Eastern District of New York Holds that Reference to the Possibility of Reviewing Legal Options Is Not an Empty Threat Under the FDCPA

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In Mikhael v. Credit Corp Solutions, Inc., the Eastern District of New York held that a letter alluding to the possibility of referring an account to an attorney for review does not constitute a threat to take imminent action that “cannot legally be taken or that was not intended to be taken” under the FDCPA. Thus, Mikhael had failed to state a claim upon which relief may be granted, and her complaint was dismissed.

On February 20, 2020, Credit Corp Solutions, Inc. (Credit Corp) sent plaintiff Stacie A. Mikhael a letter in an attempt to collect a debt on which she had allegedly defaulted. This letter stated in part that Mikhael’s account “meets [Credit Corp’s] legal referral criteria and is eligible to be referred to an attorney. If payment is not received [Credit Corp] will be sending your account to a law firm to be reviewed by an attorney for possible legal options.”

Mikhael filed her complaint on July 1, 2020, alleging violations of Sections 1692e, 1692e(5), and 1692e(10) of the FDCPA. Specifically, Mikhael alleged that the collection letter threatened action that Credit Corp did not intend to take and made false representations because it stated that Credit Corp will be sending her account to a law firm to be reviewed when in fact Credit Corp did not forward and never intended to forward her account to an attorney.

In ruling on Credit Corp’s motion to dismiss, the court noted that the letter clearly bore the title “Pre-Legal Notice” and plainly stated that the account had “been referred to [Credit Corp’s] Pre-Legal Department.” Further, the letter stated that the account was “eligible to be referred to an attorney,” and if payment was not received, Credit Corp would be sending Mikhael’s account to a law firm “to be reviewed by an attorney for possible legal options” at an unspecified time in the future. The court held that these statements taken together are not sufficient to constitute a threat to take imminent action that “cannot legally be taken or that [were] not intended to be taken” in violation of Section 1692e(5).

In reaching this decision, the court cited cases that did not find violations of Section 1692e(5), where a creditor stated that it “may consider additional remedies” or otherwise referenced a right to take legal action without making explicit threats of litigation. The court also found it important that the letter “[made] available an alternative option for [Mikhael] that is separate from either remitting payment or being referred to an attorney.” Lastly, the court noted that the letter included language specifying that “Credit Corp Solutions … is not a law firm and does not employ any attorneys.” The court found this language to “further remove[] the Letter from any apparent immediate or imminent threat of legal action,” and as such, “the least sophisticated consumer would not reasonably interpret the language in this Letter to mean that legal action was ‘authorized, likely, and imminent.'”

For the same reasons outlined above, the court found that the letter did not appear to use any “false representation or deceptive means” to attempt to collect the debt. As such, the letter did not violate Section 1692e(10).

Although debt collectors must always be wary of idiosyncratic interpretations of their collection notices by consumers and the plaintiff’s bar, this case serves as important guidance regarding what language does not constitute a violation under the FDCPA.

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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