In a case that was defended by David Schultz at Hinshaw & Culbertson, a District Court judge in Missouri has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case over alleged issues with the chain of title and validation of a debt that was purchased by a debt buyer.
The background: The case arose from a loan originated online in 2022. After the borrower fell behind on payments, the account was charged off and later sold to a debt buyer.
- Following the purchase, the debt buyer retained third-party collection agencies to attempt to collect the balance due. Information about the debt was also furnished to credit reporting agencies. Over the course of several months, the plaintiff repeatedly disputed the debt and demanded validation, including insisting on proof bearing a wet ink signature.
- Each time a dispute was received, the collectors ceased collection activity and provided documentation identifying the original creditor, the current owner of the debt, the balance owed, and copies of the electronically signed loan documents and payment history. The account was also marked as disputed when reported to credit bureaus.
- Unsatisfied, the plaintiff filed suit, alleging FDCPA violations based on an alleged failure to prove ownership of the debt, improper reporting while disputed, and deficiencies in validation.
The ruling: Granting summary judgment to the defendant, Judge Henry Edward Autrey of the District Court for the Eastern District of Missouri found the evidence of ownership and validation uncontroverted. His opinion emphasized that the loan agreement expressly allowed assignment and that the defendant produced the promissory note, e-signature agreement, and a documented chain of title establishing its right to collect.
- Judge Autrey was particularly dismissive of the plaintiff’s insistence on a wet ink signature, noting that such a demand made little sense for an online loan. As the judge explained, producing a wet ink signature was impossible because the account was opened electronically, and an electronic signature was captured instead.
- The court also highlighted that the defendant complied with the FDCPA by stopping collection efforts during disputes and providing verification. Quoting prior precedent, the judge wrote that the plaintiff offered only “completely conclusory accusations” and that “[w]ithout more, no reasonable jury could find that Defendant violated the FDCPA.” The opinion added that the “meticulous steps taken regarding Plaintiff’s loan unequivocally establish the validity of Defendant’s actions.”
