Collector Prevails in FDCPA Suit Claiming Business Debt was Consumer-Related

A U.S. District Court in Arizona last week ruled in favor of a commercial debt collection agency that was sued by a consumer who alleged violations of the FDCPA. But the consumer had made his purchase as a business and later tried to claim the product was for personal use.

In Peters v. Coface Collections North America, the consumer plaintiff purchased software from Media Cybernetics/Princeton Instruments (Princeton) using the business name Multi Media Plus. When plaintiff did not pay for the software, Princeton placed the account with collector defendant Coface Collections North America, Inc. (now called Altus Global Trade Solutions) for collection. Plaintiff later filed the suit under the Fair Debt Collection Practices Act’s 1692b and 1692c, alleging that Coface collected the debt in an unfair and harassing manner.

Both parties moved for summary judgment before Senior U.S. District Judge Frederick J. Martone.

The plaintiff claimed that the only reason he used a business name in the software purchase was because Princeton sold their products only to businesses. A former teacher, Peters said that he purchased the software for the purpose of making educational 3-D images for use in his classroom and to share with other educators, and that he generally creates images as a hobby. He argued that he has never sold or made a profit on any of the images. He further contended that “[e]ven though [he] stated that MultiMedia Plus was the business purchasing the Software, MultiMedia Plus is not actually a business.”

But Martone wrote in his opinion that “By holding himself out as a business, [the plaintiff] is estopped from now asserting that he purchased the software as a consumer.” The judge agreed with Coface’s argument that the debt was a commercial, not a consumer, debt and therefore the FDCPA is not applicable.

“The FDCPA protects consumers from unlawful debt collection practices, and therefore, applies to consumer debts and not business loans,” Martone wrote in granting summary judgment to Coface, and simultaneously denying the plaintiff’s motion for summary judgment.

“We are happy with the ruling,” said Altus president Tom Brenan in a statement. “Altus is committed to protecting our clients’ and acting in full compliance with the FDCPA and other applicable laws and regulatory requirements.  We will always defend ourselves against these frivolous and inaccurate claims that contradict the trust we have worked to earn on behalf of our clients. We operate under the highest level of standards and our quality control measures ensure we are always in compliance with the FDCPA.”