A federal judge in New Jersey has certified a class-action lawsuit against a collection agency and granted summary judgment in favor of the plaintiff after the agency was accused of violating the Fair Debt Collection Practices Act by asking recipients of a collection letter to contact it by phone regarding insurance coverage.
A copy of the ruling in Kassin v. AR Resources Inc. can be accessed by clicking here.
The plaintiff received a collection letter in regards to an unpaid medical debt. The collection letter included the following passage:
If you carry any insurance that may cover this obligation, please contact [the defendant’s] office at the number above.
The letter also included a verification notice as required by the FDCPA.
In filing the complaint against the defendant, the plaintiff alleged the letter violated Sections 1692e(10) and 1692g of the FDCPA by overshadowing the 30-day window to dispute the debt and using false or deceptive means to collect or attempt to collect on a debt.
The defendant had previously filed a motion to have the case dismissed, which the judge had denied. In seeking summary judgment, the defendant raised new cases that had been ruled on that went in the defendant’s favor related to overshadowing, but Judge Freda Wolfson labeled those non-binding cases as unconvincing.
In sum, while deciphering the “sophistication” level of a debtor is an inherently difficult task, at a minimum, I find that language inviting a debtor to call the debt collector if another party (i.e., his or her insurance carrier) is liable for all or a portion of the debt obligation, rather than the debtor personally, could mislead that debtor into foregoing his or her statutory right to dispute a debt. Accordingly, because I find that the insurance language contradicts the required language in the validation notice, Plaintiff has proved that Defendant violated § 1692g of the FDCPA as a matter of law.
Judge Wolfson did say that the win for the plaintiffs was not a slam dunk.
While I acknowledge that the case before me presents a close call, and appreciate the distinction that these courts have drawn between disputing a debt and resolving a debt, under the relevant standard, I find that the insurance language in this case is so closely related to disputing a debt that it could mislead the least sophisticated debtor into foregoing his or her statutory right to effectively dispute a debt, i.e., in written form.