Seventh Circuit Elaborates on Definition of “Consumer” Under Fair Debt Collection Practices Act

The Seventh Circuit Court of Appeals recently heard a case in which it had to determine whether the definition of a “consumer” under the Fair Debt Collection Practices Act (FDCPA) includes a person who is being contacted by a debt collector over a debt that allegedly is owed, but which the person claims she or he does not owe. The definition of “consumer” is extremely important for this particular type of situation because it determines whether that person—who says she does not actually owe a debt but is being contacted about a debt—has protections under the FDCPA.
In the case, Loja v. Main Street Acquisition Corp. (2018), the Court determined that the definition of “consumer” under the FDCPA is broad enough to include “consumers who have been alleged by debt collectors to owe debts that the consumers themselves contend they do not owe.” The case will have implications for future consumers in Oak Park and throughout Illinois. We want to tell you more about the case and why it is significant.
Getting the Facts of Loja v. Main Street Acquisition Corp.
The case began back in 2007 when a person opened a Visa credit card account using the name “Mario Loja.” The card went into default with a remaining balance of $4,018.17, and the bank charged off that debt. The bank then sold the debt to Main Street Acquisition Corporation, which is a collection agency in Illinois. The collection agency then hired a lawyer to file a claim to recoup the money owed. In short, Mario Loja was named in the complaint, and he was served with papers requiring him to appear in small claims court.
According to the case, Loja “maintains he never opened an account . . . and never accrued any credit card debt” on that account. When Loja was served with the complaint, he appeared in small claims court to insist further that he never owed the debt. He also insisted that, even if he did owe the debt, the claim was time-barred under Illinois law. The small claims court dismissed the case with prejudice, ruling in favor of Loja.
Loja then filed a claim against Main Street under the FDCPA. Main Street argued that Loja was not eligible to file a claim under the FDCPA because he was not able to show that his claim related to credit card debt “for personal, family, or household purchases.” Loja argued that, even though he did not owe the debt in question, it was “on a personal credit card,” which was sufficient for purposes of filing a claim under the FDCPA. However, the district court dismissed the case brought by Loja for another reason, which led to the Seventh Circuit hearing the case.
Defining a “Consumer” Under the FDCPA
The district court ultimately dismissed the case in favor of Main Street, ruling that Loja was ineligible to file a claim because he did not meet the definition of a “consumer” under the FDCPA. The district court reasoned that a consumer is defined as one who is “obligated or allegedly obligated to pay any debt,” and as such a plaintiff—Loja in this case—would be required to “allege he actually owed a debt.” Since Loja maintained that he did not owe the debt, the district court said he could not file a claim under the FDCPA. Loja appealed to the Seventh Circuit.
The Seventh Circuit Court of Appeals ruled that “the definition of ‘consumer’ under the FDCPA includes consumers who have been alleged by debt collectors to owe debts that the consumers themselves contend they do not owe.” The Court reasoned that this ruling is in line with the aims of the FDCPA, which is designed to hold debt collectors accountable for their conduct. The ruling broadens the definition of consumer and allows other people in situations like Loja’s to file a claim under the FDCPA.
Contact an Oak Park Consumer Protection Lawyer
If you have questions about your rights under the FDCPA, you should discuss your case with a consumer protection attorney in Oak Park. An advocate at the Emerson Law Firm can help. Contact us today for more information.
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