James Moore purchased computer equipment from ABC Electronics for the grocery store he had operated for almost his entire life. Repeated illnesses forced him to close the store, however, and he was unable to make payments and finally defaulted.

ABC wrote him three letters and then referred the matter to a collection agency.

The agency called Moore at his place of business several times, and each time they got a recorded message. Then, after a search at the county clerk's office turned up Moore's home address, the agency began placing calls to his home.

After the fourth call, Moore consulted an attorney and instituted a suit against the agency for violation of the Fair Debt Collection Practices Act.

Moore charged that the telephone calls constituted an abuse of debt collection practices and that since he was an individual doing business as a trade name, he should be covered under the Fair Debt Collection Practices Act.

The agency argued that Moore was a business debtor, and that therefore the transaction was not a consumer transaction and should not be covered under the FDCPA.

Who is right?

Moore won.

The one important factor that is not totally obvious from the case, but is significant, is that Moore's minor son received a foul, indecent, and intimidating telephone call. It seems that the violations were fairly blatant, and this may have swayed the court to attempt to find some avenue to identify a violation of the FDCPA.

The court explained that once the agency telephones the consumer at his home, the call converted the debt from the business to the consumer category. The court's reasoning was that the telephone call to the home indicated or suggested to Mr. Moore that he personally, rather than the business, was liable.

This was a remarkable decision, and in my opinion the court was merely stretching to find some way to hold the collection agency liable. The Act states fairly clearly under Section 803 Subdivision 5 the following:

"the term debt means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or service which are the subject of the transaction are primarily for the personal family or household purposes, whether or not such obligation has been reduced to judgment"

The definition of consumer is also vividly clear:

"the term consumer means any natural person obligated or allegedly obligated to pay the debt"

In this case, even if the consumer operated the grocery under a trade name and was obligated to pay the debt, the debt did not arise for a personal, family, or household purpose. The computer equipment was clearly ordered by the grocery store and was for a business purpose. The decision is not a reported decision. It is, however, indicative of how courts will sometimes go out of their way to hold agencies liable when they feel that violations fall within the parameter of the prohibited activity set forth in the FDCPA but are not covered merely because it is a business rather than a consumer debt.

Often, if the consumer pleads properly, the court will find a violation in the collection of a business debt under the state laws, many of which cover the same prohibitive activities set forth in the FDCPA but do not distinguish between business and consumer delinquent debts.

In essence, a debt collector as defined by the FDCPA would be wise to comply with the requirements of the Act, even when pursuing a business debt. The FDCPA has become the standard.

The court says that if a collection action is a violation under the FDCPA, then it should be a violation whether the debt is business or consumer and, sometimes, whether the collector is an agency or a creditor. Many of the cases that extend the coverage of the FDCPA to creditors are built on the premise that the creditor was committing a fairly blatant act that would have been a violation under the FDCPA, but did not constitute a violation because the creditor, rather than a collection agency, performed the act. In these cases, the courts also stretch to find the creditor liable and sometimes produce bad law--as I think the court did in this case. If the violation had been merely technical, I doubt that the court would have reached the same result.