LVNV Funding Hit with $38 Million Verdict

Recently, the Circuit Court for Baltimore City delivered a verdict against a Las Vegas-based debt buyer, LVNV Funding, LLC. The court ordered LVNV to pay $38 million, which will be split among 1,590 people. This judgment is the largest ever ordered against a debt collector in Maryland.

The appellants filed a class action suit in the Circuit Court for Baltimore alleging LVNV was not licensed as a collection agency, as required by Maryland law, when it obtained the default judgments against co-appellants Larry Finch and Kurt A. Dorsey in the District Court for Baltimore City. Finch and Dorsey were consumers who accumulated credit card debts and in 2008 LVNV filed collection suits against them. The district court entered a default judgement against Finch in July 2009 and against Dorsey in April 2009 as often happens in debt collection cases. Finch and Dorsey filed a class action in 2009 representing a class comprised of, “Those persons sued by LVNV in Maryland state courts from October 30, 2007 through February 17, 2010 against whom LVNV obtained a judgement for an alleged debt, interest or costs, including attorney’s fees in its favor in an attempt to collect a consumer debt.”

The class action complaint alleged: (1) that LVNV engaged in illegal collection of debts because LVNV was not licensed as a collection agency in Maryland; (2) that LVNV’s unlicensed collection activities violated the Maryland Consumer Debt Collection Act and Maryland Consumer Protection Act; and (3) that the judgments against Finch and Dorsey were obtained based upon affidavits that were irregular in certain respects. The Maryland Collection Agency Licensing Act, requires all collection agencies to be licensed in Maryland for debts to be enforceable by judgements in Maryland. Additionally, in 2013 the Maryland Court of Special Appeals held that a judgement in favor of an unlicensed collection agency was void, but LVNV continued its unlicensed debt collecting until earlier this month.

The appellants, Dorsey and Finch, asserted five causes of action. The first three counts were based on LVNV’s unlawful activities as an unlicensed collection agency. For these counts, the appellants sought declaratory judgment and injunctive relief. In count four, appellants alleged unjust enrichment and sought to recover “all judgment sums, costs, and pre and post-judgment interest it has collected.” In count five, appellants asserted individual and class claims for damages under the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act.

When approached about the case attorney for LVNV, Ronald Canter, stated, “This case was completely without merit and as such, the company is determined to receive a fair and impartial hearing. In the end, we believe the Court will absolve LVNV and find that it has always operated within the letter and the spirit of the law and with the utmost transparency with our clients.” LVNV is planning to appeal the judgment.
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