Appeals Court Holds Being More Explicit About Creditor Name in Letter Does Not Violate FDCPA

For the second time in two days, the Seventh Circuit Court of Appeals has affirmed a lower court’s decision in favor of a collector that was sued for allegedly violating the Fair Debt Collection Practices Act. This time, the court ruled on two consolidated class-action suits that the collector did not violate the FDCPA by referring to the client and the original creditor in a collection letter.

A copy of the ruling in the consolidated cases of Smith v. Simm Associates, Inc., and Nieto v. Simm Associates, Inc., can be accessed by clicking here.

This ruling follows a day after the Seventh Circuit affirmed a lower court’s dismissal of a lawsuit in Casillas v. Madison Avenue Associates.

In these cases, the defendant sent collection letters to a number of individuals, including the plaintiffs. The collection letters referenced the original creditor, Comenity Capital Bank, and the client, PayPal Credit. The letters also offered the recipients the opportunity to request the name of the original creditor, if different from the current creditor. The inclusion of both the client and original creditor’s names was done to ensure that the recipients of the letter understood that while the accounts they had may have been in the name of PayPal, the accounts were actually being maintained by Comenity Capital Bank. The defendant said it sought to adhere to “the spirit of” the FDCPA by disclosing the name — PayPal Credit — that the consumer was more likely to recognize.

“The letter provides a whole picture of the debt for the consumer, identifying the creditor to whom the debt is owed as well as the commercial name the consumer is more likely to recognize,” the Seventh Circuit wrote in its opinion. “This provides clarity for consumers; it is not abusive or unfair and does not violate § 1692g(a)(2).”

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