Tenth Circuit Finds that Materiality Must be Determined Through the Perspective of the Reasonable Consumer

In a recent Tenth Circuit decision, the Court of Appeals considered whether an alleged violation of the Fair Debt Collection Practices Act (“FDCPA) was material under a “reasonable consumer” standard rather than a “least sophisticated consumer” standard. See Tavernaro v. Pioneer Credit Recovery, Inc., No. 20-3219, 2022 WL 3153234 (10th Cir. Aug. 8, 2022).

In Tavernaro, the plaintiff borrowed money to pay for schooling and subsequently defaulted on the loan. The debt was sold to a federal student loan guaranty agency, which then contracted with the defendant debt collector to help collect the debt. In an attempt to collect the debt, the defendant sent the plaintiff’s employer a packet with an Order of Withholding from Earnings, which required the plaintiff’s employer to withhold a portion of his earnings and remit the withheld wages to the debt collector.

The federal student loan guaranty agency’s logo was displayed on the first page of the letter at the top-right corner and the letter clarified that the agency held the loan. On the second page of the letter, near the middle of the page, the debt collector was named in the letter. Specifically, the letter stated, “Pioneer Credit Recovery, Inc. is assisting ECMC with administrative activities associated with this administrative wage garnishment.” The letter instructed the employer to remit payment to the debt collector and provided the debt collector’s mailing address. After the employer withheld a portion of the plaintiff’s wages and garnished the funds to the debt collector, the plaintiff filed a class action lawsuit against the debt collector claiming that it violated Sections 1692e and 1692f of the FDCPA. The plaintiff asserted that the debt collector used the federal agency’s name and logo on the first page of the letter to deceive the reader into believing that the agency was the sender of the letter.