A recent opinion issued by the U.S. District Court for the Southern District of New York in Nunez v. Pinnacle Credit Services, L.L.C. (United States District Court, S.D. New York, Case No. 15-5538) affirmed that passive debt buyer Pinnacle Credit Services (Pinnacle) did not violate the Fair Debt Collection Practices Act (FDCPA) when telling a consumer that their account had been placed with a debt collection firm.

A copy of the opinion can be found here.


Plaintiff Pascuala Nunez’s debt from Verizon Wireless was obtained by Pinnacle, which subsequently assigned the debt to collection agency Dynamic Recovery (DR). Nunez hired Asset Protection and Management, Inc. (APM) to help her with her credit.

On July 28, 2015, APM representative Joy Avila called Pinnacle and had the following exchange about Nunez’s debt:

“During that conversation, Defendant’s representative informed Ms. Avila that Plaintiff’s “account has now been placed with Dynamic Recovery Solutions. They’ve been assigned to service the account.” Ms. Avila asked if she could dispute the debt with Defendant, as Defendant was “the one[] that appear[s] on the credit report.” Defendant responded, “Unfortunately, ma’am, we, we don’t handle the accounts here. We do have outside agencies that handle the accounts for us. So you need to speak with them about the account.” Defendant provided Ms. Avila with DR’s phone number and the account number for Plaintiff’s debt, and transferred Ms. Avila’s call to DR.”

After this exchange, Nunez filed suit against Pinnacle, alleging that this was a false, deceptive or misleading practice and thus an FDCPA violation.

“Specifically, Plaintiff alleges that by reporting Plaintiff to credit reporting agencies and listing itself as the reporter, Defendant misled Plaintiff and similarly situated consumers into thinking that Defendant would handle any attempt to dispute the debt, when in fact Defendant referred such disputes to DR. Plaintiff also alleged that the same conduct violated the FDCPA’s prohibition on the use of unfair or unconscionable means in connection with collection of a debt, 15 U.S.C. § 1692f.”


Judge Cathy Seibel initially references the legal standard that “summary judgment is appropriate when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law’” and that “a party asserting that a fact cannot be or is genuinely disputed must support the assertion by….citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.”


In beginning discussion of the case, Judge Seibel notes that “the FDCPA was enacted ‘with the aim of eliminating abusive practices in the debt collection industry’ while also ensuring that ‘those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.’”

Judge Seibel then discussed the “least sophisticated consumer” standard in this way:

“[T]he question of whether a communication complies with the FDCPA is determined from the perspective of the ‘least sophisticated consumer.’” Jacobson, 516 F.3d at 90 (quoting Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993)). “The hypothetical least sophisticated consumer does not have the astuteness of a . . . lawyer or even the sophistication of the average, everyday, common consumer, but is neither irrational nor a dolt.” Ellis v. Solomon & Solomon, P.C., 591 F.3d 130, 135 (2d Cir. 2010) (internal quotation marks omitted). But “in crafting a norm that protects the naive and the credulous the courts have carefully preserved the concept of reasonableness.” Clomon, 988 F.2d at 1319.

The protections of the statute therefore do “‘not extend to every bizarre or idiosyncratic interpretation of a collection notice’ and courts should apply the standard ‘in a manner that protects debt collectors against liability for unreasonable misinterpretations of collection notices.’” Easterling v. Collecto, Inc., 692 F.3d 229, 234 (2d Cir. 2012) (quoting Clomon, 988 F.2d at 1319). A communication from a debt collector is deceptive when it “could mislead a putative-debtor as to the nature and legal status of the underlying debt, or . . . could impede a consumer’s ability to respond to or dispute collection.”

With respect to the plaintiff’s complaint, Judge Seibel notes that “Plaintiff is unclear as to what representation or means employed by Defendant was misleading or deceptive” and that “it was clear that Defendant owed the debt and had assigned an agent to handle the collection process on its behalf,” concluding that “the statements were not capable of more than one reasonable interpretation, nor could they have misled Plaintiff, or the least sophisticated consumer, about the legal status of the debt or impeded efforts to dispute it.”

Additionally, “Plaintiff’s claim appears to be not that Defendant said or did anything misleading, but rather that the FDCPA obliges owners of debt to personally register disputes from consumers rather than delegating that task to an agent” and that “she is trying to fit the square peg of an obligation not found anywhere in the FDCPA into the round hole of the statute’s prohibition against deceptive or misleading means to collect a debt.”

Judge Seibel ultimately ruled in favor of Pinnacle and granted summary judgment because “there being nothing deceptive, misleading, obstructive, unjust, unscrupulous or abusive about the conduct Plaintiff has challenged, that conduct does not violate § 1692f.”

insideARM Perspective

This result is a positive outcome for the ARM industry, and shows that there are limits to the interpretation of what actually constitutes a false, deceptive or misleading practice. Judge Siebel applied a reasonable, practical approach to the issues presented.

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