Judge Partially Grants MTD in FDCPA Letter Case, But Also Hints At Awarding Plaintiff Summary Judgment

A District Court judge in New York has partially granted a defendant’s motion to dismiss but also ordered the defendant to show cause why the plaintiff should not be granted summary judgment on another count in relation to a collection letter that was sent.

A copy of the ruling in Meintzinger v. Sortis Holdings, Inc. f/k/a ClearSpring Loan Services, Inc., Sortis Financial, Inc.. f/k/a ClearSpring Loan Services, Inc., and Diverse Funding Associates LLC, can be accessed by clicking here.

Let’s start with the good news. The plaintiff received a collection letter from the defendant that referenced a $6 fee that would be applied if the plaintiff made a payment on the unpaid debt via a telephone call. The letter also said that no fee would be applied if a payment was mailed to the defendant. Judge Brian Cogan of the District Court for the Eastern District of New York granted the defendant’s motion to dismiss this claim, because “[n]othing in the FDCPA requires the collection company to accept payments by telephone, and thus nothing prohibits it from offering to enter into a new contract with the debtor, i.e., ‘for $6, I will give you the added convenience of paying by phone.’ The debtor does not have to accept that offer, and if she does, the fee for that new, additional service is fully disclosed.”

The collection letter also included the following passage: “Your account referenced above has been transferred to ClearSpring Loan Services, Inc. by Diverse Funding Associates, LLC/DNF for collection.”

While admitting that the violation was a “very technical” one, Judge Cogan conceded that the statement regarding the current creditor was misleading. His “main” issue was the use of the word “transferred,” which could imply that ClearSpring was now the owner of the account and not simply an entity collecting on behalf of the current creditor. The word does not “imply an agency relationship,” Judge Cogan wrote, but “a sale, complete assignment, and surrender of interest by Diverse Funding. It suggests that ClearSpring is merely explaining how it acquired the debt.”

Said Judge Cogan: “No one should think that this Court is comfortable with this result. In the real world, I see no reason why a debtor, sophisticated or not, would care a whit about whether the current holder is ClearSpring or Diverse Funding. She knows how much she is claimed to owe, she knows how and to whom to pay it, and she knows how to dispute it. It would make a lot more sense to require disclosure of the original creditor, so that the debtor could have no doubt about what purchases or charges are at issue, but the statute does not require that.”

Another “technical defect” with the letter was the inclusion of DNF. Judge Cogan admitted he didn’t know what it meant, so he would assume an unsophisticated consumer wouldn’t know what it meant, either. DNF is an affiliate of Diverse Funding, but that relationship is not explained in the letter.

The statute “does not require [the plaintiff] to research on the internet what ‘Diverse Funding Associates, LLC/DNF’ might mean, and then call each affiliate in a process akin to P.D. Eastman’s children’s book, ‘Are You My Mother?’ Judge Cogan wrote, in giving the defendant 14 days to show cause why the plaintiff should not be granted summary judgment on this count.

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