Alabama Supreme Court Rules Title Lender is Not Debt Collector Under FDCPA

The Alabama Supreme Court has ruled that a title lending company is not a “debt collector” as defined by the Fair Debt Collection Practices Act.

A trial court had awarded a woman $200,000 in a case before it was appealed to the Supreme Court. The Supreme Court’s ruling overturns the jury’s verdict.

A woman stole the title to her grandmother’s truck and, with the assistance of an employee from a title lender, obtained a fraudulent title loan for $2,352. The granddaughter made several payments, extending the term of the loan for 30 days with each payment, before she ultimately stopped making payments and the vehicle was subsequently repossessed.

The grandmother sued the title lender, alleging violations of the Alabama Panwshop Act and the FDCPA. A trial court dismissed some of the claims but did not dismiss the FDCPA allegation. A jury awarded a $200,00 verdict against the title lender, Complete Cash Holdings, LLC.

The lender appealed and argued that it should not be subject to the FDCPA because it is not a third-party collector. The Alabama Supreme Court agreed.

Instead, the court ruled that Complete Cash was merely collecting its own debt and enforcing its own security interest when it repossessed the truck. It was not collecting debts owed to others, and thus could not be a “debt collector” for purposes of the FDCPA.

The Supreme Court ruling should act as a precedent for any company operating in Alabama that is collecting its own debts and is charged with liability under the FDCPA.

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