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01
Jul
2019

Credit Union Violates Fair Trade Practices Act

Credit Union Violates Fair Trade Practices Act in collection actions against debtor.
 
The Internal Revenue Federal Credit Union granted a loan to Patricia Johnson. The loan went into default and the credit union sent the matter to a collection agency for further action.
 
The collection agency sent a demand letter to the debtor, however, prior to the debtor receiving the demand letter, the arrearage was cured and the account brought up to date.
 
The credit union demanded that Johnson also pay a 35% collection charge. Debtor refused to pay the collection fee and the credit union filed suit for the entire balance owing on the loan.
 
Johnson claimed that the credit union violated federal law, specifically the Fair Trade Practices Act, 15 USC 1640(A)(2), by failing send to her monthly statements of the account balance.
 
The trial court awarded the credit union a judgment for collection of the loan balance, and also awarded a judgment to the debtor against the credit union for twice the finance charges on the debt from the date of the note to the date judgment was entered.
 
The Fair Trade Practices Act provides for damages and penalties which may be actual damages plus twice the amount of any finance charges, but not less than $100 or more than $1,000.
 
Here, in Internal Revenue Federal Credit Union v. Patricia Johnson, Court of Appeals of Louisiana, No. 92-C-0391,the credit union suffered a loss after being ordered by the court to pay the debtor twice the accrued interest on the loan from its inception to the date of judgment.
 
Author: Charles R. Harroun, Attorney at Law


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