Loan Glitch Leads To $122,000 Payback Supreme Court Rules That Loan Company Violated Fair Debt Collection Practices

A 13-year dispute over repayment of a $2,500 student loan has ended with the former student winning a $122,700 judgment from the Student Loan Fund of Idaho Inc.

The state Supreme Court on Tuesday unanimously upheld the award to Jeffrey Duerner, agreeing with 4th District Judge Duff McKee that the loan fund was subject to the Fair Debt Collections Practices Act and had violated it.

After obtaining four separate loans totaling $4,000 from two banks between 1979 and 1982, Duerner defaulted on all of them and the loan fund took them over in the mid-1980s for collection.

Duerner claims he paid $2,500 in 1984, but the fund disputes that and he could not produce any record of the payment.

Three years later, Duerner was sued for repayment and was told his payoff amount was $1770. He paid that amount, but the fund pressed ahead with its lawsuit and obtained a default judgment for nearly $6,600, which did not take into account any payments.

Then in 1990, Duerner again asked the fund how he could retire the entire debt and was told $70 would do the trick. He paid that amount and was sent back the four original notes all marked “paid in full.” The loan fund later claimed it was still owed the $2,500 and maintained that a computer mistake led to return of the notes.

The fund continued to press in court for the $2,500 until in 1993 Duerner countersued, accusing the loan fund of violating the debt collection law and defaming him.

A jury in May 1996 rejected the fund’s claim for the $2,500 and then ordered the fund to pay Duerner $2,100 for violating the debt collection law and over $120,000 in compensatory and punitive damages for defamation.

The high court rejected the fund’s contention that McKee mishandled several aspects of the trial and should have voided the jury verdict when it was rendered.