A District Court judge in Virginia has dismissed the majority of claims against several defendants in a Fair Debt Collection Practices Act class-action lawsuit, but allowed one key claim against a collection agency to proceed.
The background: The lawsuit accused several companies, including three different collection operations of violating the FDCPA and the Virginia Consumer Protection Act in their attempts to collect on the plaintiff’s unpaid student loans.
- The National Collegiate Student Loan Trusts, which owned the loans, hired collection agencies to collect on the debts. The plaintiff alleged that the agencies did not have the proper documentation to prove ownership of the loans and thus could not legally collect on them.
- She also claimed that the collection efforts, which included contacting her workplace and her co-signer, were harassing and caused significant emotional distress. The plaintiff argued that the defendants’ actions violated both federal and state laws, particularly the FDCPA, which prohibits misleading and abusive practices in debt collection.
The ruling: In the ruling, Judge M. Hannah Lauck of the District Court for the Eastern District of Virginia dismissed several claims, including those against the National Collegiate Student Loan Trusts and U.S. Bank National Association. Judge Lauck found that the plaintiff did not provide enough evidence to support her claims that the Trusts lacked the legal authority to collect the debts.
- However, not all of the plaintiff’s claims were dismissed. The court allowed her to proceed with an FDCPA claim against one of the collection agency defendants, focusing on whether it used misleading language in their collection attempts. Specifically, Judge Lauck found that the plaintiff’s allegation that the defendants’ communications could mislead an unsophisticated debtor into believing that the debts were still legally enforceable, despite being time-barred, was plausible.
- The judge also rejected the plaintiff’s argument that the collection agency defendants had an obligation under the FDCPA to investigate debt ownership before initiating their collection efforts.
