4.2.4.1.1 General

Business records used to prove a collector’s causes of action constitute hearsay. Federal Rule of Evidence 801(c) provides that “[h]earsay is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” To be admissible, records relating to the consumer’s debt must fit within the business records exception to the rules prohibiting hearsay evidence.

Of course, the business records exception is only relevant in courts that prohibit hearsay. In some state small claims courts—for example, California—hearsay is admissible, but the court determines its weight.¹¹⁵ In Maryland, for claims for under $5000 brought in the district court, the admissibility of the evidence is also left to the trial judge, who will weigh the probative value of the evidence.¹¹⁶ Maryland requires, before a default judgment will be awarded to a debt buyer, that the complaint be accompanied by specified documents that must meet the business records exception to the hearsay rule. But this requirement only applies to a debt buyer seeking a default judgment, and, if a case is contested, then the requirements do not apply.¹¹⁷

Even in courts that allow hearsay evidence, the standards set out below as to the business records exception should still be relevant. The exception allows such records if they meet standards of reliability, and such reliability concerns will be relevant to the court in determining the weight to give to the records.

In most courts, however, hearsay is inadmissible, and most state rules of evidence are similar to Federal Rule of Evidence 803(6), which establishes that a business record is exempt from the hearsay rule only if it is:

. . . A record of an act, event, condition, opinion, or diagnosis if:

• (A) the record was made at or near the time by—or from information transmitted by—someone with knowledge;¹¹⁸
• (B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;
• (C) making the record was a regular practice of that activity;
• (D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and
• (E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.¹¹⁹