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2021’s Top Consumer Credit Decisions From the 3rd Circuit

consumer credit litigationThe U.S. Court of Appeals for the Third Circuit handed down several noteworthy decisions impacting consumer credit law in 2021 concerning the disclosure of consumer account information, communications with consumers, itemization of debt, and whether a debtor’s spouse is liable for certain debts.

Morales v. Healthcare Rev. Recovery Grp., LLC, 859 F. App’x 625 (3d Cir. 2021)

In one of its most interesting opinions (and likely one of its most controversial) the Third Circuit held that a debt collector violated the federal Fair Debt Collection Practices Act when it sent a consumer a letter containing a bar code which was visible through the window of the envelope. The consumer alleged this bar code, if scanned by a smartphone, revealed an “Internal Reference Number.” The Court reversed the lower court, holding that the IRN was “protected information,” the disclosure of which caused a concrete injury, even absent allegations that it was viewed by anyone or  that it had the potential to expose plaintiff to an increased risk of harm.

Most perplexing about Morales is that although TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) was decided by the U.S. Supreme Court about ten days prior to its published decision, the Third Circuit neither requested additional briefing nor even mentions Ramirez in its opinion which, on its face, appears to be in  conflict with Ramirez.  Adding to the confusion is that the debt collector filed a peition for rehearing citing the decision’s failure to address Ramirez. The request was denied just 15 days later. Morales represents a divergence from the direction most Circuits appear to be heading when analyzing standing post-Ramirez. It is unlikely that Morales ages well in the months to come.

Leyse v. Bank of Am. Nat’l Ass’n, 856 F. App’x 408 (3d Cir. 2021)

The Third Circuit also had opportunity to weigh in on Article III standing in the context of an alleged Telephone Consumer Protection Act violation when it affirmed the lower court’s granting of summary judgment to the defendant on the basis that the plaintiff lacked standing. There, the plaintiff answered a phone call which was not connected to a person but rather played a prerecorded marketing message.

Being familiar with the TCPA based upon his work for a consumer law firm, the plaintiff thereafter placed and recorded over 20 calls to the calling entity during which he used a false name and employer and asked about the services the caller provided, the numbers it called, the dialing system it used, the number of recorded messages it left per day, and whether the representatives knew that the call violated the TCPA. When twice asked if he wanted to be added to their Do-Not-Call list, the plaintiff declined.

The District Court reasoned that the plaintiff did not claim that he suffered nuisance, annoyance, inconvenience, wasted time, or any other such injury. Rather, the plaintiff asserted only a procedural violation that resulted in no harm.

The Third Circuit affirmed and rejected the plaintiff’s argument that, with respect to the TCPA, Article III standing does not require any allegations of harm beyond the statutory violations themselves.

Instead, the Court noted that it had previously held that the TCPA is intended to prevent harm stemming from nuisance, invasions of privacy, and other such injuries and as such the plaintiff must allege one of those injuries that the TCPA is intended to prevent in order to have standing.

Moyer v. Patenaude & Felix, A.P.C., 991 F.3d 466 (3d Cir. 2021)

Weighing in on issues related to overshadowing and ensuring clear communication of a consumer’s validation rights, the Third Circuit held that a debt collector did not violate the FDCPA when it sent a consumer a collection letter inviting the plaintiff to “eliminate further collection action” by calling the company, when in fact only written communication could legally stop collection activity. There, the letter was the initial communication and also included the requisite validation notice pursuant to § 1692g(a).

Noting that only a written dispute of a debt is sufficient to require a debt collector cease collections pursuant to § 1692g(b), the plaintiff argued that the language inviting a telephone call to “eliminate” collections was misleading.

The Third Circuit was not persuaded by this argument noting that although the language invited the plaintiff call to “eliminate” collection action, the letter never asserted, explicitly or implicitly, that the phone call would, by law, force the debt collector to cease its collection efforts.

The Court also held that this invitation to call which preceded the validation notice did not create any confusion regarding how the plaintiff could exercise her rights pursuant to §1692g(a), as the validation notice was clear that a writing was required.

Hopkins v. Collecto, Inc., 994 F.3d 117 (3d Cir. 2021)

The Third Circuit affirmed the dismissal of a class action complaint alleging that a collection letter’s itemization of a debt as including “$0.00” in interest and fees — when the debt could not accrue interest or fees — violated the FDCPA.

In so ruling, the Third Circuit concluded that the inclusion of line items listing $0.00 in the form letter’s interest and fees columns did not mislead the consumer to believe that he may owe interest or fees in the future in violation of the FDCPA.

Specifically, the plaintiff had alleged that because the debt was static and purportedly could not accrue interest or fees, that assigning a “$0.00” value to those columns falsely implied that interest and fees could accrue and increase the total debt over time.

Joining the Fifth and Sixth Circuits which had both already weighed on similar claims, the Court rejected that the type of consumer the FDCPA has been interpreted to seek to protect would be misled holding that even the least sophisticated consumer “reads a debt collection letter without speculating about what could happen in the future based on true statements concerning the past.”

Noting that the plaintiff had alleged that the letter was a “mass-produced, computer-generated form letter” the Court explained that “[t]o see $0.00 in each of the form letter’s interest and fees columns, and yet fail to understand that they are inapplicable vestiges of a template letter, is to be callow to an unrealistic and fanciful degree. And yet, as [plaintiff] tells it, this same person is also shrewdly speculative — extrapolating that he or she needs to pay off the debt post haste because interest and penalties are materially likely to accrue in the future. Our FDCPA case law does not support attributing to the least sophisticated debtor simultaneous naïveté and heightened discernment.”

Klotz v. Celentano Stadtmauer & Walentowicz LLP, 991 F.3d 458 (3d Cir. 2021)

The Third Circuit addressed whether the federal Equal Credit Opportunity Act preempted a state common law doctrine permitting a debtor’s spouse to be held liable for certain debts. There, the plaintiff’s husband had incurred medical debt prior to his death which went unpaid and ultimately was sought for collection from the plaintiff herself pursuant to New Jersey’s common-law doctrine of necessaries, which provides that a spouse is jointly liable for necessary expenses incurred by the other spouse.

After receipt of demand letters, the plaintiff sued pursuant to the FDCPA, claiming that she did not owe the debt. The plaintiff claimed that to the extent the doctrine of necessaries could cause her to be liable on the debt, same was preempted by the ECOA.

Specifically, the ECOA prohibits “any creditor” from “discriminat[ing] against any applicant, with respect to any aspect of a credit transaction[] on the basis of . . . marital status.” 15 U.S.C. § 1691(a)(1). In this regard, the ECOA further provides that “a creditor shall not require the signature of an applicant’s spouse . . . on any credit instrument if the applicant qualifies under the creditor’s standards of creditworthiness for the amount and terms of the credit requested.” 12 C.F.R. § 202.7(d)(1).

The plaintiff had argued that the doctrine of necessaries conflicts with the ECOA’s spousal-signature prohibition because by imposing liability for her deceased husband’s debt, the doctrine effectively treats her as a spousal co-signer on the debt in violation of the spousal-signature prohibition. Per the plaintiff, this conflict means the spousal-signature prohibition preempts the doctrine.

Rejecting this theory, the Court held that the ECOA does not preempt the doctrine of necessaries because the medical debt in issue was “incidental credit” exempt from the prohibition.

Noting that under the ECOA “incidental credit refers to extensions of consumer credit . . . (i) [t]hat are not made pursuant to the terms of a credit card account; (ii) [t]hat are not subject to a finance charge . . . and (iii) [t]hat are not payable by agreement in more than four installments” the Court held that the medical debt involved fit such parameters, that as such the doctrine of necessities was not preempted, and thus the defendant’s attempts to collect same did not violate the spousal-signature prohibition of the ECOA and thus also did not violate the FDCPA.

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Shannon P. Miller is a principal attorney at Maurice Wutscher LLP, where he focuses his practice on various aspects of financial services law with an emphasis on consumer financial services litigation. He has successfully represented healthcare and financial institutions and law firms across the country for claims filed under the Fair Debt Collection Practices Act, Fair Credit Reporting Act, and various state consumer protection statutes. For more information, see

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