In a case that was defended by Rick Perr and Monica Littman of Kaufman Dolowich, a New Jersey Appeals Court has affirmed a lower court’s dismissal of a case accusing a collection operation of violating the New Jersey Consumer Finance Licensing Act and the Fair Debt Collection Practices Act, agreeing with the state court judge that the NJCFLA does not allow for a private right of action.
The background: The plaintiff alleged that a collection operation had attempted to collect on a debt after purchasing it without the required license under the NJCFLA. The plaintiff’s case rested on the argument that the debt was void because of the defendant’s failure to obtain the necessary license. In addition to this claim, the plaintiff sought relief under the FDCPA, arguing that the collection activity misrepresented the legal status of the debt.
- A state court judge agreed with the defendant the NJCFLA does not provide for a private cause of action and dismissed the case.
- The plaintiff appealed, arguing that the state court judge made a mistake and that the NJCFLA does allow for private rights of action, in addition to enforcement remedies of state regulators.
The ruling: The appellate court upheld the lower court’s ruling, stating that the NJCFLA does not grant consumers the right to sue for violations. While the NJCFLA authorizes the Commissioner of Banking and Insurance to take action against violators, the court found that there is no statutory provision allowing individual consumers to initiate legal proceedings. This ruling aligns with previous case law, including the Francavilla decision, which reaffirmed that the NJCFLA does not support a private cause of action.
- The court also addressed the plaintiff’s argument that a violation of the NJCFLA could trigger claims under the FDCPA and the New Jersey Consumer Fraud Act (CFA). However, the appellate court ruled that since the plaintiff could not establish that the debt was improperly assigned or that the defendant’s actions were unlawful, the claims under the FDCPA and CFA were also barred.
- The court’s decision reinforces the understanding that while the NJCFLA provides regulatory oversight, it does not open the door for private lawsuits related to violations of licensing requirements. This case underscores the importance of ensuring that collection operations adhere to licensing regulations, but also highlights the limited avenues available for consumers to seek legal redress under the NJCFLA.
