4th Circuit Holds That Debt Collection Claim Under WV Consumer Protection Act Does Not Require Showing of Intent

A panel of the U.S. Court of Appeals for the Fourth Circuit recently held that a consumer is not required to show that a defendant acted with intent to establish a violation of the West Virginia Consumer Credit and Protection Act provisions governing debt collectors (the CCPA).

Over the course of their mortgage loan’s life, the plaintiffs-borrowers made several voluntary prepayments to reduce the loan’s balance.  When making such payments, the borrowers paid both the regularly scheduled monthly payment and any prepayment amount using a single check.  The defendant–loan servicer, however, did not apply the prepayments toward the remaining balance before the monthly payments.  Because the simultaneous prepayment had not yet been credited, the monthly interest payment was calculated using a larger loan balance.

Despite reported reassurances to the contrary, the borrowers alleged that the servicer continued to credit payments in the purportedly incorrect order and that they never received a refund for the purported interest overcharges.  Consequently, the borrowers sued the servicer, alleging that they were charged interest not actually due on the loan in violation of the CCPA.  The district court granted summary judgment in favor of the servicer, concluding that the borrowers had failed to show that the servicer intended to violate the CCPA.

The Fourth Circuit reversed, holding that the district court had erroneously implied an intent requirement when the statute’s plain text did not provide for such a requirement.  As the Fourth Circuit reasoned, the statutory language prohibiting “any fraudulent, deceptive or misleading representation or means” does not require that a debt collector act intentionally simply because committing a “fraudulent act” in other contexts requires that the act be taken intentionally.

Accordingly, the Fourth Circuit vacated the summary judgment order and remanded the case for further proceedings, considering its interpretation of the CCPA.