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Appeals Court Rules Collector Did Not Violate EFTA By Making Withdrawals Without Written Consent

The Second Circuity Court of Appeals last week issued a summary order dismissing a class-action lawsuit against Portfolio Recovery Associates for allegedly violating the Electronic Funds Transfer Act by making automatic withdrawals from an individual’s bank account without obtaining written consent.

A copy of the order in the case of Aikens v. Portfolio Recovery Associates can be accessed here.

The District Court had ruled that the plaintiff had not suffered any concrete injury and therefore under the Supreme Court ruling of Spokeo v. Robins, could not make a claim.

In attempt to prove its position, PRA supplied an audio recording of the call between its agent and the plaintiff, where the plaintiff agreed to have $32.91 deducted from her account every month, and a letter which it sent to the plaintiff six days after the conversation that summarized the terms of the payment arrangement.

The Electronic Funds Transfer Act limits liability to “unauthorized” transfers, and defines that as meaning the individual receives no benefit. The Appeals Court ruled that was not the case here because the plaintiff had agreed to the withdrawal and did not ask her bank to stop the transfers, and because she received the benefit of a reduction in the amount of her debt.

The case was remanded back to the District Court, however, so that it could change the ruling so that it was dismissed without prejudice instead of being dismissed with prejudice.

 

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