8th Circuit Rules that False Statement Must be Material in Order to Violate FDCPA

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On April 19, 2018, a three-judge panel for the Eighth Circuit joined the Third, Fourth, Sixth, Seventh, and Ninth Circuits when it ruled that allegedly false statements must also be material in order to constitute a violation of Section 1692e of the Fair Debt Collection Practices Act (FDCPA).

Section 1692e states that, a “debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.”  This decision solidifies a trend started by multiple district court judges throughout the circuit who have held that Section 1692e requires a plaintiff to allege that such a representation was not only false but also material, such that it undermines the plaintiff’s ability to intelligently choose his or her action regarding the debt.

As background, the case concerned a consumer who alleged that a collection agency violated the FDCPA by presenting inauthentic evidence during an earlier debt conciliation hearing regarding the consumer’s debt for “unpaid medical services.”  In the conciliation hearing, the consumer argued that the documents the agency presented to prove that the consumer’s healthcare provider had assigned the consumer’s debt to the agency were false and could not be authenticated.

The consumer filed this action, alleging that the agency violated the FDCPA by (1) presenting a fake assignment document to the consumer and the conciliation court; (2) attempting to collect interest to which it was “not entitled;” and (3) filing a “false and misleading” complaint, insomuch as it included interest in its claim for account stated.  The district court granted summary judgment in favor of the collection agency, reasoning that plaintiffs alleging a violation of 15 U.S.C. § 1692e must prove that a “defendant’s allegedly misleading conduct actually deceived the plaintiff or someone else.”  The district court ruled that the misrepresentations were not material, as the consumer failed to prove that either he or the court were misled and did not plausibly allege that his ability to intelligently choose his action regarding the debt was undermined.

On appeal, the consumer argued that the district court erred by applying a materiality standard to Section 1692e.  The Eighth Circuit upheld the district court’s decision, citing and agreeing with multiple circuit court opinions that false yet non-material statements are not actionable under Section 1692e because “a statement cannot mislead unless it is material.”  Further, the consumer argued that the agency’s statements were materially false because (1) the agency falsely claimed that the documents it submitted to the conciliation court were authentic, and (2) the statements contained in those documents were also false.  The court disagreed and affirmed the district’s court’s order, reasoning that the agency’s inability to provide adequate documentation of the assignment did not itself constitute a materially false representation, and that the other alleged inaccuracies in the exhibits were not material.

The case, Hill v. Accounts Receivable Services, is accessible here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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