Seventh Circuit Favors Collectors in Recent FDCPA Decision

The Seventh Circuit recently affirmed four lower court rulings granting defendant debt-collector’s motion to dismiss plaintiff-consumer’s Fair Debt Collection Practices Act (“FDCPA”) actions for failure to state a claim.  In separate lawsuits, four plaintiffs filed a claim against four defendants alleging that the defendant’s dunning letter violated notice provisions set forth in 15 U.S.C. § 1692g(a)(4) of the FDCPA.  In the consolidated case, Gruber v. Creditors’ Protection Service, the plaintiffs received collection letters from the defendants that included the following relevant language:

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.  If you notify this office within 30 days from receiving this notice, this office will obtain verification of the debt or obtain a copy of the judgment and mail you a copy of such judgment or verification.

The plaintiffs argued that this language does not adequately provide the notice required by §1692g(a)(4) because the second sentence omits the phrase “that the debt, or any portion thereof, is disputed.”  The plaintiffs argued that the language provided directs the consumer to request verification instead of directing the consumer to dispute the debt and that this creates the risk that the unsophisticated consumer who may wish to exercise his rights would fail to properly do so.  The Seventh Circuit rejected this argument stating that “a request to verify the existence of a debt constitutes a ‘dispute’ under the [FDCPA].”  Therefore, if a consumer wrote and sought verification, he would be disputing the debt for the purposes of the FDCPA, and would be entitled to all of the same protections afforded under the FDCPA as if he had written to dispute the debt. 

Additionally, one of the plaintiff’s letters contained the statement:  “[w]e believe you want to pay your just debt” immediately preceding the notice language above.  The plaintiff argued that the statement is overshadowing and is inconsistent with the notice, and is thereby misleading in violation of the FDCPA.  The plaintiff further claimed that the phrase “just debt” implies that judgment has already been rendered against the recipient of the letter.  The Seventh Circuit rejected both arguments.  The Court concluded that the phrase “just debt” is best characterized as “puffing, in the sense of rhetoric designed to create a mood…”  Puffery does not violate §1692g(a)(4).

This decision is important because the Seventh Circuit held that demanding verification of a debt constitutes contesting the debt under the FDCPA.  Thus, letters omitting language directing consumers to request verification rather than dispute the debt does not violate the FDCPA- at least in the Seventh Circuit.