In its continuing advocacy related to debtors and time-barred debt, the CFPB and FTC jointly filed an amicus brief urging the United States Court of Appeals for the Sixth Circuit to reverse a district court’s decision granting defendant’s motion to dismiss a class action alleging violations of the Fair Debt Collection Practices Act. Defendant, a debt collector, sent plaintiff a “dunning” letter seeking to collect a debt by offering plaintiff a settlement. Plaintiff filed a class action alleging that by failing to disclose that the debt was time-barred and by offering to settle the debt, defendant violated the FDCPA’s prohibition on providing false and misleading representations in the collection of the debt. Defendant moved to dismiss the class action arguing that the FDCPA does not expressly require debt collectors to disclose that a debt is time-barred, and that its letter to plaintiff did not explicitly or implicitly threaten litigation. The district court granted defendant’s motion to dismiss. In reaching its decision, the district court dismissed plaintiff’s citations of CFPB and FTC materials interpreting the FDCPA in plaintiff’s favor, stating that such materials do not require courts to read the FDCPA in any particular way.

In their amicus brief, the CFPB and FTC argue that the FDCPA prohibits debt collectors from suing or threatening to sue on a time-barred debt. The agencies argue further that the outcome should not hinge on whether the letter threatened litigation because no threat of litigation is necessary for the letter to be deceptive. Rather, in the agencies’ view, the letter’s failure to disclose that the debt was time-barred is a deceptive omission under the FDCPA even if the letter did not threaten to sue on the debt, because it could mislead the least-sophisticated consumer as to the legal status of the debt.  Of concern to the agencies was the practical effect of such practice by debt collectors. Unsophisticated consumers, according to the agencies, “do not know or understand their legal rights with respect to time-barred debts.” The deadline in defendant’s letter to plaintiff could imply that failure to pay by the date would result in litigation. Ultimately, the agencies argued that “[i]n some circumstances, a debt collector may be required to make affirmative disclosures in order to avoid misleading consumers.”

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