaw & Culbertson:
By affirming dismissal, the Eighth Circuit joins the Third, Fourth, Sixth, Seventh and Ninth Circuits in requiring a consumer to prove not only that a violation of the FDCPA has occurred, but also that the violation was material. The decision increases jurisdictions in which debt collectors can defend purely technical violations of FDCPA on material grounds.
