A recent opinion issued by the U.S. District Court for the District of Oregon in Santibanez v. National Credit Systems, Inc. (United States District Court, D. Oregon, Case No. 16-00081) affirmed that collection agency National Credit Systems, Inc. (NCS) did not violate the Fair Debt Collection Practices Act (FDCPA) when sending a collection letter to the plaintiff.

A copy of the opinion can be found here.


Plaintiff Carlos Santibanez allegedly owed $873.55 in connection with a rental property to Encompass Management & Consulting LLC (EMC), which hired NCS to collect the debt. On February 5, 2015, NCS sent a letter to the plaintiff containing the following language:


It is imperative that you give this matter your prompt attention.

The above referenced account has been placed with this office for collection. National Credit Systems, Inc. has been authorized to recover this debt by way of credit bureau reporting (following this initial 30 day validation period) as well as other remedies available under the law. It is our intention to pursue this debt until resolved.

However, if you contact our office, we will work with you to satisfy this debt in a friendly manner. Your representative will review and explain all charges assessed, consider your individual circumstances, and assist you in resolving this matter. Please be assured that you may still avoid the aforementioned consequences.

We encourage you to take advantage of this oppo11unity so we may settle this debt amicably.

NCS sent a second letter to the plaintiff on April 21, 2015, which listed the same balance as the first letter, adding no interest to the amount.

Following the second letter, Santibanez filed suit against NCS, alleging that the letter violated the FDCPA because it failed to effectively disclose the amount of the debt and the identity of the creditor. After discovery, both parties moved for summary judgment.


Judge Ann Aiken notes that the FDCPA is specific with regard to how collectors communicate with consumers:

“When a debt collector sends an initial communication about a debt to a consumer, the FDCP A requires that communication, or a subsequent notice sent within five days of the initial notice, to include certain information, including ‘the amount of the debt’ and ‘the name of the creditor to whom the debt is owed.’ 15 U.S.C. § 1692g(a)(l), (2). A debt collector cannot satisfy the requirements of section 1692g merely by including the required information in the notice; rather, the information must be ‘conveyed effectively to the debtor.’”

Considering this, the Court examined whether the information in this case was “conveyed effectively using the least sophisticated debtor standard.”

With respect to the plaintiff’s first claim that NCS had not clearly communicated the amount of the debt and potential interest charges, Judge Aiken ruled as follows:

“Here, there was no danger plaintiff would be misled. It is undisputed that defendant never attempted to collect any interest and that payment of the ‘balance’ listed in the letter would have cleared plaintiffs account. Plaintiff has cited no authority for the proposition that the FDCPA requires a debt collector to affirmatively state that no interest is accruing or to warn the consumer that interest could accrue if the account is sold to another creditor in the future. The few federal courts to address analogous fact patterns have held that no such disclosure is required.”

In fact, the Court held that “including information about interest when no interest is due carries a higher risk of confusing an unsophisticated consumer than simply stating the balance due,” and ruled that NCS was entitled to summary judgment on that issue.

The plaintiff’s second claim was that the defendant failed to effectively convey the identity of the creditor in the letters. Santibanez’s claim relies on the ruling in Janetos v. Fulton Friedman & Gullace, LLP, (825 F.3d 317 (7th Cir. 2016). where the 7th Circuit held that “a collection communication must identify the current creditor clearly and accurately.”

Judge Aiken held that “this case is distinguishable from Janetos” because in this case, the letter “strongly suggests EMC is the creditor” and “clearly indicates that defendant was collecting the debt on behalf of EMC,” with one caveat:

“Although it would have been better if the letter had expressly identified EMC as the ‘creditor’ or ‘owner’ of the debt, the least sophisticated consumer would understand based on the letter that EMC was the creditor.”

The plaintiff also alleges that a clerical error incorrectly identifying EMC as “Encompass Management Consultants” instead of “Encompass Management & Consulting, LLC” would confuse the least sophisticated consumer. Judge Aiken dismissed that claim, and ruled that NCS is entitled to summary judgment on that claim as well.

insideARM Perspective

This result is a positive outcome for the ARM industry. The common sense analysis was key to the decision. However, the case shows the importance of clearly conveying the relevant facts to a particular account, and not including extra information that is not legally required.

Next Article: GTCR Announces Partnership with Rahul Gupta as ...