While the Fair Debt Collection Practices Act (FDCPA) generally applies to attorney statements in litigation documents, a federal court in Richardson v. Midland Funding, LLC,[1] held that the FDCPA is not meant to penalize debt buyers who come up short proving cases solely because of evidentiary weaknesses.
The court in Richardson v. Midland Funding rejected a consumer's lawsuit against Midland Funding for its allegedly hearsay evidence in support of its case. Maryland requires an affidavit and a checklist submitted by debt buyers when starting cases to promote sufficient, legitimate cases against consumers.
The consumer in Richardson did not dispute the accuracy of the debt. Nor did the consumer allege that Midland falsely represented any facts. The crux of the consumer's case was that Midland acted deceptively for bringing the case with insufficient evidence. But courts often reject FDCPA lawsuits that rely solely on allegations that debt buyers lack possession of sufficient proof to win their cases.
The courts are more concerned with punishing abusive, harassing, and deceptive conduct. Debt buyers that bring legitimate cases in good faith—but just can't meet an evidentiary threshold—usually prevail against FDCPA claims. Had the consumer pointed to any particular misrepresentations or to some other form of deceptive conduct, the case may have survived.
Similarly, the court rejected the consumer's claim that liability should attach for Midland's lack of standing due to the same defects. The issue of standing (debt buyer's proof of custody of the debt) will always be a hot one in collection litigation unless debt buyers perfect their record-keeping practices when it comes to proving assignments of the accounts at issue. As a matter of fact and in somewhat contrast to this Richadson case, the court in Young v. Unifund CCR Partners found merit in a class action where the plaintiffs' argued that a lack of standing could violate the FDCPA.
Midland Funding, however, did not fare so well against the Consumer Financial Protection Bureau after a recent investigation. See that report here.