Court Sides With Collector on Out-of-Stat Disclosure

On May 16, 2016, in an order granting a defendant’s motion for judgment on the pleading a federal judge in Florida ruled that a debt collector’s letter on a time-barred account did not violate multiple provisions of the Fair Debt Collection Practices Act (FDCPA). The case is Valle v. First National Collection Bureau, Inc. (Case No. 16-62751, U.S.D.C, Southern District of Florida.)

A copy of the order can be found here.

Background

On October 10, 2016, Defendant, First National Collection Bureau, Inc. (FNCB,) sent the Plaintiff a collection letter in an attempt to collect a consumer debt on an account owned by LVNV Funding LLC. The Plaintiff alleged that she defaulted on the debt more than five years ago and has made no payment toward the debt since defaulting, and therefore any legal action to collect the debt is time-barred. The Plaintiff also alleged that the collection letter violated a variety of provisions of the FDCPA. The Plaintiff sought statutory and actual damages, an injunction prohibiting FNCB from engaging in further collection activities directed at the Plaintiff, and costs and reasonable attorneys’ fees.

The Defendant did not dispute that the Plaintiff was the object of collection activity arising from consumer debt, or that the Defendant qualifies as a debt collector under the FDCPA. The parties’ dispute concerns whether the Defendant engaged in an act or omission prohibited by the FDCPA.

The matter was before the Court on the Defendant’s Motion for Judgment on the Pleadings.

Alleged Violation of § 1692g(a) of the FDCPA

15 U.S.C. § 1692g(a) states that, “[w]ithin five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication. . .send the consumer a written notice containing –

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) 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;

(4) 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 (5) 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.”

The Plaintiff claims that the collection letter violated § 1692g(a) by failing to adequately inform the Plaintiff of these rights, as well as how to exercise these rights.

However, the court disagreed stating:

“Accordingly, since the collection letter set forth all of the information required to be provided by 15 U.S.C. § 1692g(a), and neither the Complaint nor the Plaintiff’s briefing identify any specific information that was missing or misleading, the Court grants the Defendant judgment on the pleadings with respect to the Plaintiff’s allegation that the collection letter violated § 1692g(a).”

Alleged Violation of 15 U.S.C. § 1692f(8)

15 U.S.C. § 1692f prohibits debt collectors from using “unfair or unconscionable means to collect or attempt to collect any debt,” and subsection (8) specifically prohibits the use of “any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails. . .except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.”

The Plaintiff alleged that the collection letter violated this provision because the envelope used to mail the collection letter displayed a bar code through the transparent window of the envelope.

Again, the court agreed with the defendant. The court wrote:

“The bar code displayed through the window of the envelope does not implicate or identify the Plaintiff as a debtor in any way, nor has the Plaintiff alleged that the bar code identified her as a debtor. In light of the legislative history indicating that § 1692f(8) was intended to be limited to symbols indicating that the contents of the envelope pertain to debt collection, the Court does not find that the mere visibility of a bar code on an envelope containing a collection letter violates § 1692f(8). Accordingly, the Court grants the Defendant judgment on the pleadings with respect to the Plaintiff’s allegations that the Defendant violated 15 U.S.C. § 1692f(8).”

Alleged Violation of 15 U.S.C. § 1692e(2)(A)

15 U.S.C. § 1692e(2)(A) prohibits a debt collector from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt,” including the false representation of “the character, amount, or legal status of any debt.”

The Plaintiff alleges that the collection letter violated this prohibition because it failed to sufficiently inform the Plaintiff that the debt was “absolutely time-barred,” and failed to “adequately disclose the impact making a payment would have, to wit, that making a payment would revive the Consumer Debt, thus making it legally enforceable.

The collection letter stated, in relevant part:

The law limits how long you can be sued on a debt. Because of the age of your debt, LVNV Funding LLC will not sue you for it, and LVNV Funding LLC will not report it to any credit reporting agency. In many circumstances, you can renew the debt and start the time period for the filing of a lawsuit against you if you take specific actions such as making certain payment on the debt or making a written promise to pay. You should determine the effect of any actions you take with respect to this debt.

Again, the court agreed with the defendant, writing:

“The collection letter specifically stated that FNCB would not sue the Plaintiff because of the age of the debt. The collection letter also specifically disclosed that payment of the debt or a promise to pay the debt could re-start the statute of limitations. Even from the perspective of the least sophisticated consumer, the Defendant did not misrepresent the legal status of the debt. Therefore, the Court grants the Defendant judgment on the pleadings with respect to the Plaintiff’s allegation that the letter violated 15 U.S.C. § 1692e(2)(A).”

Alleged Violations of 15 U.S.C. § 1692e(10)

15 U.S.C. § 1692e(10) prohibits “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.”

The Plaintiff alleges that the Defendant’s use of the language “will not sue you” was misleading because it implied that the Defendant chose not to sue the Plaintiff when, in reality, the Defendant could not sue the Plaintiff as a matter of law because of the age of the debt.

The court disagreed, writing:

“The Court disagrees. The phrase with which the Plaintiff takes issue must be read in the proper context. The relevant paragraph states in full: “The law limits how long you can be sued on a debt. Because of the age of your debt, LVNV Funding LLC will not sue you for it, and LVNV Funding LLC will not report it to any credit reporting agency.” Thus, the Defendant informed the Plaintiff that there are legal limits to how long she could be sued for the debt, and then stated that “Because of the age of your debt,” she would not be sued. Read in the context of the entire paragraph, the phrase “will not sue you” is not false or deceptive, even from the perspective of the least sophisticated consumer.”

insideARM Perspective

On March 27, 2017 insideARM wrote about another case involving this debt collector and the same letter. See that article here. The case discussed in that earlier article was from United States District Court in Indiana. As noted above, the case discussed today was from the Southern District of Florida. The two cases and stories should be read together.

Here is classic situation where a debt collector now has two different courts deciding the same issue, but with opposite results.

insideARM contacted FNCB for comment. Issa Moe, General Counsel and Chief Compliance Officer, responded:

“We are thrilled with the Court’s decision, particularly as it pertains to the disclosure regarding the time-barred nature of the debt at issue and the impact of certain actions, such as payments, on the statute of limitations. FNCB takes great care to ensure that every word in its letters is clear and unambiguous to the consumer. The out-of-statute disclosure challenged in this lawsuit is no exception. The disclosure is the product of thoughtful analysis by industry leaders of prior judicial decisions and regulatory guidance. Despite an inconsistent decision regarding a similar disclosure in an Indiana federal court, FNCB intends to stand behind its disclosures. We hope this decision paves the way for other agencies to do the same.”

Is there a lesson to be learned from these two cases? I go back to my comment in the March 27, 2017 article: