The U.S. Court of Appeals for the Third Circuit recently held that a debt collector did not violate the federal Fair Debt Collection Practices Act (FDCPA) when it sent a consumer a collection letter inviting her to “eliminate further collection action” by calling the company, when in fact only written communication could legally stop collection activity.
A copy of the opinion in Moyer v. Patenaude & Felix, A.P.C. is available at: Link to Opinion.
A consumer failed to pay her credit card debt, and the card issuer hired a debt collector. The debt collector sent the consumer a collection letter that stated:
- Please be advised that the above-referenced debt has been assigned to this firm to initiate collection efforts regarding your delinquent outstanding balance to our client. If you wish to eliminate further collection action, please contact us at [the debt collector’s phone number].
(the “contact sentence”). In addition, the collection letter also stated:
- Unless you notify this office within THIRTY (30) days of receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume this debt is valid.
- If you notify this office in writing within THIRTY (30) days of receiving this notice that this debt, or any portion thereof, is disputed, this office will obtain verification of the debt, or a copy of a judgment against you, and mail you a copy of such verification or judgment. Further, if you make a written request upon this office within THIRTY (30) days of receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.
- This is an attempt to collect a debt and any information obtained will be used for that purpose.
The consumer sued the debt collector under the FDCPA, arguing that the contact sentence would make a debtor uncertain about the correct method to dispute the debt.
The trial court disagreed with the consumer and granted summary judgment in favor of the debt collector. This timely appeal followed.
When deciding if a debt collection action violates the FDCPA, courts in the Third Circuit employ the “least sophisticated debtor” standard. Jensen v. Pressler & Pressler, 791 F.3d 413, 418 (3d Cir. 2015). “The standard is an objective one, meaning that the specific plaintiff need not prove that she was actually confused or misled, only that the objective least sophisticated debtor would be.” Id. at 419.
Under 15 U.S.C. § 1692e, “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” “[A] collection letter ‘is deceptive when it can be reasonably read to have two or more different meanings, one of which is inaccurate.’” Wilson v. Quadramed Corp., 225 F.3d 350, 354 n.2 (3d Cir. 2000 (quoting Russell v. Equifax A.R.S., 74 F.3d 30, 35 (2d Cir. 1996)).
Also, under 15 U.S.C. § 1692g(a), a debt collector must provide the consumer with a written notice containing the following:
- the amount of the debt;
- the name of the creditor to whom the debt is owed;
- a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
- a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
- a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
Id. § 1692g(a). Section 1692g(a)(3) through (5) represent the “validation notice,” which informs a consumer how to obtain verification of the debt, a copy of a judgment, or the name and address of the original creditor, and that she has 30 days in which to do so. Wilson, 225 F.3d at 353–54. It was not disputed that the debt collector here did provide the validation notice in the collection letter after the contact sentence.
If a consumer writes to a debt collector to dispute the debt or to request the name of the original creditor, then § 1692g requires the debt collector to “cease collection of the debt . . . until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and [these materials are] mailed to the consumer by the debt collector.” § 1692g. Thus, a phone call to a debt collector cannot legally stop collection activity.
In this case, the consumer argued that the collection letter is deceptive because it indicated that a telephone call was a “legally effective” method of stopping collection activity.
The Third Circuit was not persuaded by this argument because, while the debt collector did invite the consumer to call to “eliminate” collection activity, it never explicitly or implicitly stated that calling would legally force the debt collector to cease its collection efforts.
The consumer also asserted that because the contact sentence came before the validation notice in the collection letter, a debtor would be left confused as to whether she should call or write to exercise her rights under § 1692g.
The Third Circuit again disagreed because the validation notice specifically instructs the consumer to write to exercise her § 1692g rights, not to call.
Similarly, the Court noted that the contact sentence does not state or even suggest that the consumer could exercise her § 1692g rights over the phone. The Court also held that the order of the paragraphs does not create confusion. See Wilson, 225 F.3d at 356 (holding that a paragraph demanding immediate payment of a debt that preceded a validation notice did not create “an actual or apparent contradiction” with the validation notice in violation of § 1692g).
Accordingly, the Third Circuit concluded that the collection letter did not violate the FDCPA, and affirmed summary judgment in favor of the debt collector.