The West Virginia Supreme Court of Appeals affirmed last week that consumers can sue third party debt collectors under the state’s Consumer Credit and Protection Act (WVCCPA) – a statute that carries greater punitive damages for violators than the federal Fair Debt Collection Practices Act (FDCPA).

The ruling came June 14th in the case of Linda Barr vs. NCB Management Services Inc. and HSBC Bank of Nevada.  It’s the final say on the issue unless the state legislature changes the law, which is not expected. However, if a new law were passed, it would only apply to future complaints.

The case began in the U.S. District Court for the Northern District of West Virginia. Barr alleged that NCB Management Services violated the act by intentionally inflicting emotional distress on her, when over a two month period collection representatives from the Trevose, Pa.- based debt collection agency repeatedly telephoned her with an intent to “annoy, abuse, oppress, and threaten” her in an attempt to collect nearly $7,900 of unpaid debt on a repossessed motorcycle.

NCB asked the district court to dismiss the case, arguing that the WVCCPA only gives consumers the right to sue creditors. After considering some amendments, District Court Judge John Preston Bailey, in September 2010, asked the Supreme Court to decide, citing conflicting language in the statute.

In its ruling, the Supreme Court noted that it had not been previously defined who or what is considered a creditor, and so determined that a debt collector can be included in that definition based on the intent of the legislatures when the WVCCPA was drafted and passed. That applies whether the agent is acting as an agent for a creditor and violates the law or as the new owner of the debt. The court explained that the WVCCPA is a remedial statute intended to provide broad consumer protection from unfair, illegal and deceptive business practices, and must be liberally construed to accomplish that purpose.

“It logically follows that, insofar as the Legislature intended for Article 2 to apply to professional debt collectors, the Legislature likewise intended to allow consumers to utilize the remedy provisions of Article 5 to seek redress from professional debt collectors,” Justice Robin Davis wrote on behalf of the court.

NCB Management did not respond to insideARM’s inquiry regarding the ruling. The company’s attorney had previously said a ruling in Barr’s favor would leave third party agencies more vulnerable to lawsuits, increase their costs and risk of doing business in the state, and impact consumer lending.

Barr’s attorney, Anthony Majestro, says the ruling does not change how the law has been interpreted in the past.

“We are happy that the court recognized this interpretation of the statute, which is consistent with way everyone always has interpreted the law and as the intent of the drafters back in the 1970s,” Majestro said. “We don’t’ believe anything will change.  There should be no additional burden on the [debt collection] industry that should have been following this law and the parallel provisions of the FDCPA.”

The case has been sent back to Judge Bailey who requested the clarification. Majestro said his office resubmitted the complaint on June 15th and will file amendments to provide more details of the alleged violations of the West Virginia law.

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