Appeals Court Overturns Dismissal of FDCPA Suit Over Lack of Dispute

The Court of Appeals for the Second Circuit has overturned a lower court’s decision dismissing a lawsuit filed by an individual against a debt collector alleging violations of the Fair Debt Collection Practices Act, ruling that just because the individual did not dispute the debt does not preclude her from filing a lawsuit over it.

The granted motion to dismiss has been vacated and the case has been remanded back to the District Court for the Eastern District of New York for further proceedings. A copy of the ruling in Vangorden v. Second Round, LP, can be accessed by clicking here.

The plaintiff had settled a debt related to an unpaid credit card account. Five years later, the defendant purchased the settled account from the original creditor and sent the plaintiff a collection letter. The letter included the statutory language notifying individuals of their right to dispute a debt and that the defendant may report account information to the credit bureau and that information may already appear on her credit report. The plaintiff did not dispute the debt. Five months after receiving the letter, the plaintiff filed a lawsuit against the defendant, for allegedly violating Sections 1692e(2), 1692e(10), and 1692f(1) of the FDCPA. A District Court judge granted a motion to dismiss the lawsuit on the grounds that the plaintiff “could not state a plausible FDCPA violation because the same letter notified [her] of her right to dispute the debt, which she failed to do.”

In arguing against the appeal, the defendant argued that the plaintiff’s decision not to dispute the debt when she received the collection letter from the defendant negates her claim. The Appeals Court did not see it the same way.

The defense argued that the validation language in the collection letter precluded the plaintiff from claiming a violation of 1692e and 1692f, but the Appeals Court ruled that there is nothing in the FDCPA that says filing a claim is dependent upon first disputing the validity of the debt. The defense also tried to argue that a least sophisticated consumer would not be confused by the misled by the letter, but, again, the Appeals Court disagreed.

As Vangorden persuasively argues, upon receipt of a debt collection letter misstating a debt obligation and requesting payment, a consumer — and, particularly, a least sophisticated consumer—might question whether she had indeed satisfied the debt and make payment anew “out of fear and confusion.”