Collection Letter Falsely Implying Immediate Legal Action Doesn’t Violate FDCPA

A collection agency that sent a notice warning of possible legal action if the debt was not repaid did not violate federal law, according to U.S. District Court Judge Vincent Briccetti, who dismissed the case. The complaint was filed by a New York resident who was seeking class-action status.

The issue was whether a letter implying that immediate legal action would ensue if the debtor did not respond to the creditor's requests violated the Fair Debt Collection Practices Act. The letter stated, among other things, that the owner of the debt “will send your account to an attorney" and referenced “legal action" more than once. According to the complaint, mention of legal action by a collection agency – which did not own the debt – was an over-exaggeration of the status of the debt and would be misleading to consumers.

FDCPA Requirements

According to the complaint, Client Services, Inc., a credit agency, sent a letter that would have led “the least sophisticated consumer" to believe that legal action was imminent. The FDCPA requires creditors to notify debtors of the amount of the debt and that they have 30 days to dispute the debt in writing, among other requirements.

The letter had this required information. However, the consumer argued that as a whole, the letter gave the false impression that immediate legal action was forthcoming. For example, the letter requested the debtor call the collection agency to “help you avoid any possible legal action."

Least Sophisticated Consumer

For claims under the FDCPA, courts apply the “least sophisticated consumer" standard, a hypothetical that requires the court to analyze potential violations according to whether the least sophisticated consumer would understand notices and information provided by the collection agency.

This standard has led courts to find violations when creditors mislead consumers by trying to obscure important information, even if the notice or letter had met the technical requirements of the FDCPA.

Judge Briccetti did not buy it in this circumstance, however, writing that “the Court fails to see . . . how the least sophisticated consumer could reasonably believe legal action to be imminent if such action is not even certain to be taken." Judge Briccetti noted that all of the legal action mentioned in the letter had qualifiers such as “possible."

Considering the state of the economy, collection actions – and resulting disputes – are sure to arise more frequently. At least in New York, however, mentioning potential legal consequences of failing to pay delinquencies does not violate the FDCPA.

Related Resources

• Debt Collector Gets FDCPA-Slapped (FindLaw's U.S. Second Circuit)
• Debt Buyers Are Subject to Debt Collection Law (FindLaw's U.S. Third Circuit)
• Loan Guaranty Agency Can't Be Sued for Incorrectly Garnishing Wages (FindLaw's U.S. Eleventh Circuit)