A District Court judge in Maryland has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class action after the defendants were accused of attempting to collect on unpaid debts without having the proper licenses to do so in the state. For anyone who has seen complaints against debt buyers, not having the proper license is a very frequent claim made by plaintiffs.
A copy of the ruling in the case of Bittinger v. DNF Associates can be accessed by clicking here.
The plaintiffs defaulted on credit card debts that were purchased by the defendants. The defendants hired a collection law firm to file lawsuits against the plaintiffs to recover the unpaid debts. The lawsuits caused the plaintiffs to suffer damages including mental anguish, emotional distress, difficulty sleeping, elevated stress levels, and extreme nervousness.
The plaintiffs filed suit, alleging the defendants are not licensed under Maryland’s Consumer Loan Law and Maryland’s Sales Finance Company Licensing Law, and thus were not authorized to engage in any activity associated with attempting to collect on debts from individuals within the state of Maryland.
In seeking to have the suit dismissed, the defendants argued they are not required to have either license.
The Consumer Loan Law applies to anyone “in the business of making loans” which is not what the defendants did. The defendants purchased defaulted loans, they did not make new loans to the plaintiffs, noted Judge Theodore F. Chuang of the District Court for the District of Maryland.
The Sales Finance Company Licensing Law, meanwhile, applied to retail credit transactions, among others, and the plaintiffs contend the defendants are engaged int he business of acquiring or investing in retail credit account transactions. But, after a lengthy review of the legislative history of the law and other cases invoking similar claims, Judge Chuang noted that the Maryland Collection Agency Licensing Act checklist includes debt buying activities whereas the Sales Finance Company checklist does not. “Considering the historical understanding of sales finance companies, the General Assembly’s separate licensing regime for debt buyers in the MCALA. and the Commissioner’s reinforcement of that separate arrangement, the Court concludes that the legislature did not intend for companies such as the Unlicensed Debt Buyer Clients to be subject to the SFCLL’s licensing requirement,” Judge Chuang wrote.