Last week, the Seventh Circuit Court of Appeals affirmed a district court’s grant of summary judgment in favor of two debt collector in two separate Fair Debt Collection Practices Act (FDCPA) suit alleging that a collection letter did not properly identify the creditor to whom the debt is owed.

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The combined Seventh Circuit decision in Smith and Nieto v. Simm Assocs., Inc., Nos. 18-3350 and 19-1155 (7th Cir. June 6, 2019), the court found no issue with a collection letter that listed PayPal Credit as the “Client” and Comenity Capital Bank as the “Original Creditor.” The Seventh Circuit’s decision addressed two main points in its finding that there is nothing in the letter that would make it abusive, unfair, or deceptive.

First, the Seventh Circuit found no issue with—and, if anything, found benefit in—including both the creditor’s actual name as well as the commercial name more widely known among consumers. This, according to the court, assists consumers in identifying the debt.

Second, the use of “original creditor” rather than “current creditor” did not bother the court. The FDCPA does not require the use of specific terminology. All that is needed that the information is “clear enough that the recipient is likely to understand it.” (Citing the court's 2017 decision in  Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317). The consumer argued that specifying an “original creditor” could confuse a consumer into thinking that there were other, non-original creditors.  The court, however, was unconvinced. The letter did not include any other creditors. Additionally, the validation notice, which notifies the consumer that they could request the name of the original creditor “if different” from the current creditor, “alters debts the original and current creditor may be the same.”

The court finishes with this:

The letter provides a whole picture of the debt for the consumer, identifying the creditor to whom the debt is owed as well as the commercial name the consumer is more likely to recognize. This provides clarity for consumers; it is not abusive or unfair and does not violate § 1692g(a)(2).


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