In a recent decision from the U.S. District Court for the Northern District of Indiana, the court granted a motion to dismiss in favor of a debt collection law firm and one of its attorneys who were not licensed as debt collectors in Indiana. The court found that a failure to be licensed did not provide for a private right of action under state law and did not violate the Fair Debt Collection Practices Act (FDCPA).
In Washtour v. Weltman Weinberg & Reis Co. and Collier (Weltman), Weltman filed suit to collect on a car loan. That lawsuit was later dismissed. The plaintiff then sued Weltman and the handling attorney, alleging they violated state law and the FDCPA for being unlicensed and for seeking to collect without a perfected security interest.
The court agreed that “any person desiring to conduct a collection agency” must apply for a license and that it is unlawful to operate a collection agency without obtaining the required licensure. However, the statutory licensing scheme does not provide for a private right of action nor is it a duty enforceable by tort law. The plaintiff thus had no basis to seek damages under state law.
The plaintiff’s claim under the FDCPA failed because a violation of state licensing law does not constitute an FDCPA violation in the Northern District of Indiana. Similarly, the court found the failure of the lender to record the lien on the vehicle did not make the debt uncollectible or create an FDCPA claim.
The district court therefore dismissed the plaintiff’s claims.