In Rudio v. Credit Control, LLC, 2018 WL 4772303 (N.D.Cal., 2018), Judge Donato dismissed an FDCPA and Rosenthal Act claim.
Credit essentially inverts Rudio’s claim to contend that the FDCPA does not apply to settled or expunged debts. The point is not well taken. The FDCPA defines “debt” to include an “alleged obligation of a consumer” to pay money, “whether or not such obligation has been reduced to judgment.” 15 U.S.C. § 1692a(5). An alleged debt is enough to trigger the FDCPA because Congress intended “to protect consumers who have been victimized by unscrupulous debt collectors, regardless of whether a valid debt actually exists.” Baker v. G. C. Servs. Corp., 677 F.2d 775, 777 (9th Cir. 1982); see also Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 361-62 (6th Cir. 2012) (“[A] debt holder or servicer is a debt collector when it engages in collection activities on a debt that is not, as it turns out, actually owed.”); Shula v. Lawent, 359 F.3d 489, 491 2 (7th Cir. 2004) (same). To conclude otherwise would violate Congress’s intent as stated in the ordinary words of the FDCPA, and lead to the perverse result that lenders, collection agencies and others would be perfectly free to engage in the most reprehensible conduct so long as the claimed debt didn’t actually exist or was even fictitious. The Rosenthal Act claim is derivative of the FDCPA claim and will go forward for the same reasons. See Davis v. Hollins, 832 F.3d 962, 966 n.3. (9th Cir. 2016).