SW Legal Educational Publishing

Waiver of Privacy Rights in Loan Agreement Violates Public Policy
Description Appeals court held that a loan application form that contained a waiver of privacy rights was unenforceable. The borrower, who suffered abusive debt collection tactics, could proceed with a suit for violation of privacy against the lender.
Topic Consumer Protection
Key Words Debt Collection; Invasion of Privacy
C A S E   S U M M A R Y
Facts King borrowed $500 from Cashland in an unsecured loan. The agreement included this clause: "I agree that Cashland, Inc. may contact any person(s) on my original application and on this application. I waive any privacy claims against Cashland, Inc." His application included his sister and a friend as references and gave the name of his employer. King's check to repay the loan bounced, so Cashland began collection efforts. Its employees called King 40-50 times and used abusive language. Cashland also called his sister and friend and told them King would be arrested; King's landlord and employer were also contacted by letter and fax about the debt. King sued Cashland for invasion of privacy and for violation of the Ohio Consumer Sales Practices Act. The trial court dismissed the suit; King appealed.
Decision Reversed. "Public policy demands that debt collectors act in a reasonable manner when pursuing payment of debts. ... Cashland's collection tactics exceeded the bounds of reasonableness." The clause about waiving any privacy claims permitted Cashland to engage in "unlimited abusive and harassing methods of debt collection." That violates public policy and is, therefore, unenforceable. King has grounds for a suit for invasion of privacy. He has no suit for violation of the Ohio Consumer Sales Practices Act, because that applies only to sellers of goods, not money lenders.
Citation King v. Cashland, Inc., 2000 WL 1232768 (Ct. App., Ohio, 2000)

Back to Consumer Protection Listings

©1997-2001  South-Western, a division of Cengage Learning, Inc. Cengage Learning is a trademark used herein under license.