A district court in the Northern District of Illinois recently granted a debt collector's motion to compel arbitration in a Fair Debt Collection Practices Act lawsuit even though it could not provide the original bill of sale to prove it purchased the debt and the concomitant rights to enforce the arbitration provision in the underlying credit card agreement.
The case is Janis Fuller v. Frontline Asset Strategies, LLC, No. 1:17-cv-7901 (N.D. Ill. Apr. 11, 2018).
The FDCPA putative class action arose out of a collection letter that debt collector Frontline mailed to Janis Fuller allegedly threatening legal action that could not be taken. Importantly, Fuller alleged in her complaint that Frontline had purchased the debt from Credit Bank One. Frontline subsequently moved to compel arbitration per the terms of the underlying credit card agreement it acquired from Credit Bank One upon purchase of Fuller's debt.
In opposing the motion to compel, Fuller argued that Frontline failed to provide the bill of sale to prove it was "validly assigned Plaintiff's Credit One account and all rights thereunder." The Court rejected this argument for two reasons. First, the Court found that Fuller's allegation in her complaint that the debt collector had purchased her debt constituted a binding admission. Second, the Court found the debt collector had provided sufficient evidence from Credit Bank and its own business records to prove it was validly assigned Fuller's debt, even absent the binding admission. Specifically, the Court found that an affidavit from Credit One stating it had sold the account to Frontline, as well as Frontline's internal list of receivables including Fuller's account, proved the debt collector was the current owner of Fuller's debt.
The Court also summarily rejected Fuller's arguments that Frontline failed to prove she ever signed the credit card agreement or that her FDCPA claims fell within the scope of the arbitration provision.
The district court's common-sense approach to this issue could provide a powerful tool for litigants lacking chain-of-title documents through no fault of their own. However, the evidentiary standard required to compel arbitration in FDCPA and other consumer protection-related actions varies widely by jurisdiction and can contain many pitfalls. We will continue to monitor developments within this area of the law.
The Troutman Sanders' Consumer Financial Services Law Monitor blog offers timely updates regarding the financial services industry to inform you of recent changes in the law, upcoming regulatory deadlines and significant judicial opinions that may impact your business. To view the blog, click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
