The Colorado Supreme Court has issued a unanimous decision clarifying the documentation requirements debt buyers must meet when filing collection lawsuits under the Colorado Fair Debt Collection Practices Act (CFDCPA).
In Wright v. Portfolio Recovery Associates, LLC, the court held that a debt buyer must attach an assignment or other written documentation that specifically establishes ownership of the consumer’s debt when initiating a collection action. The court also determined that an affidavit cannot be used to replace or remedy missing chain-of-title documentation required by statute.
Case BackgroundÂ
The case arose when Portfolio Recovery Associates filed a lawsuit against Colorado consumer Felicia Wright seeking to collect $671.29 in alleged credit card debt.Â
To support its complaint, Portfolio Recovery Associates attached:Â
- A bill of sale between Comenity Bank and Portfolio Recovery Associates;Â
- Credit card statements associated with the account; andÂ
- An affidavit from a company records custodian stating that Wright’s account was included in the portfolio of accounts purchased from Comenity Bank.Â
Wright filed a counterclaim, alleging that the complaint failed to include the written proof required by the CFDCPA to establish that Portfolio Recovery Associates owned her specific debt. Both the county court and district court ruled in favor of the debt buyer, finding that the affidavit sufficiently supplemented the bill of sale.Â
Wright subsequently appealed to the Colorado Supreme Court.
The Court’s DecisionÂ
The Colorado Supreme Court reversed the lower courts and addressed two key provisions of the CFDCPA.Â
Blank Asset Schedules Do Not Establish Ownership of a Specific DebtÂ
Under Section 5-16-111(2)(b) of the CFDCPA, a debt buyer must attach a copy of the assignment or other writing establishing that it owns the debt being collected.Â
The court found that while the bill of sale demonstrated that Portfolio Recovery Associates purchased a portfolio of accounts from Comenity Bank, the accompanying asset schedule did not identify Wright’s specific account. As a result, the documentation did not establish ownership of the particular debt at issue and failed to satisfy the statute’s notice requirements.Â
Affidavits Cannot Replace Required DocumentationÂ
Portfolio Recovery Associates argued that the affidavit identifying Wright’s account cured any deficiency in the supporting documents.Â
The Supreme Court rejected that argument, pointing to Section 5-16-111(4) of the CFDCPA, which states that an affidavit does not satisfy the statute’s requirements when the documentation required by Section 5-16-111(2)(b) is absent.Â
According to the court, debt buyers must independently provide the required written evidence establishing ownership of the debt. An affidavit cannot be used to overcome missing documentation.Â
Potential Consequences Under the CFDCPAÂ
The court also noted that Section 5-16-113 of the CFDCPA provides remedies when a debt buyer fails to attach the required documentation. Those remedies may include statutory damages, court costs, and attorney fees.Â
The case was remanded to the lower court for further proceedings, including consideration of any damages and fees that may be awarded.
Impact of the DecisionÂ
The ruling provides additional guidance regarding the evidentiary requirements for debt buyers pursuing collection actions in Colorado. The decision emphasizes the importance of including documentation that specifically demonstrates ownership of the consumer’s individual account at the time a collection lawsuit is filed.Â
The court also reiterated that the CFDCPA is to be interpreted broadly in favor of consumer protections and the prevention of abusive debt collection practices.Â
Author:Â Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
