Capital One Wins Iowa Debt Collection Test

All Banking Law, All in One Place. Bloomberg Law: Banking is the comprehensive research solution that powers your practice with access to integrated banking-related legal news, analysis,...

By Chris Bruce

Nov. 27 — Capital One Bank (USA) N.A. did not violate an Iowa debt collection law by collecting a debt without registering with the state as a debt collector, the Iowa Court of Appeals said (Capital One Bank (USA) N.A. v. Taylor, Iowa Ct. App., No. 13-2043, 11/25/15).

The Nov. 25 ruling involved a debtor, Randy Taylor, who claimed Capital One's failure to register under Section 537.6202 of the Iowa Consumer Credit Code (ICCC) is an unfair debt collection practice. The Iowa Court of Appeals disagreed, citing and adopting the analysis in a 2012 federal district court ruling that involved a similar dispute.

Although Capital One is a national bank, the court declined to address whether the National Bank Act preempts the Iowa law.

“We do not reach the issues of exemption and preemption because we find that a failure to file a notification pursuant to section 537.6202 is not a violation of the ICCC that allows a defendant in a debt collection action to pursue a counterclaim for unfair debt collection practices under the IDCPA,” the court said, referring to the Iowa Debt Collection Practices Act.

Debtor Will Appeal

According to the Court of Appeals, the case involved two trial court rulings. In 2012, a trial court denied the bank's motion for summary judgment and held that, as a national bank, it was not exempt under the law.

Capital One renewed its motion, and in 2013, a different trial court agreed with Capital One, holding national banks are exempted from the notification requirement (The Court of Appeals, in describing the two rulings, used the language of exemption, not preemption).

Taylor's attorney, Raymond H. Johnson of the Johnson Law Firm in West Des Moines, Nov. 27 said he will ask the Iowa Supreme Court to review the decision.

In an e-mail to Bloomberg BNA, Johnson said lower courts in Iowa are split on whether national banks must register in order to collect debts in the state.

He said different sets of standards are at work, and that debt collection proceedings “are unfair to consumers.”

“It is our position that if national banks do not have to register and designate a registered agent in Iowa, or even come to trial for the debt collection actions they file, the system is very unfair to consumers,” Johnson said. “National banks and other large corporations are losing confidential information of consumers at alarming rates. The wrong people are being sued for debts they do not owe. National banks like Capital One and debt buyers are collecting debt with robo-signed affidavits that contain false or seriously misleading statements. Courts need to be fair,” he said.

Neither Capital One nor the office of Iowa Attorney General Thomas J. Miller immediately responded to a request for comment Nov. 27.

To contact the reporter on this story: Chris Bruce in Washington at

To contact the editor responsible for this story: Seth Stern at