Agency collecting credit card debt not a creditor, COA rules

A debtor’s counterclaim that a collection agency violated the Indiana Uniform Consumer Credit Code by not obtaining a license was rejected by the Indiana Court of Appeals on the grounds that although the agency was trying to recover a debt, it was not a creditor.

Asset Acceptance LLC, a Delaware limited liability company with its principal place of business in Michigan, tried to recover $6,594.26 from Nathan Wertz, who had defaulted on his credit card from Chase Bank/First USA/Chase.

Wertz claimed Asset Acceptance could not collect on payments for consumer loans debts because it is not licensed under the IUCCC. Accordingly, Wertz argued Asset Acceptance’s collection efforts violated both the Indiana Deceptive Consumer Sales Act and the federal Fair Debt Collection Practices Act.

The Indiana Court of Appeals disagreed in Nathan Wertz v. Asset Acceptance, LLC, 71A03-1305-CC-175. The COA affirmed the trial court’s grant of the agency’s Trial Rule 12(B)(6) motion to dismiss Wertz’s counterclaim.

Wertz raised the question on appeal of whether Asset Acceptance “regularly engage(d) in Indiana” in taking assignments of consumer loans or in the collection of payments from debtors arising from consumer loans as described in Indiana Code 24-4.5-3-502. If so, then it was required to have a license from the IUCCC.

Citing Sheetz v. PYOD LLC, 3:12-cv-811-JD-CAN, 2013 WL 5436943 (N.D. Ind. Sept. 26, 2013), the Court of Appeals rejected the argument that the plain language of the IUCCC extends the licensure requirement to entities not physically located in Indiana.

“…Section 3-502(3), which is the licensure requirement relevant here, does not require ‘creditors’ to obtain a license and instead focuses on the actions undertaken by the entity in question,” Judge Edward Najam wrote for the court. “These actions, in particular that of taking an assignment or collecting on a debt, may or may not be the actions of a creditor.”