A California Appeals Court has reversed a lower court’s ruling in favor of a debt buyer, determining that consumers do not need to show actual damages to pursue statutory damages under the Fair Debt Buying Practices Act (FDBPA).
The background: The case stemmed from a violation of California’s FDBPA, which regulates how debt buyers may collect delinquent consumer debts that the original creditors have written off as a loss. The law requires debt buyers to provide specific documentation to consumers when initiating debt collection efforts. This includes informing the consumer of their right to request documentation proving the debt, the consumer’s liability, and the debt buyer’s entitlement to collect on behalf of the original creditor.
- In this case, a debt buyer sent a consumer a collection notice without the required information about the consumer’s rights to request documentation. The consumer filed a class-action lawsuit seeking statutory damages for this violation.
- A lower court ruled in favor of the debt buyer, stating that the consumer could only pursue damages if he proved he had suffered actual injury from the violation. The consumer had conceded that he experienced no concrete injury from the violation, prompting the initial dismissal.
The ruling: The Appeals Court reversed the lower court’s decision, interpreting the statute to allow consumers to seek statutory damages without proving actual damages. The court emphasized that the law’s language clearly allows for both actual damages and statutory damages, with statutory damages ranging from $100 to $1,000.
- “The Legislature could have set statutory damages as a percentage or product of actual damages, leaving zero entitlement to statutory damages when actual damages were nonexistent,” the appeals court wrote. “It did not: Instead, the Legislature left the court discretion to award statutory damages within the prescribed range of $100 to $1,000, without requiring or even suggesting the court factor the actual damages in deciding what statutory damages to allow.”
- Importantly, the court concluded that the presence of a statutory violation alone, without the need for concrete injury, provides sufficient grounds for standing to sue.
