Attempting to collect on time-barred debt without informing the consumer that a payment may renew the applicable statute of limitations creates an “informational injury” sufficient to confer Article III standing, a district court in Illinois has ruled. In Navarroli v. Midland Funding LLC, 2019 U.S. Dist. LEXIS 34704 (N.D. Ill. Mar. 5, 2019), the defendants Midland Funding, LLC, Midland Credit Management, Inc. and Encore Capital Group, Inc. (collectively, “Midland”) sent Navarroli a letter offering him various payment options to settle an alleged consumer debt. The letter also informed Navarroli that the law limited how long he could be sued for the debt and how long a debt can be reported to a credit bureau, and went on to state that due to the age of the debt at issue, Midland would “not sue [Navarroli] for it or report payment or non-payment of it to a credit bureau.”
Despite including these statements, Midland did not include a warning that any payment “could restart the statute of limitations and revive an otherwise legally unenforceable debt.” After receiving the letter, Navarroli filed a class action lawsuit alleging that by failing to include such a warning, Midland’s letter contained false, deceptive, or misleading representations in violation of the FDCPA. Midland countered with a motion to dismiss, arguing that Navarroli’s claims amount to a bare statutory violation rather than a concrete injury in fact, thereby failing to confer Article III standing on the court.
The district court found that Navarroli had standing to pursue his FDCPA claims. The court recognized that even though it is Congress’ role to identify and elevate intangible harms (such as the intangible harm at issue here), just because Congress has passed a statute purporting to authorize a person to sue to vindicate a particular right does not automatically mean that person has standing. A litigant must still allege a “particularized injury” he or she has suffered before the court can hear the case.
The court found that Navarroli had done so here because he alleged that Midland’s letter failed to give him information – that any payment on the time-barred debt would restart the statute of limitations – that he was entitled to and the omission of which made the letter false and misleading. Relying on the Seventh Circuit’s landmark opinion in Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679 (7th Cir. 2017), the district court found that this type of intangible injury was exactly the type of injury that the FDCPA was passed to protect: “We begin with the danger that a debtor who accepts the offered terms of settlement will, by doing so, waive his otherwise absolute defense under the statute of limitations. Only the rarest consumer-debtor will recognize this danger.”
The injury, according to the court, was clear; Navarroli received a letter asking him to pay a debt that he was not legally obligated to pay due to its age, and the letter omitted the “crucial information” that paying any amount towards the time-barred debt would restart the statute of limitations. This created an “informational injury” that was concrete and particularized, even though Navarroli did not make any payments on the debt.
Especially in the Seventh Circuit, dunning letters on time-barred debt should include a warning that any payment made on the debt may restart the applicable statute of limitations. Navarroli reminds us that failing to do may be construed as an “informational injury” which confers standing on the consumer to pursue an FDCPA claim, even if he or she did not make any payments on the time-barred debt.