A District Court judge in New York has ruled in favor of the defendants in two separate Fair Debt Collection Practices Act cases, determining that entities that purchase debts do not have to disclose the chain of title detailing how they came to acquire those debts in the initial collection letters.
A copy of the ruling in the cases of Rosenberg v. Frontline Asset Strategies and Absolute Resolution Investments and Ortiz v. Asset Recovery Solutions and Velocity Investments can be accessed by clicking here.
The cases were consolidated into one ruling because the allegations made against the defendants were exactly the same in both cases. The plaintiffs accused the defendants of violating the FDCPA because they did not recognize the name of the current creditor to whom the debt was owed because they were never notified by the original creditor or the current creditor that the debt had been sold or transferred.
Unfortunately for the plaintiffs, there is neither a legal or factual basis to dispute the defendants’ ownership of the debts, ruled Judge Brian Cogan of the District Court for the Eastern District of New York. “… there are no factual allegations suggesting that Absolute is a fraudulent enterprise that masquerades as a debt-buyer to fleece consumers, or that there was some irregularity in the acquisition of plaintiff’s original debt that deprives Absolute of ownership and precludes collection,” Judge Cogan wrote. “Quite the contrary. As noted above, plaintiff Rosenberg is aware, and affirmatively pleads, that Absolute is in the business of buying and collecting consumer debt, and Frontline is a professional collection agent. Moreover, by identifying plaintiff’s Citibank credit card account, plaintiff could readily match-up her original debt with its current ownership by Absolute.”
As well, there is nothing in the FDCPA that requires collectors to educate individuals with proof or some other evidence of how a debt came to be acquired. When Congress required collectors to identify the “current” creditor, it even acknowledged that the debt might be sold or transferred, but did not require all prior owners of the debt to be disclosed, Judge Cogan wrote.
Judge Cogan also shot down the plaintiffs’ argument that, under New York rules, collectors seeking default judgments have to provide additional documentation, including proof of the chain of acquisition. But those rules don’t apply in federal court, Judge Cogan noted.
“Comparing the focus of the New York Rules with the FDCPA, it is one thing to protect a consumer from the improper entry of a default judgment; it is quite another to provide the consumer with an affirmative damage remedy plus attorneys’ fees when the debt owner has not even brought a lawsuit,” Judge Cogan wrote. “This may be why the other judges in the district who have considered plaintiff’s argument have also rejected it.”
