In a 2017 Fair Debt Collection Case, the Ohio Supreme Court ruled that the Fair Debt Collection Practices Act (FDCPA) and the Ohio Consumer Sales Practices Act applied to the lawsuit filed by First Resolution Investment Corporation (FRIC). Ohio’s borrowing statute imposes a shorter statute of limitations when the cause of action accrues in a different state with a shorter statute of limitation. Filing a lawsuit in violation of the FDCA is unlawful Ohio debt collection.
Fair Debt Collection Act Governs Unlawful Ohio Debt Collection
The Fair Debt Collection Practices Act has four elements:
- A person is harmed by a violation of the FDCPA or is a consumer;
- The debt arises out of a transaction entered primarily for personal, family or household purposes;
- The entity collecting the debt is a “debt collector”;
- The entity violated, by act or omission, a provision of the FDCPA.
The FDCPA excludes original creditors engaged in debt collection. The FDCPA applies to purchasers of debt and attorneys who regularly engage in debt-collection activities, including litigation to collect debts owed by consumers.
Ohio Consumer Sales Practices Act Governs Unlawful Ohio Debt Collection
The Ohio Consumer Sales Practices Act protects consumer debtors against debt collectors and attorneys representing debt collectors. “[N]o supplier shall commit an unconscionable act or practice in connection with a consumer transaction.”
Facts Of The 2017 Fair Debt Collection Case
Debtor used a credit card for her personal use she defaulted on. The debt was purchased and resold repeatedly until it became owned by FRIC. Debtor made all payments to the original creditor in Delaware. No signed credit card agreement was produced to the trial court.
Ohio Borrowing Statute
The Ohio Borrowing Statute borrows another state’s statute of limitation if the cause of action accrued in that foreign state and that state’s limitation period is shorter. The cause of action is where the plaintiff resides and sustains economic impact of the loss. Here, the bank was located in Delaware and failure to receive payments consequently occurred in Delaware. Delaware had a shorter statute of limitation than Ohio. While FRIC filed in time for Ohio’s statute of limitation, it did not file in time for Delaware’s statute of limitation. Filing outside of the statute of limitation is a violation of the FDCPA. In other words, it is unlawful Ohio debt collection.
Unlawful Interest Rate
FRIC requested 24% without a contract providing for the same. Asking for such a rate in a complaint may induce the defendant to pay the debt and the higher rate. A court filing is not a safe harbor for debt collectors under the FDCPA.
A creditor is limited to interest at the statutory rate unless a written contract provides a different rate of interest, pursuant to Ohio Interest Rate Law. An invoice or monthly statement is not enough to legally impose a higher rate on a consumer.
Attorney Daniel Gigiano
Attorney Daniel Gigiano was admitted to the practice of law in Illinois in 1993. In 1999, he was admitted to practice in Ohio. In 2000, he took his experience to a private practice in Wadsworth, Medina County, Ohio, and devotes a substantial portion of his practice to bankruptcy and defending credit card collection cases. Attorney Gigiano has maintained a practice in Wadsworth since that time.