6th Cir. Holds that Where Debt Collection Lawsuit Failed, Strict FDCPA Liability Arose Because Statements to the Debtor that the Debtor Owed the Debt Were False

In Gamby v. Equifax Information Services LLC, 2012 WL 447491 (6th Cir. 2012), the Court of Appeals for the Sixth Circuit found that a debt collector’s loss of a lawsuit seeking to collect on the debt ipso facto created FDCPA liability based on the debt collector’s previous statements that the the debtor’s owed the debt. 

Taken together, the plain language of the MCPA and the cases interpreting the FDCPA demonstrate that it is immaterial whether FNBO knew its statements were false or misleading at the time it sought payment from the Gambys for the credit-card debt. Because the district court found “no evidence” that the Gambys owed the debt, FNBO’s undisputed statements that the Gambys were responsible for paying it were false. Even if the statements were based on the Bank’s reasonable belief at the time it sought payment from the Gambys, that belief does not alter the underlying falsity of its statements regarding the debt. Although this same result may not have occurred absent the declaratory judgment—particularly in light of potentially significant factual questions as to the Gambys’ knowledge and authorization of their son’s activities—FNBO’s failure to contest the issue resolves the MCPA liability question against it and entitles the Gambys to judgment as a matter of law under section 445.252(e).