Cruz v. International Collection Corp.

A debt collection agency violates the FDCPA when it (1) uses false, deceptive, or misleading representation when attempting to collect a debt, or (2) contacts a debtor who has notified the creditor, in writing, of refusal to pay the debt. An individual may personally violate the FDCPA if he qualifies as a debt collector and took action that violated the FDCPA.

Herminia Cruz filed suit under the Fair Debt Collections Act (FDCPA) against International Collections Corporation (ICC) and Charles Hendrickson, the sole owner, officer, and director of ICC. Cruz wrote two checks, totaling $500, to Harrah’s Casino in Nevada. Both checks bounced. Harrah’s assigned the claim to ICC, which commenced collection action against Cruz. ICC sought payment of $2,042.59, which included interest, fees, and treble damages. Cruz sent ICC written notice disputing the debt and refusing to pay. Thereafter, ICC sent seven more collection letters. The district court granted summary judgment in favor of Cruz. The district court also granted three post-summary judgment motions awarding damages, attorney’s fees, and substitution of Leonides Cruz for Herminia Cruz as plaintiff. ICC and Hendrickson appealed. The Ninth Circuit found that ICC violated the FDCPA when it claimed it could collect interest and fees even though Nevada does not allow such recovery. In Nevada, a debt collector cannot collect interest or fees unless added before the debt collector received the debt. Harrah's did not add any interest or fees to its $500 claim before assignment. The Court also found that ICC’s claim for treble damages was excessive ($1500) because it could only collect up to $500 for each bad check. The Court ruled that Hendrickson was a debt collector and personally liable because he signed to receive Cruz’s certified letter refusing to pay the debt and because he signed the fourth collection letter sent to Cruz, even though he used the name of another employee. The Court denied the appeal of the post-petition summary judgment motions because notice of appeal was not timely. AFFIRMED in part, DISMISSED in part.