In Grant-Hall v. Cavalry Portfolio Services (No. 11 C 1832), the U.S. District Court in Illinois, Eastern Division, has ruled that consumers have a right to sue debt buyers and their attorneys for violating Section 8b of the Illinois Collection Agency Act. Section 8b mandates that debt collectors must have documentation that proves they are entitled to pursue legal action against a consumer in order to sue a consumer in court. Typically, this means that, when filing a lawsuit against a consumer, the debt buyer must attach a copy of the documentation that specifically includes the date that the delinquent account was assigned and how much the debt collector paid for it.
In the ruling, the judge pointed out that Cavalry Portfolio Services did not include the proper documentation when filing suit against the consumer – even though Cavalry claimed it had the documentation. Although Cavalry used four other arguments for dismissing the case, the ruling found those without merit. Those arguments were that the documentation requirement violates the Commerce Clause, that Section 8b doesn’t give private parties the right to sue, that the plaintiffs’ complaint did not argue that there were actual damages incurred, and that Cavalry is not liable for the conduct of the law firms it uses.
The lawsuit also alleged that Cavalry Portfolio Services and the law firms it used violated the Illinois Consumer Fraud Act and the federal Fair Debt Collection Practices Act. The ruling found that the plaintiff’s complaint adequately pleads a deceptive practices claim, and that Cavalry’s claim that it cannot be held liable for the law firms’ actions was meritless because of the debt collector’s “active and direct” participation in the actions of the law firms.
Further, the plaintiffs’ suit alleges violations of the Fair Debt Collection Practices Act, namely the provisions that relate to the false representation of the legal status of a debt and using deceptive means to collect a debt. The ruling found precedent for the argument, saying, “Cavalry allegedly brought debt collection actions against Plaintiffs even though it lacked the documentation required by Section 8b of the ICAA, thus giving the ‘false impression’ that it had the ‘legal status’ necessary under Section 8b to file the suits.” The court also rejected the defendants’ argument that the FDCPA does not apply to law firms.
What does this mean for Illinois residents? If the debt collector who sues you doesn’t have the proper documentation, it means that you may have a cause of action under the Illinois Collection Agency Act and the Illinois Consumer Fraud Act.
There are several debt collection agencies and debt buyers that file a high volume of cases against Illinois consumers. In Cook County, for instance, 14 debt collection agencies stand out as filing numerous lawsuits for allegedly outstanding debts. They are:
Cavalry Portfolio Services
Equable Ascent Financial
National Credit Adjusters
In addition, it appears that Midland Funding likely files a high volume of lawsuits in Cook County.
On several occasions, we’ve talked about debt collectors’ strategy of filing numerous lawsuits against consumers. For some debt collectors, this has become a business model, in that they are using the taxpayer-funded court system as a collection method rather than collection tactics that would cost the companies money. Requiring debt collectors to attach documentation to the lawsuits filed, as Illinois does, is critical in protecting consumers’ rights. This is because, all too often, debt buyers go after the wrong people – those whose names, addresses, or phone numbers are similar to the person owing the debt. Sometimes, debt buyers file suit for debts that are past the statute of limitations, or against those who have already paid off a debt. Without the proper documentation, judgments can be granted to debt buyers against unsuspecting consumers, who find out after the fact that their wages are being garnished or their bank accounts are being emptied for a debt that isn’t theirs. The court’s decision in Grant-Hall v. Cavalry Portfolio Services is important in ensuring that consumers have an avenue of redress when they’re caught in the crossfire.