CEB Prac. Guide § 2A.17 -- Debts to which the FDCPA Apply -- Federal -- "Consumer" Requirement

In In Valdera v. PHH Mortg. Corp., No. 20-470-JJM-PAS, 2022 U.S. Dist. LEXIS 139869, at *10-12 (D.R.I. Aug. 4, 2022), Judge McConnell denied summary judgment to an FDCPA Defendant who argued that the loan documents designated the loan for investment purposes because the Plaintiffs claimed that they lived at the property. PHH argues that the FDCPA does not protect Plaintiffs'… Read More

In Weiser v. Castille, No. 20-2043, 2021 U.S. Dist. LEXIS 173993, at *13-14 (E.D. La. Sep. 14, 2021), Judge Lemmon dismissed FDCPA and FCRA claims arising out of a Plaintiff's investment mobile home properties.   Additionally, an obligation arising from a commercial transaction, as opposed to a transaction "primarily for personal, family, or household purposes" is not a "debt" as defined… Read More

In FTC v. Am. Future Sys., No. 20-2266, 2021 U.S. Dist. LEXIS 83401, at *3-4 (E.D. Pa. Apr. 30, 2021), Judge Slomsky allowed the FTC to proceed on unfair debt collection claims against a debt collection agency collecting on business related education and publication debts. On May 13, 2020, the FTC initiated this action against American Future Systems, Inc. ("AFS"),… Read More

In Woodard v. O'Brien, No. 2:18-cv-1523, 2020 U.S. Dist. LEXIS 228608 (S.D. Ohio Dec. 4, 2020), Judge Marbley addressed the standards for an ID theft victim to prove an FDCPA claim. When determining if an individual is a "consumer" under the FDCPA, the typical inquiry is to ask whether the debt was for "personal, family, or household purposes." Martin v.… Read More

In Denicolo v. Hertz Corp., No. 19-cv-00210-YGR, 2020 U.S. Dist. LEXIS 181248 (N.D. Cal. Sep. 30, 2020), Judge Rogers denied a debt collector’s MSJ arising out of a rental car contract  arising from a debtor’s business trip. In Chyba, defendant claimed that plaintiff had incurred damage to a rental vehicle and that summary judgment on the FDCPA claim should be… Read More

In Gilliam v. Psg Ks, No. 18-56373, 2020 U.S. App. LEXIS 11706, at *2-3 (9th Cir. Apr. 14, 2020), the Court of Appeals for the Ninth Circuit held that a loan obtained by a trustee for the benefit of a beneficiary remained a 'consumer credit transaction'. This case presents an issue of first impression under federal and state regulation of… Read More

In Norton v. Lvnv Funding, No. 18-cv-05051-DMR, 2019 U.S. Dist. LEXIS 146863, at *15-16 (N.D. Cal. Aug. 28, 2019), Magistrate Judge Ryu held that equivocal pleading of a debt's consumer nature survived an FRCP 12(b)(6) motion. Defendants essentially argue that a plaintiff's allegations about consumer debt must be unequivocal and ironclad in order to withstand a Rule 12 challenge. This… Read More

In Mueller v. I.C. Sys., No. 18-CV-336 (AMD) (RML), 2019 U.S. Dist. LEXIS 70342, at *4-5 (E.D.N.Y. Apr. 25, 2019), Judge Donnelly let an FDCPA case past the pleadings stage. While the plaintiff's contract with Liberty Power does include a check box describing the "customer" as a "corporation," the plaintiff asserts that his intent in signing the contract was to… Read More

In Taylor v. Alltran Financial, LP, 2018 WL 4403335, at *3–4 (S.D.Ind., 2018), the District Court certified an FDCPA class over the Defendant's objection that some of the debts might be commercial debts. Here, Defendants’ argument that the proposed class could contain individuals who received commercial or business loans, and who would therefore be ineligible under the FDCPA, makes no… Read More

Readers know that we've complained about this before -- that Courts apply different standards in individual and class actions when it comes to determining whether a debt was incurred primarily for consumer or business purposes.  (Hyman & Walser-Jolly, The Effect of the FDCPA’s “Consumer Limitation on Class Certification: Do Courts Apply Different Standards in Individual and Class Actions? 70 Conf.… Read More

Severson & Werson published an article entitled Hyman & Walser-Jolly, The Effect of the FDCPA's "Consumer" Limitation on Class Certification:  Do Courts Apply Different Standards in Individual and Class Actions", 70 Conf. Cons. Fin. L. Q. 172 (Summer 2017).  A copy of the article can be found here.     Read More

In Grubb v. Green Tree Servicing, LLC, 2017 WL 3191521, at *8–9 (D.N.J., 2017), Judge Wolfson held that a loan servicer's acquisition of servicing rights for an account in default triggered the FDCPA. Post-assignment servicers and owners of debts that were in default at the time of assignment, however, are treated differently under the law. “[A]n assignee may be deemed… Read More

In Group One Development, Inc., v. Bankof Lake Mills, et. al. 2017 WL 2937709, at *3 (S.D.Tex., 2017), Judge Lake held that a commercial debt did not trigger the FDCPA. Plaintiffs allege that they are “consumers” and that defendant Fora is a “debt collector” as defined by the FDCPA. Fora argues, however, that the debt at issue is not a “debt”… Read More

In Ellis v. Phillips and Cohen Associates, Ltd., 2016 WL 3566981, at *3-5 (N.D.Cal., 2016), Judge Davila found a triable issue of material fact as to whether a debt incurred by Plaintiff's corporation, for which she denied responsibility, was a "commercial" debt under the FDCPA. As this court previously observed when addressing Defendant's motion to dismiss, a “consumer debt” qualifying… Read More

In Yu v. Design Learned, Inc., 2016 WL 1621704, at *5 (N.D.Cal., 2016), Judge Beeler dismissed an FDCPA claim because the Plaintiff did not plead that the debt was for consumer use. First, he does not allege that the debt was for personal, family, or household purposes. See 15 U.S.C. § 1692a(5). See also Bloom v. I.C. Systems, Inc., 972… Read More

In Hall v. Phenix Investigations, Inc., 2016 WL 1238602, at *2-3 (5th Cir. 2016), a Law Firm hired private eyes to obtain information on a litigant in a commercial lease dispute, which the Law Firm used against the litigant in the litigation.  The litigant sued, alleging that the information obtained by the private eye was a "consumer report" under FCRA, and litigation… Read More

In Ordinario v. LVNV Funding, LLC, 2016 WL 852843, at *1-2 (S.D.Cal., 2016), Judge Burns denied summary judgment to an FDCPA plaintiff because he had failed to demonstrate that his allegedly personal debts were not commercial. The FDCPA and RFDCPA apply only to consumer debt, not business loans. See Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1068 (9th Cir.… Read More

In  Shular v. LVNV Funding LLC, 2016 WL 685177, at *9-10 (S.D.Tex., 2016), Judge Lake denied class certification for almost all reasons applicable to FRCP Rule 23, but one of which was the inability to determine commonality or who was in the class because of questions whether the debts were "personal" in nature.  The class action arose from Plaintiff's contention… Read More

In Scarola Malone & Zubatov LLP v. McCarthy, Burgess & Wolff, 2016 WL 536864, at *1-2 (C.A.2 (N.Y.),2016), the Court of Appeals for the Second Circuit affirmed dismissal of a law firm's FDCPA complaint because the debt was commercial in nature. The FDCPA does not cover “actions arising out of commercial debts.” Goldman v. Cohen, 445 F.3d 152, 154 n.… Read More

In In re Baroni, 2015 WL 6956664, at *12 (9th Cir.BAP (Cal.), 2015), the 9th Circuit BAP found that a debt secured by investment property was not an consumer "debt" under the FDCPA. As a second alternate theory for granting summary judgment against Allana on her FDCPA claim, the bankruptcy court held that the Carmel refinancing loan was not a… Read More