7th Circuit holds individual who denies owing a debt can qualify as a consumer under FDCPA
On October 18, the U.S. Court of Appeals for the 7th Circuit held that an individual is a “qualified consumer” under the FDCPA, even when he is alleged by debt collectors to owe debts that he claims he does not owe. According to the opinion, a credit card was fraudulently opened in the plaintiff appellant’s name and was charged off, after default, to a debt collector who filed suit in an attempt to collect the debt. After the small-claims collection case was dismissed, the plaintiff appellant sued the debt collector for alleged violations of the FDCPA and the Illinois Collection Agency Act. The district court dismissed the action, holding that, to be a “consumer” under FDCPA, the individual must “allege he actually owed a debt.” On appeal, the 7th Circuit reversed. It held that the plain language of FDCPA covers individuals “allegedly obligated to pay” a debt, which includes “obligations alleged by the debt collector as well.” As a result, individuals who are alleged by debt collectors to owe debts are consumers under the FDCPA, even if they deny having any connection to the debt or any obligation to pay it.