District Court Holds Letter Notifying Debtor That Change in Ownership of Debt May Be Subject to FDCPA | Troutman pepper

On October 5, 2020, the United States District Court for the Intermediate District of Florida refuse a debt collector’s motion for summary judgment, ruling that a letter that provides notice of a change in ownership of the debt and requests that payments be released to the new owner is considered a debt-related communication under the Fair Debt Collection Practices Act (“FDCPA”), which limits how debt collectors can collect debtors.

Axiom Acquisition Ventures, LLC (“Axiom”) purchased Robert Valenzuela’s consumer debt from a bank after he allegedly defaulted on his personal loan payments. Axiom sent Valenzuela a letter notifying it that its debt had been reallocated and ordering it to remit future payments to Axiom.

Valenzuela sued, alleging that the letter violated the FDCPA because it (1) did not inform him of his right to dispute the debt; (2) misled him as to the chain of ownership of the debt; and (3) concealed Axiom’s status as a collection agent. Axiom sought summary judgment, arguing that the letter was not a communication “in connection with the collection of a debt” submitted to the FDCPA, only a notice of the change in ownership of its debt.

The district court denied Axiom’s motion, applying precedent from the United States Court of Appeals for the Eleventh Circuit, that a communication from a collection agent may serve a dual purpose, such as giving notice and demand payment. The Court found that to be true here, concluding that the letter was a communication in connection with the collection of a debt because in addition to informing Valenzuela of the change in ownership, it “also includes specific language urging the claimant to immediately remit future payments” to Axiom. The Court noted that if this wording had not been included, the result might have been different.