For years, debt collectors have complained about the Catch-22 they face under the Fair Debt Collection Practices Act (FDCPA)—provide too much detail and face liability for confusing the unsophisticated consumer, but provide not enough detail and face liability for omitting information necessary to that same unsophisticated consumer. In Delgado v. Client Services, Inc., 17 C 4364, Judge Sara L. Ellis of the United States District Court for the Northern District of Illinois acknowledged that dilemma while dismissing Delgado’s FDCPA claim.
Delgado defaulted on a credit card and the debt was transferred to Client Services for collection. In May 2017, Client Services sent Delgado a letter which contained the following itemization of the amount due: (1) Balance Due at Charge Off – $2,619.26; (2) Interest – $0.00; (3) Other Charges – $0.00; (4) Payments Made – $20.00; (5) Current Balance – $2,599.26.
Delgado claimed that because the itemization contained “interest” and “other charges,” the letter implied that interest and other charges would start accruing if he did not pay even though Credit Services had no basis to charge interest or other charges and had no intention to do so. Delgado asserted that by implying interest and other charges would accrue when they would or could not, the letter violated §1692e of the FDCPA by falsely representing the status of the debt. In the alternative, Delgado asserted that Client Services’s letter violated §1692g because, to the extent Client Services was going to charge interest or other charges, the letter failed to notify Delgado of the actual amount of the debt. Client Services moved to dismiss under Rule 12(b)(6).
On March 7, 2018, Judge Ellis dismissed Delgado’s complaint in its entirety. As to §1692e, Judge Ellis noted that whether a communication is misleading to an unsophisticated consumer is generally a question of fact. But if the court can determine that not even a “significant fraction of the population would be misled,” the court can reject the claim as a matter of law. Here, Client Services’s letter was not misleading as a matter of law. “Rather than making a false, misleading, or deceptive statement, the letter sets forth the amount due and provides an accounting of that amount, making it explicit that no part of the amount due includes interest or other charges.”
Judge Ellis could have ended her §1692e analysis there, but she continued. She noted that “[t]o find otherwise places debt collectors between a rock and a hard place, where they cannot simply list the amount owed, for fear of being misleading, but likewise, cannot breakdown the amount into categories either, for fear of being misleading. Debt collectors would be damned if they do and damned if they don’t. This is clearly not what Congress intended the FDCPA to do—essentially turn debt collectors into a modern-day version of Goldie Locks, who cast about searching for the letter that is just right, not listing too little information or too much.”
Judge Ellis rejected Delgado’s §1692g claim as well. The premise of Delgado’s claim was if Client Services intended to charge interest or late fees, then its letter failed to properly notify him of the amount of the debt. But there was no factual basis for the contention that Client Services intended to charge interest or late fees, so Delgado’s hypothetical §1692g claim was not plausible.
Judge Ellis’s ultimate holding is not particularly noteworthy—it is difficult to imagine any judge finding that the subject letter was misleading. But debt collectors can be cheered by Judge Ellis’s additional commentary. Too often, debt collectors are being asked to thread the needle and generate debt collection communications that contain not only accurate information, but just the right amount of accurate information. In that environment, Judge Ellis’s recognition that the FDCPA is not intended to turn debt collectors into a “modern-day version of Goldie Locks” is a welcome respite. Debt collectors can hopefully use that commentary in other cases to push for a more fair and pragmatic interpretation of the FDCPA.