A federal judge in New Jersey last week approved the settlement of a class action lawsuit against a collection agency over the validation language the firm used in a letter to a consumer. The settlement calls for the debt collection firm to pay $9,500 to the lead plaintiff and potential class of 225 consumers, with the plaintiffs’ attorneys receiving $40,000.
The case, Wilson v. Mattleman, Weinroth & Miller, involved a collection letter sent to the plaintiff for an outstanding debt owed to an apartment complex. The law firm Mattleman, Weinroth & Miller was acting on behalf of collection agency Executive Credit Management, Inc. – also named in the suit – a firm that specializes in, among other things, apartment rental debt.
The suit, originally filed in January 2013, alleged that the collection letter did not include the proper disclosures in the validation language per § 1692g(a)(3) of the FDCPA. The plaintiff also alleged that the firm violated § 1692e(10) using deceptive collection practices.
On or about October 12, 2012, Mattleman delivered a one-page collection letter to the plaintiff demanding a $4,200 payment that contained the following validation language:
In the event you notify us in writing within thirty (30) days of your receipt of this letter that the debt, or any portion of the debt, is disputed, we will mail you verification of the debt, or, if applicable, obtain a copy of the judgment, and upon your written request we will provide you with the original creditor’s name and address should it be different from the current creditor.
Should you fail to respond within thirty (30) days, we will recommend that our client commence an action against you to protect its rights. Please understand that this communication is from a debt collector and any information we obtain will be used for the purpose of collecting this debt.
In a decision issued in June, U.S. District Judge Joseph Irenas dismissed the § 1692e(10) claim, finding that the plaintiff failed to assert a violation. But he did deny the defendants’ request to dismiss the § 1692g(a)(3) claim writing, “Although Mattleman contends that its letter contains all the information that § 1692g(a), a reading of the letter as a whole from the perspective of the least-sophisticated debtor shows that this is not the case.”
Irenas noted that “section 1692g(a)(3) requires only that Mattleman convey the gist of the provision in a non-deceptive statement, not that Mattleman specifically use the term “assume” as argued by the defendants. Yet at no point does the letter purport to notify Wilson that her debt would be assumed valid (or for that matter by whom it would be assumed) if she did not respond within thirty days. The only sentence that could possibly be interpreted to provide such notice states, ‘Should you fail to respond within thirty (30) days, we will recommend that our client [Executive] commence an action against you to protect its rights.’ This statement, however, does not convey effective notice to a least-sophisticated debtor that her debt would be assumed valid.”
After the June ruling, the parties started talking settlement. A potential class was determined comprised of former tenants of the apartment complex who had received collection letters from the firm, about 225 people. A $2,500 payment for Wilson, the representative plaintiff, was settled on, as was $7,000 for the remaining class, about $30 per person.
The plaintiffs’ attorneys, although billing a total of around $44,000 for the case, bravely accepted a $40,000 payment from the defendants.