A new amicus brief filing by the CFPB recently appeared on the CFPB’s amicus program webpage. On August 14, 2013, the CFPB, jointly with the FTC, filed an amicus brief in Delgado v. Capital Management Services, LP, et al., a case on appeal to the Seventh Circuit. The brief urges the Seventh Circuit to affirm the district court’s refusal to dismiss a class action complaint alleging that a debt collector’s letter offering a settlement of the plaintiff’s credit card debt violated the Fair Debt Collection Practices Act (FDCPA) because it did not disclose that the debt was time-barred.
Even though the letter did not threaten litigation, the plaintiff claimed that the letter nevertheless violated the FDCPA’s prohibition of a debt collector’s use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” According to the plaintiff, the collector’s failure to disclose that the debt was time-barred, together with setting a 45-day deadline for paying the settlement amount, amounted to a misleading representation that the debt could be legally enforced.
In their brief, the CFPB and FTC argue that a time-limited settlement offer can mislead an unsophisticated consumer to believe that a debt is enforceable even if the offer is not accompanied by any explicit or implied threat of litigation. They contend that when a debt is time-barred, a dunning letter that sets a deadline for accepting a settlement offer must expressly disclose that the collector cannot legally sue on the debt to avoid creating the impression that the collector may sue if payment is not made by the deadline.
The FDCPA does not require debt collectors to disclose that a debt is time-barred when attempting to collect. If the CFPB’s view is accepted, it would effectively impose such a requirement on any settlement offer that is not left open indefinitely. Given that the CFPB appears poised to engage in FDCPA rulemaking, use of the notice and comment rulemaking process would be a more appropriate way for the CFPB to achieve its apparent goal of imposing a new FDCPA requirement.