| Insights | Blog

No Bill of Sale, No Problem: Compelling Arbitration of FDCPA Claims

Last week, in Fuller v. Frontline Asset Strategies, Inc., the Northern District of Illinois compelled arbitration of Fair Debt Collection Practices Act (FDCPA) claims against LVNV Funding, LLC (LVNV), Resurgent Capital Services, L.P. (RCS), and Frontline Asset Strategies, LLC (Frontline), despite the absence of a bill of sale evidencing assignment of the underlying debt.

Janis Fuller held a credit card with Credit One Bank, N.A. (Credit One) for which she defaulted on the amount due, ultimately resulting in Credit One writing off and selling her debt to LVNV. RCS, as servicer of LVNV’s debt, hired Frontline to collect the debt. Fuller alleged that Frontline’s collection letter violated the FDCPA because it impliedly threatened to file suit, which Frontline—not being a law firm—could not do.  Frontline, RCS, and LVNV (collectively, Defendants), moved to compel arbitration pursuant to the cardholder agreement that governed the original relationship between Credit One and Fuller. Fuller presented four arguments, none of which the Court found availing.

First, Fuller argued that the Defendants failed to “produce[] a bill of sale with sufficient supporting documentation to prove that it was in fact validly assigned Plaintiff’s Credit One account and all rights thereunder.” The court noted that Fuller had alleged in her complaint that LVNV had purchased the debt, which operated as admission. But even putting the admission aside, Defendants had produced an affidavit from Credit One stating it sold its rights to LVNV, as well as a records affidavit from RCS showing “a list of receivables that LVNV obtained [from Credit One, including] Plaintiff’s account . . . .” These affidavits were sufficient to “demonstrate[] the existence of a valid arbitration agreement and its subsequent assignment to LVNV.”

Second, the Court dismissed Fuller’s argument that the Defendants failed to show she ever received the cardholder agreement by assuming—in the absence of any contract evidence—that she had received it. “Moreover, . . . requesting, receiving, and using the card, none of which Plaintiff disputes she did, constitutes the cardholder’s agreement with the terms stated, including the arbitration provision.”

Third, Fuller argued the Defendants waived arbitration by filing a state court collection suit. However, the arbitration agreement contemplated such suit, and the Defendants timely moved to compel arbitration of the federal claims brought by Fuller.

Fourth, Fuller claimed that her FDCPA claims fell outside the scope of the arbitration agreement, which purportedly only covered claims between her and Credit One. Here again, the Court turned to the agreement itself, which applied to Credit One’s “successors and assigns” and additionally covered “disputes relating to . . . collections matters . . . .”

Compelling arbitration remains a powerful tool for dispelling class actions and individual suits in unfavorable forums or with onerous discovery on the horizon. Though some courts have set high hurdles for debt buyers to compel arbitration based on a credit card agreement, Fuller shows that not all courts find bills of sale talismanic and that debt collectors may yet find a way to enforce arbitration provisions governing their debts.