Facts

Manuel Fausto opened a Wells Fargo charge card in 1992. The card had a credit limit of $1000. Mr. Fausto and his wife, Luz Fausto, made monthly payments, but the balance continually increased, and the Faustos sought assistance from a local loan modification business. In 1998 or 1999, the Wells Fargo debt was paid off.

In August 2006, Credigy Services Corp. (Credigy) contacted the Faustos at their home by phone and by mail regarding their debt. The Faustos did not recognize Credigy as a party they had dealt with previously regarding the Wells Fargo debt. Credigy claimed that they had assumed the debt and that the Faustos owed them $17,000.

With the assistance of the Watsonville Law Center, a non-profit legal clinic, the Faustos sent Credigy a letter demanding proof of the debt. Credigy did not provide proof and the Faustos sent a cease and desist letter demanding that no further contact be made by Credigy. Credigy continued to call and send letters. The Faustos sued Credigy claiming violations of the federal and state Fair Debt Collection Practices Act.

PLAINTIFFS' CONTENTIONS:
Plaintiffs contended that Credigy made repeated false threats and claims regarding the debt. These included a false threat that Credigy would take plaintiffs' home and paycheck, a false claim that Mrs. Fausto was jointly liable for the debt, and a false claim that Credigy would report the account "forever" on Mr. Fausto's credit file.

DEFENDANTS' CONTENTIONS:
Credigy contended that it had made a "bona fide error" in continuing its collection efforts against the Faustos. The dispute resolution team was overloaded with work and lacked the resources to spot the error that had occurred in the Faustos file.

Result

Plaintiffs' verdict for $500,000. The award consisted of $100,000 in actual damages and $400,000 in punitive damages. Plaintiffs are also entitled to attorney fees and costs.