Appeals Court Upholds MSJ For Defendant in FDCPA Vicarious Liability Case

The Eleventh Circuit Court of Appeals has upheld the summary judgment ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act because of alleged misrepresentations made by another entity that was collecting on the defendant’s behalf.

A copy of the ruling in the case of Rivas v. Midland Funding can be accessed by clicking here.

The plaintiff defaulted on about $12,000 of credit card debts that were spread across three different cards. Those accounts were then purchased by the defendant. The defendant placed the accounts with Midland Credit Management (MCM), an affiliate of the defendant’s, for collection. MCM filed collection lawsuits on behalf of the defendant. The two sides worked out a settlement, where the consumer would make monthly payments to MCM’s website of $50 until $1,100 was repaid to resolve all three lawsuits. When the first payment was made, the balance on the website was $1,100. But when subsequent payments were made, the balance shown on the website was much higher, which caused “considerable distress” for the individual. He filed suit, alleging Midland Funding violated Section 1692e(2)(A) of the FDCPA by making false representations about the character, amount, or legal status of a debt.

Midland Funding filed a motion for summary judgment, arguing it could not be held liable for the actions of MCM, and a District Court judge granted the motion.

On appeal, the plaintiff attempted to argue that Midland Funding should be held indirectly liable for the representations made by its agent, MCM. The plaintiff argued that the text of the FDCPA, which defines a collector, in part, as an entity that “regularly collects or attempts to collect, directly
or indirectly, debts owed or due or asserted to be owed or due another” suggests that a collector is liable for the actions of its agents. But, as the Eleventh Circuit noted, only one of the two definitions of debt collector in the FDCPA uses the word “indirectly.” But the District Court, and the Appeals Court, ruled that the defendant could not be considered a debt collector under that clause of the FDCPA.

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