When can a consumer sue a collection law firm for allegedly violating the Fair Debt Collection Practices Act, even when he claims the debt is not his own? When the collection law firm sues him first, according to the Seventh Circuit Court of Appeals, which last week overturned a lower court’s dismissal of the case.
Back in 2007, someone opened a credit card in the name of Mario Loja. When the debt on the card was not paid, it was charged off and sold to a debt buyer, Main Street Acquisition Corp. The debt buyer hired a law firm, Shindler & Joyce, to sue Loja for the unpaid balance. The Mario Loja who was served with a complaint appeared in court and said the debt was not his and the suit against him should be dismissed because the statute of limitations had expired. The court dismissed the suit.
A copy of the ruling in Loja v. Main Street Acquisition Corp. et al can be accessed by clicking here.
Loja then turned around and sued the debt buyer and the law firm, alleging they violated the FDCPA by bringing the suit. The debt buyer, now a defendant, moved to dismiss under Section 1692a(5) of the FDCPA, which says that in order to be applicable, the debt must be “for personal, family, or household purchases.” At a hearing, however, the court decided to dismiss the complaint under Section 1692a(3) of the because the plaintiff did not meet the definition of “consumer,” under the FDCPA. The plaintiff subsequently appealed the ruling.
Under Section 1692a(3) of the FDCPA, a consumer is defined as “any natural person obligated or allegedly obligated to pay any debt.” In overruling the lower court, the Seventh Circuit ruled that the word “allegedly” not only applies to obligations alleged by the consumer, but those alleged by a debt collector as well.
We therefore hold that the definition of “consumer” under the FDCPA includes consum‐ ers who have been alleged by debt collectors to owe debts that the consumers themselves contend they do not owe. This interpretation conforms to the structure and text of the rest of the FDCPA, which focuses primarily on the conduct of debt collectors, not consumers.
The Seventh Circuit ruling also gave the plaintiff a chance to amend his complaint.
