In the strictly applied, technical world of FDCPA ("Fair Debt Collection Practices Act") litigation, it's just as important to see why claims fail.
The FDCPA is a federal Act that governs the conduct of consumer debt collectors while providing an avenue to dispute and demand validation of debts.
A "class action" is largely a U.S. phenomenon where numerous people who have suffered small harms are joined together to bring an action redressing the repeated, small harms of a big business. These actions have the effect encouraging compliance with the law, and preventing unjust enrichment of ill-gotten gains. FDCPA claims are well suited for class action treatment because often times the violative acts are in the form of language in collection letters disseminated to thousands of consumers.
The case discussed in this blog entry, Oscar v. Professional Claims Bureau,[1] Magistrate Wall of the Eastern District of New York, by opinion dated June 1, 2012, dismissed most FDCPA claims in this class action involving a collection letter containing the following language:
"Payment is expected within 10 days of this notice. If this account is not resolved, we will assume that you have no intention of settling this outstanding debt and will notify our client of this."
Aside from the named plaintiffs' failure to adequately allege the "threshold" elements of being "consumers" involving a "consumer debt," Magistrate Wall was unmoved by the allegations that the above language violated the FDCPA.
The first claim was made under FDCPA § 1692e(5), which prohibits a collector from making a "threat to take any action that cannot legally be taken or that is not intended to be taken." The court observed that case law holds that "[a] false threat exists where the least sophisticated consumer would interpret the language to mean that legal action was authorized, likely and imminent." (Gutierrez, 2010 WL 3417842). Applied here, the court found that no cognizable legal threat exists where the collector threatened to notify the creditor of the debtor's failure to pay within 10 days.
Magistrate Wall also made short work of the plaintiffs' claim under 1692e(7), which prohibits the use of a "false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer." Plaintiffs did not allege any facts to support the claim that this statement "disgraced" them.
The strongest argument, I found, was the plaintiffs' claim under 1692e(10), a "catch-all provisions that prohibits "the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." The court held, "A debt collector's written communication is deceptive, and thus violates section 1692e(10), if it can be read to have at least two different meanings, one of which is inaccurate." (Gutierrez, 2010 WL 3417842). Applied here, the plaintiffs' argued that the consumer may have read the language and think that they must pay the debt within 10 days or they will not have another opportunity to pay it. The court opined, however, that even if such an interpretation could be made, such a failure would not be "materially" false or misleading, as required to support a 1692e(10) violation. To hold otherwise, the court held, would require "bizarre or idiosyncratic" interpretations of the collection letter, which are unsupported by the FDCPA.
The court also found that the plaintiffs did not alleged any additional or different facts to support a 1692f claim, which prohibits "unfair" or "unconscionable" conduct, as required under Foti, 424 F.Supp. 2d at 667.
The court left one door open for the plaintiffs: the right to re-plead their claims under 1692c(b) (prohibiting contacts to third parties) and 1692d(6) (prohibiting debt collectors from omitting their identity when placing phone calls) because the defendant did not object to these claims, and they were not yet found substantively deficient.