Credit Card Collection Defense

One of the most dramatic changes in the law has been the stunning increase in credit card debt collection cases and the growth of credit card debt collection agencies. There are two sides to every debt collection case.

As long as the debt truly exists, the creditor has a right to seek repayment from the debtor. But the debtor may be unable to pay or the creditor may use unsavory methods to seek repayment. If you have been sued by a debt collection agency for repayment of a credit card debt, you need to contact an attorney immediately. 

Credit card debt collection cases have been the subject of much legal scrutiny. In 2011, the Superior Court of Pennsylvania determined that the rule of incorporation of business records were inapplicable under Pennsylvania law in Commonwealth Financial Systems, Inc. v. Smith.

This case alleged that the defendant owed credit card debt to Commonwealth Financial Systems, Inc. (CFS), a company that purchases and collects upon debt, for debt purchased from Citibank. CFS only had one witness at trial, who testified that he was not familiar with how Citibank created or maintained their business records, employed or protect their computers, and electronically transmitted their spreadsheets.

The CFS witness did state that the standard in the industry is that the debt buyer purchases the debt and is provided with documents supporting the debt. At the close of trial, defense counsel objected to admission of CFS’s exhibits, arguing that the did not qualify as business records under the Pennsylvania Rules of Evidence.

CFS argued that given modern computer technology and emerging case law, it had a right to rely upon Citibank’s representations. The trial court sustained the objection and refused to admit into evidence the account statements, bills of sale, and credit card agreement. The trial court determined that CFS had failed to establish the trustworthiness and reliability of the records sufficient to permit their admission into evidence. CFS filed a timely appeal.

The issue before the Superior Court was whether computerized files of an original creditor are admissible as a business record of a successor debt buyer. The Superior Court noted that the appears to be an issue of first impression.

On appeal, CFS argued that the federal “rule of incorporation” should be applied in Pennsylvania credit card debt collection cases. The federal “rule of incorporation” states that a third party purchaser, like a debt collection company, creates a business record when it takes custody of documents from the selling business.

CFS further argued that, in order to authenticate a document, a witness does not need to be the author of the document, participate in the document’s creation, or even be able to attest to its accuracy. To support its position, CFS stated that the rule is used in federal court and there is a national trend by the states supporting its use.

The Superior Court rejected CFS’s arguments. The court framed the issue narrowly as to whether it was an abuse of discretion by the trial court not to admit the evidence.

The court determined that it was not an abuse of discretion for the trial court to rule that the documents were inadmissible. The court reasoned that the “rule of incorporation” has not been adopted by the Commonwealth of Pennsylvania. The court state that the Pennsylvania Rules of Evidence did not provide for a “rule of incorporation.”

Credit card debt collection cases are prevalent due to the downturn of the economy. If you are being sued by a debt collector for credit card debt, then contact an attorney immediately. The law firm of Behrend and Ernsberger, P.C. may be able to you assist you in a credit card debt collection case- call us today at (412) 391-2515.