A District Court judge in New York has denied a motion to dismiss filed by the defendants that were sued by the Consumer Financial Protection Bureau last year, rejecting a number of arguments put forth that the lacked standing to pursue its claims because the defendants were not covered persons under the Consumer Financial Protection Act, that they could not be held vicariously liable for violations made by collectors, and because the statute of limitations on some of the violations had expired.
A copy of the ruling in the case of Consumer Financial Protection Bureau v. Manseth et al. can be accessed by clicking here.
The CFPB accused the defendants of violating the CFPA and Fair Debt Collection Practices Act by allowing third parties to deceive consumers and selling debts to collection companies that were engaged in unlawful activities. The defendants allegedly received “hundreds” of complaints that collection companies working the defendants’ accounts were threatening consumers with arrest, jail, or lawsuits if debts were not paid immediately, according to the CFPB. The defendants allegedly continued to place debts with these agencies, even after reviewing call recordings in which some companies “falsely threatened suits or made false statements about credit reporting,” according to the CFPB.
Judge Lawrence J. Vilardo of the District Court for the Western District of New York rejected every argument put forth by the defendants that attempted to make their case why the suit should be dismissed. Trying to summarize all of the arguments made by the defendants, and Judge Vilardo’s rejections of same that made up his 52-page ruling is a tall order, but suffice to say that while the ruling is comprehensive, it gives deference to the claims made by the CFPB, especially at the motion-to-dismiss stage of the proceedings. For example, the defendants argued that claims accusing them of threatening litigation to collect on unpaid debts that they did not plan to pursue are countered by lawsuits that were filed in Texas for that very purpose. But Judge Vilardo said those facts could not be considered at this stage because they were not part of the amended complaint.
Judge Vilardo also ruled that the FDCPA’s one year statute of limitations does not apply to the CFPB because it is not a person, although he did write that the provision of the FDCPA that applies — 1692k(d) is “ambiguous” about whether the statute of limitations applies to federal agencies bringing enforcement actions.
