The Fair Debt Collection Practices Act (FDCPA) requires debt collectors to list the creditor to whom the debt is owed in the initial letter sent to consumers. This is simple enough when there is a single creditor entity, but becomes a little more complex when more than one entity is involved with the debt. One such situation is where the debt arises from a store-branded credit card that is issued by a bank.
In Bryan v. Credit Control, LLC, No. 18-cv-0865 (E.D.N.Y. Dec. 11, 2018), the court addressed this situation and found that listing the retail store as the creditor to whom the debt is owed does not violate the FDCPA due to the underlying contract between the retail store and the issuing bank.
Factual and Procedural Background
Plaintiff opened a Kohl’s Department Store, Inc. credit card that could only be used for the purchases made at Kohl’s. The card was initially issued by Chase Bank until 2011, followed by Capital One thereafter. The underlying agreement between Kohl’s and Capital One stated the following:
- Accounts are defined as credit accounts used to make purchases from Kohl’s;
- The “program” is the private label credit card program, including for the extension of credit to make purchases from Kohn’s.
- Kohl’s is responsible for, among other things, processing applications, managing accounts, handling collection and recovery efforts.
After plaintiff defaulted on his account, Credit Control sent a collection letter that listed Kohl’s as its “client” and Chase as the “Original Credit Grantor.”
Plaintiff filed an FDCPA suit against Credit Control alleging that the letter failed to properly identify the current creditor. Credit Control filed a Motion for Judgment on the Pleadings, which the court granted -- effectively disposing of the case by ruling in Credit Control’s favor.
The Court’s Decision
By granting Credit Control’s Motion for Judgment on the Pleadings, the court essentially ruled that based on all of the allegations contained in the complaint, there is enough present to find that Credit Control did not violate the FDCPA.
Based on the contract between Kohl’s and Capital One, Kohl’s is the creditor to whom the debt is owed. According to the FDCPA, “creditor” is defined as one “who offers or extends credit by creating a debt or to whom a debt is owed.” (Emphasis added by court.) Plaintiff argued that since Capital One is the owner of the account, the bank -- rather than Kohl’s -- is the creditor. However, the court disagreed, finding that plaintiff was confusing ownership of an account with the FDCPA’s definition of creditor. Based on the agreement between Kohl’s and Captial One, Kohl’s is the entity offering credit and is the entity responsible for collecting the debt. This, according to the court, qualifies Kohl’s as the creditor under the FDCPA.
The court rejected plaintiff’s argument that listing both Kohl’s and Capital One is confusing. The court cites prior precedent to show that specific labels are not required and, based on the context of the letter, the consumer would not be confused as to who the creditor is in this case. According to the court:
There is no indication that a bank’s involvement with a debt undermines the efficacy of listing the creditor as a “client,” and the Court remains persuaded by the reasoning in Wright. Bryan applied for the credit card directly from Kohl’s, transacted business exclusively with Kohl’s, and was obligated to make payments through Kohl’s. No debtor, however unsophisticated, would be “uncertain as to the meaning of the message,” as it is obvious that the Collection Letter referred to Plaintiff’s Kohl’s credit card account. Thus, the technical owner of the Debt would not have been of concern to the least sophisticated consumer, who in this case could have paid off his Debt without having ever interacted with Capital One. Accordingly, the Collection Letter’s reference to Kohl’s as Credit Control’s client complied with the FDCPA’s required inclusion of “the name of the creditor to whom the debt is owed.”
(Internal citations omitted.)
Since the court found that Credit Control accurately stated the creditor to whom the debt is owed in the letter, there was no violation of the FDCPA and the Motion for Judgment on the Pleadings was granted.