Editor's Note: This article is published on insideARM with permission from the author.
Universal Fidelity, LP (“Universal”) scored a pair of victories in recent federal cases in which the courts examined debt collection communications that properly identify the current creditor in accordance with the Fair Debt Collections Practices Act (“FDCPA”) and those that do not. The two cases provide important guidance for debt collectors in drafting debt collection communications which comply with the FDCPA. On one hand, there are cases where the mere printing of the creditor’s name without more is deemed a violation of the FDCPA. On the other hand, there are cases, such as these two recent decisions, where the communications at issue included additional referential language that linked the creditor’s name to its status as owning the debt in question.
In August, 2018, in Adams v. Universal Fidelity, the United States District Court in Houston, Texas granted the motion to dismiss filed by Universal. Adams had incurred a consumer debt after purchasing a “Boop Film Bag.” On November 7, 2016, Universal sent an initial written communication (the “Letter”) to Adams in which Universal sought to collect the alleged debt from Adams. Adams alleged that the Letter violated the FDCPA because it failed “to effectively convey the name of the current creditor to whom the debt is owed as required by [15 U.S.C.] § 1692g(a)(2).” Adams alleged she was damaged as a result of the statutory violation. Universal moved to dismiss Adams’s claims on the grounds that (1) she lacked standing and (2) she failed to state a claim because the Letter does not violate the FDCPA.
As an initial matter, the Court found that Adams lacked standing under Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). Furthermore, the Court held that “[e]ven if Adams did have standing, the court agrees with Universal that the Letter does not violate the FDCPA’s disclosure requirements.” Adams had alleged that the Letter failed to convey the name of the creditor to whom the debt is owed. But, the Court noted that Letter conveyed the name of the creditor, The Bradford Exchange, on multiple occasions.
The Court stated “that the FDCPA requires debt collectors to disclose the name of the creditor to whom the debt is owed. 15 U.S.C. § 1692g(a)(2). The statute “implies that the required disclosures be set forth in a form and within a context that does not distort or obfuscate its meaning.” Peter v. GC Servs. L.P., 310 F.3d 344, 348 (5th Cir. 2002). However, the court should not “consider the debtor as tied to the ‘very last rung on the [intelligence or] sophistication ladder.’” Id. (citation omitted).” In the Adams case, the Court held that:
Adams fails to make a plausible claim that the Letter distorts or otherwise misrepresents the creditor’s identity. The Letter contains “Re: The Bradford Exchange” in three places, under the headings “Account Summary,” “Customer Information,” and “Consumer Information.”… The Letter also indicates that Universal is a collection agency working on behalf of The Bradford Exchange. Id. (“Universal Fidelity LP, a national collection agency, has been asked by The Bradford Exchange, to contact you regarding your account.”). Finally, the Letter explicitly states that Adams’s payment should be “made payable to The Bradford Exchange” and mailed to “BRADFORD EXCHANGE ONLINE.” Id. Taking the letter as a whole, even the least sophisticated consumer would understand that The Bradford Exchange was the creditor to whom payment must be made. See Peter, 310 F.3d at 349 (holding that a debt collection letter was not misleading under the unsophisticated or least sophisticated consumer standard when the letter was read as a whole). Adams fails to make a plausible argument to the contrary.
Similarly, in Gor v. Universal Fidelity, the plaintiff commenced the action, on behalf of himself and all others similarly situated, alleging that Universal had violated Sections 1692g and l692e of the FDCPA by sending him a collection notice that did not clearly and explicitly name the creditor to whom the plaintiff owed a debt. Universal filed a motion to dismiss which, on February 13, 2019, Judge Ann M. Donnelly of the United States District Court for the Eastern District of New York granted.
By way of background, on January 3, 2018, Universal sent the plaintiff a debt collection letter with a large caption in capital letters: "COLLECTION AGENCY NOTIFICATION." A box entitled "Account Summary" appeared in three places in the letter and included a line that reads, "Re: Bradford Authenticated." This "Account Summary" box appeared in the letter's top right comer, and on the front and back of the detachable portion of the bottom of the letter. The plaintiff argued that the "least sophisticated consumer would likely be confused as to the creditor to whom the debt is owed" because the collection letter did not clearly identify the name of the creditor that sent the plaintiff's account to Universal.
Universal moved to dismiss the complaint for failure to state a claim, arguing that the letter was not confusing because the "Re: Bradford Authenticated" language appeared in three different places on the letter and that the least sophisticated consumer could easily identify Bradford Authenticated as the creditor to whom the debt was owed.
The Court held that the collection letter in Gor, when read in its entirety, satisfied the FDCPA and adequately named the current creditor. The letter explained that the defendant was a collection agency collecting a debt on behalf of the "above-referenced client;" that client was named in the account summary box above the body of the letter: "Re: Bradford Authenticated," as well as in the two account summary boxes in the detachable portion of the letter. The plaintiff argued, however, that the least sophisticated consumer might not understand that Bradford Authenticated was the creditor because the line in the account summary box did not also say "client" or "creditor."
However, the Court held that the law does not require debt collectors to use '"magic words' to avoid liability." Taubenfliegel v. Miller & Milone, P.C., No. 18-CV-1884, 2018 WL 6605856, at *2 (E.D.N.Y. Dec. 17, 2018). Moreover, the Court pointed out that the inclusion of the language "the above-referenced client" distinguished the letter in the Gor case from those letters at issue in Datiz v. International Recovery Assocs., Inc., No. 15-CV-3549, 2016 WL 4148330 (E.D.N.Y. Aug. 4, 2016) and McGinty v. Prof/ Claims Bureau, Inc., No. 15-CV-4356, 2016 WL 6069180 (E.D.N.Y. Oct. 17, 2016), where the courts held that including "Re" before the creditor's name, without more, did not adequately identify the creditor. As the courts explained in those cases, the letters did not specify that the creditor was the debt collector's client. The letters in those cases, unlike the letter in the Gor case, did not clarify the relationship between the collection agency and the current creditor, nor did the letters identify the entity that the debtors should pay to satisfy the debts; thus, the requirements of Section 1692g(a) were not met.
Thus, the key holding from these two recent cases is that the collection letter, read in its entirety, must identify the current creditor and provide a way for the debtor to satisfy his or her debt. Because in these two case, Universal’s letters clearly identified the name of the creditor to whom the debt was owed, and were neither misleading or deceptive, the plaintiffs failed to state a claim pursuant to Section 1692e.