Consumer Finance Litigation

In Cherkaoui v. Santander Consumer USA, Inc., No. 4:13-cv-00467 (S.D. Tex. May 23, 2014), the U.S. District Court for the Southern District of Texas examined how a creditor may obtain "prior express consent" from a borrower and the level of evidence necessary for a borrower to survive summary judgment with claims of oral revocation of consent. The plaintiff in Cherkaoui obtained an automobile loan from the defendant, Santander Consumer USA, Inc. ("Santander"). On his credit application, the plaintiff provided his cellular telephone number. The plaintiff alleged that, despite providing his number on the credit application, he orally revoked his consent during a telephone call with Santander in December 2009. After conducting a review of corresponding entries in Santander's activity notes (which contained a record of each call between the plaintiff and Santander), the Court determined that the plaintiff's own self-serving testimony regarding his alleged oral revocation of consent was insufficient to survive summary judgment. The Court also reviewed the defendant's procedures for "verifying" a cellular telephone number with a borrower and determined that these verifications were evidence that the borrower did not orally revoke consent. Specifically, the Court stated: "Instead of revoking consent to be called on his cell phone number, Plaintiff repeatedly verified that the cell phone number was an acceptable contact number." The Court also found it relevant that over 99% of the calls placed by Santander to the borrower went unanswered and that the borrower made nearly 50 calls to Santander from his cell phone. The Cherkaoui court also provided commentary on the automobile lending industry, stating that "Santander's actions in relation to the Loan and Plaintiff were consistent with industry standards and practices under the circumstances" and that Santander had "demonstrated intent to provide Plaintiff the opportunity to become current and avoid repossession of [his vehicle]." Thus, the Court granted summary judgment in favor of Santander, finding that the plaintiff had provided Santander with "prior express consent" to call the cell phone at issue. The Cherkaoui opinion provides helpful guidance for creditors/debt collectors that are seeking to contact a borrower. "Verifying" cell phone numbers during telephone calls was cited by the Court as strong evidence to rebut plaintiff's self-serving testimony of oral revocation. Additionally, producing detailed activity notes related to telephone conversations with the borrower was also cited by the Court as additional evidence refuting claims of oral revocation. These procedures were enough for Santander to avoid a fact issue and disprove the undocumented allegations of the plaintiff.