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FIA Card Services, N.A. v. Razvi

A-1107-07T3 (N.J. Super. App. Div. 2008) (Unpublished)

CREDIT CARDS; FDCPA — The issuer of a credit card is not a debt collector under the Fair Debt Collection Practices Act when it pursues an action against its customer directly because a creditor is not subject to the Act when collecting its own accounts.

A credit card company served a notice of arbitration upon a debtor (who was a New Jersey resident) to collect the balance due on a delinquent credit card account. The debtor complained that the proposed arbitration hearing was set for Minnesota. Had he participated in the arbitration, however, under the credit card agreement, he could have designated New Jersey instead. The arbitrator in Minnesota awarded the account balance to the vendor in an uncontested proceeding. The vendor filed a complaint in New Jersey to confirm the award. An order awarding the vendor summary judgment was signed reflecting the arbitration award. The debtor appealed the order of award.

The Appellate Division affirmed the lower court’s ruling, holding that the federal Fair Debt Collection Practices Act (FDCPA) had no application to this matter. The Court ruled that the vendor was not a “debt collector” under the Act; rather the vendor pursued its action against the debtor directly and was a creditor. The Court stated that a creditor is not subject to the FDCPA when collecting its own accounts. It also recognized that the summary judgment obtained against the debtor only confirmed the uncontested arbitration award.

The Court recognized that the debtor, by his use of the credit card, bound himself to the terms of the cardholder agreement, which provided that any disputes between the parties had to be resolved by binding arbitration. It noted that the debtor was served with notice of the arbitration proceeding and chose not to request that it be conducted in New Jersey. As a result, an uncontested arbitration was conducted in Minnesota. The Court concluded that the debtor did not address the merits of the claim, but rather challenged the legitimacy of the proceeding without any basis in law or fact. As such, it held that the lower court ruling confirming the amount of the arbitration award by way of summary judgment was affirmed because, as a matter of law and fact, no other result could be reached.


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