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Yvette Vangorden was no pushover when the bank came after her for a credit card debt.
She settled the dispute for about a third of the original amount, paying $571 and change to get rid of it. About five years later, however, a debt collector came after her for some purported balance.
In Vangorden v. Second Round, Ltd., she sued for unfair debt collection practices. This time, the debt collector should have settled.
Should Have Settled
In her lawsuit, Vangorden said the debt collector violated the Fair Debt Collection Practices Act by falsely representing the character, amount and legal status of the debt. She sought statutory damages, attorney's fees, costs, and interest.
The defendant argued the plaintiff should have disputed the debt first, and that it didn't have to verify the debt before attempting to collect. Vangorden lost at the trial court, but she won on appeal.
The U.S. Second Circuit Court of Appeals said the FDCPA bars debt collectors from going after people who don't owe them. Just because Vangorden could have disputed the debt didn't mean the collector could escape liability for violating the law.
The appeals panel reversed and remanded. The judges said they were following precedent in the Third, Fourth, and Sixth Circuits.
'Least' Sophisticated Consumer
Congress enacted the FDCPA to protect consumers against unfair collection practices, the Second Circuit said, and the defendant misrepresented the status of Vangorden's debt.
"As Vangorden persuasively argues, upon receipt of a debt collection letter misstating a debt obligation and requesting payment, a consumer -- and, particularly, a least sophisticated consumer -- might question whether she had indeed satisfied the debt and make payment anew 'out of fear and confusion,'" the court said.
In other words, another consumer might have been misled. That's not Vangorden, however.