Jury Awards $500,000 to California Couple in FDCPA Case

Last month, Manuel and Luz Fausto won one of the largest collection awards documented in the last couple of years under the Fair Debt Collection Practices Act (FDCPA) against Credigy Services Corporation.

A California jury awarded the Faustos $500,000 in damages caused from harassment by Credigy collectors. Of the sum granted, $100,000 was for actual damages the Faustos experienced, while $400,000 was in punitive damages, granted for “malicious and reckless disregard of the couple’s rights.”

According to one of the Faustos’ lawyers, David Humphreys of Humphreys Wallace Humphreys, P.C. , the case stemmed from a debt on a Wells Fargo charge card opened in 1992.

Humphreys told insideARM that the Faustos routinely paid the account balance on the credit card, but the balance kept increasing. The Faustos then requested that the account be frozen, but their request was declined by a local Wells Fargo branch. Humphreys said the Faustos received help in paying the balance from a local business that promised to negotiate a discounted payoff of credit card balances.

The Faustos were under the impression that the debt owed to Wells Fargo was paid off with two money orders in the late 1990s.

In 2006, Credigy contacted the Faustos with a demand of almost $17,000.

Humphreys noted that a Brazilian affiliate of Credigy made over 90 threatening calls and sent numerous letters to the Fausto home, even after a cease and desist notice was sent to the company.

Luz Fausto recorded the last phone call made by the debt collectors, which documents false claims that threatened the Faustos’ livelihood. Credigy countered sued the Faustos on the grounds that the debt collection call was confidential.

Humphreys said that Credigy’s collection efforts did not cease until a lawsuit was filed.

Humphreys claimed that the jury award was the largest given to a consumer in a case brought under the FDCPA.

Manny Newburger, an attorney for debt collectors fears that consumer lawyers may make the false assumption that all juries will award large damages because it was awarded in this case.

“The Fausto case is fact-specific,” Newburger told insideARM. “In the vast majority of cases there is little or no evidence of actual damages presented by the consumer.” This is one reason why other debt collection lawyers are not inclined to let the verdict in this case affect their evaluation of other cases, he noted.

Newburger said that the defendants in this case sued for invasion of privacy, a common defense but also, “a theory that is asserted in a lot of the cases filed around the country involving alleged collection abuse and the jury ruled against the defendant in the invasion of privacy claim.”  

According to Newburger, the verdict was based on state legislation. “This is a California specific case,” he said.

Newburger argues that the only thing the Fausto case means is that the consumer won. He does not think the size of the award will entice more consumers to sue debt collection agencies.

“I think this verdict is indicative of what this jury thought of this particular case, but not of anything else,” Newburger said.  

As for the size of the jury award, Newburger said that he had heard of larger rulings in FDCPA cases.

The ruling for the statutory penalty is still undecided. Once decided, a judgment could be granted for any sum up to $1,000 for Credigy’s violations of the FDCPA.

It is unknown if Credigy will appeal the ruling. The lawyers for the debt collection agency could not be contacted.