A state Appeals Court in South Carolina has partially affirmed and partially reversed a Fair Debt Collection Practices Act case, ruling that even though it isn’t a creditor, a debt collector was required to send a consumer a right to cure notice under the South Carolina Consumer Protection Code (SCCPC) before filing a lawsuit to collect on an unpaid debt.
A copy of the ruling in the case of Portfolio Recovery Associates v. Campney can be accessed by clicking here.
The consumer defaulted on a debt which was sold or assigned to the collection operation. The operation asserted it was an assignee of “Synchrony Bank/HH Gregg.” The operation filed a lawsuit to collect on the debt, during which there was a lot of back and forth that ultimately ended up in a trial. A judge found in favor of the collector and ordered the consumer to pay the amount owed plus costs to the collector. The consumer appealed the ruling to the Court of Appeals of South Carolina.
The Appeals Court ruled the trial court did not make a mistake when it ruled the consumer was liable for the unpaid debt, nor did it make a mistake when it ruled the collector was not liable to the consumer on her counterclaims.
Where the Appeals Court did have an issue with the lower court’s ruling was on the applicability of the SCCPC. Even the South Carolina Department of Consumer Affairs weighed in on the matter, arguing that a consumer credit card debt is subject to the SCCPC and that the collector was required to provide a right to cure notice before suing to recover the debt.
The collector attempted to argue that the requirement of sending a right to cure notice disappeared when it bought the debt from the original creditor because it did not meet the SCCPC’s definition of creditor (“the person who grants credit in a credit transaction or, except as otherwise provided, an assignee of a creditor’s right to payment, but use of the term does not in itself impose on an assignee any obligation of his assignor.”)
“Particularly, no creditor, initial or assignee, would be held liable for violation of the SCCPC’s right to cure notice requirement whenever a charged off debt was assigned because an initial creditor would argue it would have no obligation once all their claims to a debtor’s account were assigned and an assignee would raise the argument PRA raises,” the Appeals Court noted.