Debt collectors frequently rely on affidavits that attest to the validity of underlying debt in state court collection actions. An issue that has garnered attention is the extent to which the debt collector must possess personal knowledge of the facts contained in its supporting collection affidavits. In Janson v. Katharyn B. Davis, LLC (Case No. 15-1381, U.S. Court of Appeals, 8th Cir. (Nov. 17, 2015)), the Court held that a lack of personal knowledge of the facts contained in collection affidavits does not, standing alone, violate the Fair Debt Collection Practices Act ("FDCPA").
Janson grew out of a prior state court collection action. In that case, a landlord successfully won a state court action against a tenant to collect past-due rent, and then the tenant subsequently filed a lawsuit in the Eastern District of Missouri, alleging violations of the FDCPA. The plaintiff alleged that the law firm that filed the state court collection action had violated the FDCPA by swearing to the truth of an affidavit – as evidence of the past-due rent – when the law firm did not have personal knowledge of the facts contained within the affidavit.
The plaintiff alleged that by attesting to the truth of the affidavit without having personal knowledge of the facts contained within it, the defendant violated Sections 1692e and 1692f of the FDCPA. These provisions prohibit using "false, deceptive or misleading representations" and also prohibit using "unfair or unconscionable means" to collect a debt. The law firm had relied on its client, the landlord, as to the truth of the statements contained in the affidavit. Indeed, in the collection action, the landlord's lawyer admitted that the only basis he had for attesting to the truth of the affidavit was information he obtained from the landlord's agent. That is, he admitted he did not have personal knowledge of the underlying facts.
The Eighth Circuit rejected the plaintiff's argument that swearing to the truth of the affidavit without knowledge of the underlying facts violates the FDCPA. First, the Court reasoned that the plaintiff did not actually allege that any of the substantive information contained in the affidavit was false. Second, the Court stated that even if the plaintiff alleged that the defendant's attestation to the substantive information in the affidavit was false, the plaintiff failed to allege that the least sophisticated consumer would be misled by the falsehood. The Court relied on Seventh Circuit precedent in holding that "if a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA – even if it is false in some technical sense."
However, the Eighth Circuit left the door open for a plaintiff to "plausibly" argue that if the substantive information contained in an affidavit was false, then the attestation to a false affidavit would mislead the least sophisticated consumer.
The issue of the proper form of collection affidavits, particularly when the affidavit is based on business records, has been a hot regulatory and litigation topic. For example, in 2013 the Consumer Financial Protection Bureau entered into a Consent Order ( previously discussed in this blog) with a national bank that required the bank to ensure the affidavits it uses in debt collection actions are accurate and based on the personal knowledge of the bank employee signing the documents.
Therefore, although the Janson court held it was not a violation of the FDCPA for the defendant-attorney to sign and attest to an affidavit in which he did not have personal knowledge of the underlying facts, as long as the affidavit is otherwise accurate, the ruling needs to be considered in the larger context.
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