Debt Buyer's Failure to Communicate Disputed Nature of Debt to its Collector found Actionable under the FDCPA; Class Action survives Motion to Dismiss

In Plummer v. Atlantic Credit & Finance, Inc.,[1] the court upheld three general rules:

  • Debt buyers are debt collectors.
  • Buying and selling debts is considered debt collection activity covered under the FDCPA.
  • Communications made to third-party collectors may also be actionable.

Basic facts:

Velocity moved to dismiss the class action using the following arguments:

  • Its placement of the debt with Capital Management was not a "communication" under the FDCPA.
  • It was not a "debt collector" because it did not directly attempt collection.

The court found plausible the plaintiffs' theories against Velocity:

  • Velocity's failure to disclose disputed nature of debt to Capital Management is a material misrepresentation covered under the FDCPA. Whether negligent or intentional, debt buyers may not immunize themselves from liability by hiring another collector to do its dirty work.
  • Velocity may be vicariously liable for the acts of Capital Management.
If you have received any communication from Atlantic Credit, Velocity Investments, or Capital Management Services, contact us right away. You must act to preserve important rights.

[1] 13-CIV-7562 (SDNY, Decided 12/8/14). Found here.

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