Federal Judge Dismisses FDCPA Collection Letter Case with “Least Sophisticated Consumer” Discussion

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A judge in the US District Court for the Eastern District of New York this week sided with a debt collection agency in dismissing a case, with prejudice, that alleged violations of the FDCPA in collection letter language. The judge offered interesting commentary on the “least sophisticated consumer” standard in her opinion.

The case, Kassel v. Universal Fidelity, was filed as a putative class action in July 2013. The plaintiff alleged that she received a collection letter from the defendant which included the heading “VALUED CUSTOMER” in a typeface “larger and different than any on the page.” In addition, the body of the letter contained the passage, “According to our client’s accounting records, you have ignored the terms of this purchase agreement with them. We are somewhat surprised, since our client indicated that YOU ARE A VALUED CUSTOMER of theirs.”

At the bottom of the letter, the plaintiff alleged the presence of a pre-printed signature of “C. Hearn, Director of Payment Control.” U.S. District Judge Joanna Seybert noted in her opinion that the plaintiff did not attach the letter as evidence in the suit.

Kassel contended that the collection letter violated the FDCPA, specifically 15 U.S.C § 1692e, two different ways. First, “by deceptively informing Plaintiff with regard to the creditor that ‘YOU ARE A VALUED CUSTOMER of theirs,’ …when Defendant knows this to be untrue in view of the fact that Plaintiff had one solitary transaction with the creditor and in no way can be perceived as a ‘valued customer.’”

Second, the inclusion of a pre-printed signature of “C. Hearn” “mislead[s] the consumer into believing that their [sic] particular file was reviewed by Ms. or Mr. C. Hearn who discussed it with the creditor who in turn described the consumer as ‘a valued customer,’ causing Ms. or Mr. Hearn to be ‘somewhat surprised’ to learn this.”

Universal Fidelity moved for dismissal or summary judgment, which Judge Seybert granted.

Counsel for the defendant, Nathan D. Adler of Neuberger, Quinn, Gielen, Rubin & Gibber in Baltimore, summarized the Seybert’s decision and impact on FDCPA suits:

The Court, applying the “least sophisticated consumer” standard here, found that Plaintiff failed to state a claim under 15 U.S.C. § 1692e. The Judge ruled that “Even if it is true that Plaintiff only engaged in one transaction with the creditor, the Court fails to see how the term ‘valued customer’ violates § 1692e, as it is simply a comment regarding the creditor’s perception of the Plaintiff.”

The Complaint next alleged that the inclusion of the pre-printed signature of “C. Hearn” “mislead[s] the consumer.” The Court found that this allegation is nothing more than a “bizarre or idiosyncratic interpretation of [a] debt collection letter”, and failed to see how this statement would “affect a consumer’s ability to make intelligent decisions concerning an alleged debt.”

Judge Seybert noted that the “least sophisticated consumer” standard does not stand alone. Rather, other courts have held that “the least-sophisticated-consumer standard also encompasses a materiality requirement; that is, statements must be materially false or misleading to be actionable under the FDCPA.”

In discussing the decision to dismiss with prejudice, Seybert wrote that “the Court finds that leave to replead would be futile as Plaintiff’s reading of the Collection Letter proffers an idiosyncratic interpretation of it and the alleged deceptive statements are not materially false or misleading.”

 

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Posted in Collection Law Firms, Collection Laws and Regulations, Collection Technology, Debt Collection, FDCPA, Featured Post, Mail Services .

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  • avatar Ryan Calef says:

    After reading this article, and the other strange FDCPA suits that exist out there, I have to wonder what the Plaintiff’s consumer bar must make of these situations. As an attorney, I appreciate how individual attorneys will fight vigorously for their clients. However, I can’t help but feel cases like this have done more harm to consumers then any major reputable ARM firm has in the last decade.

    There are certainly circumstances where a consumer has been hurt by the action of ARM firms, whether intentionally or by accident. It may be childish hope, but I hope that the CFPB, during their rule making, clarifies these areas, and eliminates these brazen, obscure law suits and moves the fee shifting statute back to it’s original purpose, to punish sincere violations of the FDCPA that harm a consumer.

  • avatar John DiAllbert says:

    OMG, this irresponsible collection agency referred to my client as a valued customer. I must right this terrible wrong; not just for my client but for all the other “valued customers” similarly situated who were damaged by this reprehensible behavior. I must file a class action lawsuit.

    Are you kidding me. Like Ryan says, hopefully new CFPB rules can help prevent ridiculous claims like this.

  • avatar Bob Pugh says:

    On the other hand, there might have been an error in judgment on the part of the creditor as, based on one transaction, valued customer might be generous. How much more valued might be a consumer who actually pays his/her bills?

    Moreover, how can a consumer now claim the “least sophisticated consumer” tag, if they are aware enough to know that
    1) the law will allow them to forestall any legitimate collection activity by simply
    2) hiring an attorney who has disclosed in a “non-prime time” commercial that anything a debt collection company does, contemplates doing, has done in the past, or has been aware of anyone else doing is illegal, and that
    3) if the consumer hires the properly outraged attorney, the consumer can
    4) not only obviate the debt, but
    6) be compensated for the effort it took to do so?

    Personally, I think we need to redefine the concept of “frivolous”, and start penalizing the barristers who promote these filings.

  • avatar Commercial Guy says:

    I agree wholeheartedly, Bob. The attorneys who promote this type of litigation hoping for a quick settlement check (or, as in this case, a class action certification) need to be aware that they can be spanked by the courts for this activity. I would imagine there will be great wailing and gnashing of teeth on some of the internet forums over this ruling.

    The FDCPA needs to return to what the legislators originally intended it to do; namely, to protect consumers from abusive debt collection practices. I seriously doubt that they intended it to be a cash cow for for third rate attorneys who lack the legal acumen or intelligence to pursue a practice in another field, or as a means for consumers to avoid paying for obligations that are legitimately owed.

  • avatar Sisko says:

    Companies certainly DO value their customers. A best-case-scenario still exists that a collections account will be paid, and then after getting back into good standing, the customer will once again continue to make purchases. Customers are also valued even if they make a single purchase, since many businesses rely on repeat business or word of mouth reputation. Especially if the purchase is a high dollar amount. This litigant apparently doesn’t know a lot about operating a business or customer service.

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