Portfolio Recovery Associates May Not Send Consumers "Pre-Suit Packages," Says Court

In this case[1], before the court on the plaintiff's motion for summary judgment for violations of the Fair Debt Collection Practices Act ("FDCPA"), debt buyer Portfolio Recovery Associates had sent to approximately 990 debtors a "pre-suit package" comprised of a cover letter on the letterhead of the "Litigation Department" of Portfolio Recovery, and signed by an attorney, with a set of draft pleadings attached. The cover letter read, in pertinent part:

Enclosed please find a copy of the lawsuit our local counsel in your state intends to file against you related to the delinquent account referenced above. If you pay the balance due on this account or make acceptable payment arrangements with our office by April 29, 2009, we will instruct our local counsel not to file the lawsuit against you at this time. Please contact our office by April 29, 2009, to either pay the balance due on this account or make acceptable payment arrangements to stop the lawsuit from being filed against you.

Attached to the letter was 1) a completed summons setting forth the name of the court, the parties to the purported lawsuit, and stating that the defendant had 20 or 30 days to answer, depending on the method of service; 2) a complaint bearing the same caption, setting forth a cause of action for account stated, and 3) an Affidavit of Military Investigation, all documents "identical to those generated for and transmitted for use in actual litigations in New York State courts." The "pre-suit package" also contained a "Notice to Debtor Pursuant to the Fair Debt Collection Practices Act," which set forth the disclosures required under 15 U.S.C. § 1692g.

In its analysis, the court set out the following three points of law:

1. In order to prevail on an FDCPA claim, a plaintiff must demonstrate that he or she is a "consumer" under the Act, and that the allegedly violative conduct was used in an attempt to collect a 'debt' within the meaning of the FDCPA.[2]

2. "Debt" is defined as "any obligation ... of a consumer to pay money arising out of a transaction [that was] ... primarily for personal, family, or household purposes.[3]

2. The question of whether a debt collector's action violates the FDCPA is determined objectively from the viewpoint of the 'least sophisticated consumer.'[4]

Portfolio Recovery conceded that the plaintiff was a consumer, and was unable to demonstrate there was a material issue of fact as to whether the plaintiff's debt was a consumer debt. Thus, stated the court, the only remaining issue was whether the defendant's "Pre-Suit Package" violated 1692e(9) and (13), which prohibit false representations regarding legal documents, court actions or legal process.

The court cited to Weiner v. Bloomfield[5], in which the court found a very similar set of documents violated the FDCPA, because the least sophisticated consumer would probably assume that the "imposing and formal-looking court documents" were in fact legal process. Similarly, here, stated the court:

Under the objective, 'least sophisticated consumer' standard, the Court concludes that [the plaintiff] has met his burden of demonstrating that Defendant has violated 15 U.S.C. § 1692e(9) and (13). The 'least sophisticated consumer' might well conclude that Defendant has initiated a lawsuit to collect the debt, given the form of the Summons and Complaint, the reference to the court and parties, the requirement to respond within 20 or 30 days, and the fact that an attorney from Portfolio's "Litigation Department" had signed the cover letter.

Accordingly, the court granted the plaintiff consumer's motion for summary judgment.