Federal Judge Dismisses FDCPA Collection Letter Case with "Least Sophisticated Consumer" Discussion

A judge in the US District Court for the Eastern District of New York this week sided with a debt collection agency in dismissing a case, with prejudice, that alleged violations of the FDCPA in collection letter language. The judge offered interesting commentary on the “least sophisticated consumer” standard in her opinion.

The case, Kassel v. Universal Fidelity, was filed as a putative class action in July 2013. The plaintiff alleged that she received a collection letter from the defendant which included the heading “VALUED CUSTOMER” in a typeface “larger and different than any on the page.” In addition, the body of the letter contained the passage, “According to our client’s accounting records, you have ignored the terms of this purchase agreement with them. We are somewhat surprised, since our client indicated that YOU ARE A VALUED CUSTOMER of theirs.”

At the bottom of the letter, the plaintiff alleged the presence of a pre-printed signature of “C. Hearn, Director of Payment Control.” U.S. District Judge Joanna Seybert noted in her opinion that the plaintiff did not attach the letter as evidence in the suit.

Kassel contended that the collection letter violated the FDCPA, specifically 15 U.S.C § 1692e, two different ways. First, “by deceptively informing Plaintiff with regard to the creditor that ‘YOU ARE A VALUED CUSTOMER of theirs,’ …when Defendant knows this to be untrue in view of the fact that Plaintiff had one solitary transaction with the creditor and in no way can be perceived as a ‘valued customer.’”

Second, the inclusion of a pre-printed signature of “C. Hearn” “mislead[s] the consumer into believing that their [sic] particular file was reviewed by Ms. or Mr. C. Hearn who discussed it with the creditor who in turn described the consumer as ‘a valued customer,’ causing Ms. or Mr. Hearn to be ‘somewhat surprised’ to learn this.”

Universal Fidelity moved for dismissal or summary judgment, which Judge Seybert granted.

Counsel for the defendant, Nathan D. Adler of Neuberger, Quinn, Gielen, Rubin & Gibber in Baltimore, summarized the Seybert’s decision and impact on FDCPA suits:

The Court, applying the “least sophisticated consumer” standard here, found that Plaintiff failed to state a claim under 15 U.S.C. § 1692e. The Judge ruled that “Even if it is true that Plaintiff only engaged in one transaction with the creditor, the Court fails to see how the term ‘valued customer’ violates § 1692e, as it is simply a comment regarding the creditor’s perception of the Plaintiff.”

The Complaint next alleged that the inclusion of the pre-printed signature of “C. Hearn” “mislead[s] the consumer.” The Court found that this allegation is nothing more than a “bizarre or idiosyncratic interpretation of [a] debt collection letter”, and failed to see how this statement would “affect a consumer’s ability to make intelligent decisions concerning an alleged debt.”

Judge Seybert noted that the “least sophisticated consumer” standard does not stand alone. Rather, other courts have held that “the least-sophisticated-consumer standard also encompasses a materiality requirement; that is, statements must be materially false or misleading to be actionable under the FDCPA.”

In discussing the decision to dismiss with prejudice, Seybert wrote that “the Court finds that leave to replead would be futile as Plaintiff’s reading of the Collection Letter proffers an idiosyncratic interpretation of it and the alleged deceptive statements are not materially false or misleading.”