Judge Grants Motion to Dismiss FDCPA Suit Over Settlement Offers

A federal judge in Illinois has granted a defendant’s motion to dismiss a lawsuit alleging it violated the Fair Debt Collection Practices Act because it gave a plaintiff two kicks at the settlement can.

The plaintiff had filed suit, accusing the defendant, Portfolio Recovery Associates, of violating Sections 1692(e)(5) and 1692(e)(10) of the FDCPA by sending two collection letters, one two months after the first, that each had settlement offers that expired in 30 days. Along with the settlement offer, the letter indicated that the defendant “was not obligated to renew this offer.”

The plaintiff alleged that the first letter violated the FDCPA because it contained a false statement — that the settlement offer would expire within 30 days, when it was actually re-offered later — and alleged that both letters “constituted an unconscionable means to collect a debt in violation.”

A copy of the ruling in Bass v. Portfolio Recovery Associates can be accessed by clicking here.

The language — we are not obligated to renew this offer — is actually safe-harbor language that was provided by the Court of Appeals for the Seventh Circuit in Evory v. RJM Acquisitions Funding L.L.C. The plaintiff attempted to say that his case was difference from Evory because, unlike the plaintiff in Evory, he received two collection letters instead of one.

“…while consumers must be protected, debt collectors also should be able to make their settlement offers without elaborating on the consequences of consumers’ rejections of those offers,” wrote Judge Andrea Wood in her ruling granting the motion to dismiss the lawsuit.

The plaintiff also tried to allege that the defendant violated Section 1692(f) of the FDCPA, which prohibits collectors from using unfair or unconscionable means to collect a debt. Judge Wood ruled that the 1692(f) claim could not proceed on the same conduct that fell within the 1692E) safe harbor provisions in Evory.