A recent decision of the Northern District of Ohio, Vantu v. Echo Recovery, L.L.C., held that a repossession agency, while generally not subject to liability under the Fair Debt Collection Practices Act, becomes subject to such liability when it undertakes to repossess collateral that it does not have a present right to possess.
This case arises out of a sordid factual scenario involving a defaulted auto loan and a botched attempt at repossessing the vehicle securing the loan. While attempting to repossess a van belonging to the ex-husband of Plaintiff Vantu, an employee of Echo Recovery appeared at the home of Plaintiff’s sister during Plaintiff’s visit. The employee of Echo Recovery announced his intention to repossess her ex-husband’s van, which was parked in the driveway. Plaintiff advised the Echo Recovery employee that he was mistaken and that he had no right to repossess the van. Plaintiff then got into the van and attempted to drive to her ex-husband’s house, so that the ex-husband and the Echo Recovery employee could resolve the matter. The Echo Recovery employee, however, blocked Plaintiff from leaving by brandishing a semi-automatic pistol and threatened to shoot her. The Echo Recovery employee then physically battered Plaintiff while trying to take the keys to the van. Ultimately, the Echo Recovery employee was arrested and convicted for his actions in attempting to repossess the van.
Plaintiff Vantu filed suit against Echo Recovery and its employee, alleging violations of the FDCPA. Echo Recovery responded that the court had no jurisdiction over Vantu’s FDCPA claim because Echo is not a “debt collector” for purposes of 15 U.S.C. § 1692a(6). Echo Recovery argued that its principal business is not debt collection and that entities that enforce security interests, including repossession agencies, are generally not considered debt collectors.
The court however, explained that section 1692a(6) provides that, “[f]or purposes of section 1692f(6)” only, the term “debt collector” also “includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.” 15 U.S.C. § 1692a(6). Section 1692f(6), in turn, forbids a debt collector from “[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property if … there is no present right to possession of the property claimed as collateral through an enforceable security interest.” 15 U.S.C. § 1692f(6)(A). Taken together, the court noted that these provisions provide that security enforcers, like Echo Recovery, that attempt to repossess collateral without a present right to possess the collateral become subject to liability under the FDCPA.
In determining whether a security-interest enforcer has violated section 1692f(6), the court explained that the applicable state self-help repossession statute, which identifies the circumstances under which an enforcer of a security interest does not have a present right to the collateral at issue, must be examined. The court recognized that, both under Ohio law and generally, a security-interest enforcer loses its right to present possession of collateral if it breaches the peace. Because Vantu’s complaint alleged that Echo Recovery’s employee sought to repossess her ex-husband’s car and, while doing so, pulled out a gun, threatened to shoot her, and battered her, the court found that these allegations were sufficient to support a conclusion that Echo Recovery had no right to present possession of the collateral, and its conduct, as alleged, violated the FDCPA.