Stephanie Adams of Windsor, Virginia, who operates a credit repair business out of her home, was subject of collection action by Applied Business Services of Edenton, North Carolina for an unpaid medical bill. Applied sent Ms. Adams three letters and made two calls to her over a period of two and half months. After Ms. Adams failed to respond to Applied’s collection efforts, Applied sent her a follow-up letter telling her that the next letter she would receive would be from an attorney. However, before Applied referred the account to an attorney Applied, pursuant to its client’s instructions, reported the item as a bad debt on Ms. Adams’ credit report and sent Ms. Adams a letter notifying her of the credit reporting.
Within a month thereafter, Applied sent the account to Matthew Johnson, Esquire, a member of the North Carolina Bar. Mr. Johnson intended to sent Ms. Adams a letter to collect the debt, had reviewed Ms. Adams’ account and had prepared a letter for signature. However, in the meantime, Ms. Adams sued Applied alleging that it never intended to refer the account to an attorney. Because of the suit, Applied asked Mr. Johnson to cease further action; therefore, the attorney letter was never sent.
Ms. Adams originally filed this case as a class action but never moved for class certification. Instead, she proceeded to trial on her individual claim only on September 11 and 12. She asserted that Applied violated the FDCPA because, in fact, the “next letter” she received advised her of the credit report and was not from an attorney. She further asserted that the notice that the next letter would be from an attorney was a false threat of legal action. On that claim, the District Judge permitted Ms. Adams to produce evidence that Attorney Johnson had not filed suit on any account referred to him by Applied.
At the conclusion of trial, the Court instructed the jury that a purported false statement under the FDCPA must be materially misleading and affect a consumer’s decision about the debt. Applied argued that there was nothing materially misleading in the letter and pointed to evidence that Ms. Adams conceded that she would not have done anything differently had she received a letter from a lawyer. She explained that the Hospital was supposed to have deducted a monthly payment from her credit card but stopped doing so. Ms. Adams testified that even after she was the target of Applied’s collection efforts, including the letter notifying her that follow-up correspondence would be from an attorney, she never contacted the Hospital to find out why the payments were not being applied.
After a one hour deliberation, the jury returned a verdict in favor of the debt collector.
Applied Business Services has been in business for 45 years and is a member in good standing of ACA International.
Ronald S. Canter of The Law Offices of Ronald S. Canter, and Of-Counsel to Bedard Law Group, P.C. represented Applied Business Services in this case (Case No. 18-559, United States District Court for the Eastern District of Virginia).