On December 15, 2020, the Seventh Circuit Court of Appeals decided four cases which all dealt with the issue of standing within the context of the Fair Debt Collection Practices Act (“FDCPA”). With these holdings, the Seventh Circuit stated that simply alleging a procedural violation, confusion, or annoyance under the FDCPA does not constitute an injury-in-fact and that plaintiffs need to show real harm resulting from their responses to debt collectors’ actions to have Article III standing in federal court.

In Bazile v. Finance System of Green Bay Inc., Sandra Bazile (“Bazile”) alleged that Finance System of Green Bay (“FSGB”) sent her a dunning letter seeking to collect medical debts she incurred. She further alleged that the letter did not indicate whether the amount owed may increase with the accrual of interest and that the exclusion of this information was a violation of the FDCPA because the letter was misleading and did not provide “the amount of the debt,” as required under Sections 1692g(a)(1) and 1692e. The district court thought Bazile had standing but ultimately sided with FSGB on the merits. The Seventh Circuit took up the standing issue de novo and determined that Bazile needed to do more than allege an FDCPA violation to establish standing. It held that she also needed to show personal harm. The Court noted that one way this harm could be demonstrated was through showing a concrete detriment to her debt-management choices. The Court then remanded the case back to the district court to hold an evidentiary hearing to determine whether Bazile suffered an injury-in-fact.

In Spuhler v. State Collection Service Inc., Kyle and Nichole Spuhler (“the Spuhlers”) brought a similar claim to that of Bazile. The Spuhlers alleged in their complaint that State Collection Service, Inc. (“SCS”) sent dunning letters that were misleading – and thus violated Sections 1692e(2)(A) and 1692f of the FDPCA – because the letters lacked a statement that interest was accruing on debts they owed. The Seventh Circuit held that for a concrete injury to result from the dunning letter’s exclusion of a statement about accruing interest, the exclusion must have detrimentally affected the Spuhlers handling of their debts. An example of concrete injury in this instance could have been that the Spuhlers paid a different, lower-interest-rate debt thinking that the debts mentioned in the dunning letter would not accrue interest at all; however, no evidence supporting a concrete injury was presented. Accordingly, the Court of Appeals vacated the judgment and remanded the case to the district court for dismissal of the Spuhlers’ challenge.

In Brunett v. Convergent Outsourcing, Inc., Darlene Brunett (“Brunett”) received a letter from Convergent Outsourcing, Inc. (“Convergent”) demanding repayment of a debt slightly more than $1,000.00. The letter also stated that Convergent would accept 50% of the balance in satisfaction of the debt and that if neither of these options were feasible, Brunett could contact Convergent to discuss other options. Finally, the letter stated that in the event Convergent ended up forgiving more than $600, it would be required to report the release of indebtedness to the Internal Revenue Service (“IRS”) because federal law treats as taxable income a loan that is not repaid. Brunett alleged in her complaint that the statement about reporting to the IRS violated Sections 1692e(5) and 1692e(10) of the FDCPA because it threatened action that could not legally be taken and essentially was a false representation. The Court of Appeals stated that such a statement can be a false representation when the debt owed is less than $600.00; however, here the debt exceeded $600.00. Additionally, Brunett stated during her deposition that the letter had not injured her, but that she was slightly confused. The Seventh Circuit determined that general confusion or intimidation by itself is insufficient to meet the injury element of the standing requirement; however, if the debtor acts on that confusion or intimidation to her detriment, then injury may be suffered. Accordingly, the Court vacated the judgment of the district court and remanded the case with instructions to dismiss for lack of subject matter jurisdiction.

In Gunn v. Thrasher, Buschmann & Voelkel, P.C., Linda and Christopher Gunn (“the Gunns”) became indebted to their homeowners’ association (“HOA”) for roughly $2,000.00. In response, the HOA hired the law firm of Thrasher, Buschmann & Voelkel, P.C. (“TBV”). TBV sent the Gunns a demand letter which contained a paragraph stating that, if possible, the HOA may seek to foreclose on the property to satisfy any debts. The Gunns filed suit under Sections 1692e(2), 1692e(4), 1692e(5), and 1692e(10) of the FDCPA claiming that the letter contained false and misleading statements. The Gunns conceded that the statement was both factually and legally true, but they contended that the statement was false or misleading because TBV would have found it too costly to pursue foreclosure to collect the $2,000.00 debt. The Seventh Circuit concluded that the Gunns’ complaint and brief both did not explain how they were injured by the sentence in the demand letter. Again, the Court stated that mere annoyance or intimidation by the sentence is insufficient to constitute the injury required for standing. Accordingly, the Court vacated the judgment of the district court and remanded the case with instructions to dismiss for lack of subject matter jurisdiction.

These cases demonstrate that Plaintiffs alleging violations of the FDCPA in the Seventh Circuit, and potentially in more jurisdictions, are going to have to think twice when trying to explain their injury to establish standing in federal courts if their claims are going to withstand judicial scrutiny.