Court Rules “Reply-by” Date Falling Outside 30-day Validation Notice Not a FDCPA Violation

Last week a federal court in Missouri ruled that a letter which contained a “reply-by” date that was outside the 30-day validation notice window was not a Fair Debt Collection Practices Act (FDCPA) violation. The case is Koller v. Midland Credit Management, Inc. (Case No. 4:17-cv-00430, U.S.D.C., Western District of Missouri, Western Division). 

A copy of the court’s Order granting Defendant’s motion to dismiss can be found here.

Background 

On December 21, 2016, defendant, Midland Credit Management, Inc. (MCM) sent Plaintiff a collection letter (the Letter). The letter is titled “NOTICE OF NEW OWNERSHIP AND PRE-LEGAL REVIEW.” The body of the Letter’s first page states: 

[MCM] is considering forwarding this account to an attorney in your state for possible litigation. However, such forwarding will not occur until after the expiration of the validation period described on the back of this letter. Upon receipt of this notice, please call to discuss your options.

If we don’t hear from you or receive payment by 02-04-2017, we may proceed with forwarding this account to an attorney. 

In addition to the validation rights described on the back of this letter, here are some possible options: 

— Pay your full balance . . .

— Call us to see how to qualify for discounts and payment plans. 

At the top of the Letter, in large font, is a direction to call MCM “by 02-04-2017 to Discuss Options.” And, in the left margin, the Letter states in bold, “Once your account is paid: collection calls will stop on this account [and] collection letters will stop on this account,” followed by, “Reply by 02-04-2017.” The Court refers to this February 4, 2017, deadline as the “reply-by” deadline. 

At the bottom of the first page, the Letter directs the reader to “PLEASE SEE REVERSE SIDE FOR IMPORTANT DISCLOSURE INFORMATION.”  On the reverse, below a shaded table providing account and contact information, the Letter provides the 30-day validation notice. The letter states: 

Unless you notify MCM within thirty (30) days after receiving this notice that you dispute the validity of the debt, or any portion thereof, MCM will assume this debt to be valid. If you notify MCM, in writing, within thirty (30) days after receiving this notice that the debt, or any portion thereof, is disputed, MCM will obtain verification of the debt or a copy of a judgment (if there is a judgment) and MCM will mail you a copy of such verification or judgment. If you request, in writing, within thirty (30) days after receiving this notice, MCM will provide you with the name and address of the original creditor.

. . .

Please remember, even if you make a payment within thirty (30) days after receiving this notice, you still have the remainder of the thirty (30) days to exercise the rights described above. 

On May 1, 2017, plaintiff filed suit in state court alleging violations of the FDCPA. Plaintiff complaint made two claims:

1. The Letter was misleading, in violation of 15 U.S.C. §1692e; and
2. MCM’s representations regarding the February 4, 2017, deadline for a reply overshadowed or were inconsistent with her 30-day window to dispute the debt, in violation of 15 U.S.C. § 1692g(b).

Plaintiff essentially made the same argument under both claims; that because the “reply-by” deadline overshadowed and was inconsistent with her validation rights and the notice deadline, it constituted a false and misleading representation. 

MCM removed to this Court and filed a Motion to Dismiss for Failure to State a Claim. The court’s order is in response to that motion. The order was written by the Honorable Greg Kays, Chief Judge, United States District Court. 

The Court’s Decision 

First, the Court addressed Plaintiff’s argument that the “reply-by” deadline overshadowed and was inconsistent with the 30-day validation period, in violation of 15 U.S.C. § 1692g. The court determined that the “reply-by” date was not inconsistent with Plaintiff’s rights. Judge Kays wrote: 

“The parties agree the “reply-by” deadline falls outside of the 30-day validation notice window. Because the “reply-by” date was after the expiration of Plaintiff’s validation notice period, it was not inconsistent with Plaintiff’s right to dispute her debt within 30 days. The Letter did not suggest Plaintiff was required to pay the debt prior to the 30-day window’s expiration. It clarified that action by MCM would not occur until after the expiration of the validation period described on the back page, and any payment received by MCM within the 30-day window would not bar Plaintiff from exercising her validation rights.” 

Next, the court addressed Plaintiff’s second argument: that the Letter was false or misleading in violation of 15 U.S.C. §1692e. In support, Plaintiff essentially argued the “reply-by” deadline overshadowed her 30-day validation notice window, misleading her to believe she had until February 4, 2017, to dispute the debt’s validity. 

However, the court also agreed with MCM on this issue: 

“ …….the Court finds even an unsophisticated consumer, if reasonable, would not assign the “reply-by” deadline to her validation rights. Thus, Plaintiff’s claim the Letter violated 15 U.S.C. § 1692e fails as a matter of law. 

Because Plaintiff has not stated a plausible claim upon which relief can be granted, Defendant’s Motion to Dismiss for Failure to State a Claim is GRANTED.” 

insideARM Perspective 

The is nothing better than a strong judge willing to put a quick end to a FDCPA lawsuit that doesn’t meet minimal thresholds. The lawsuit was filed in May of this year and dismissed by this judge less than six months later. Still, MCM was forced to engage counsel and incur attorney’s fees to gain the victory. insideARM would be curious to know what “demand” was made by plaintiff’s attorney to settle the case. 

insideARM has discussed this dilemma before. What is the right answer? Pay a settlement or fight on principle. Every case is different, every plaintiff’s attorney is different. There is no “one size fits all” answer. MCM should savor the victory, BUT, a different judge could have denied their motion and sent the case down the road for greater defense costs.