Creditor Disclosure Does Not Violate FDCPA, Judge Rules

A District Court judge in Missouri has granted a motion for judgment on the pleadings on behalf of a defendant that was sued for allegedly violating the Fair Debt Collection Practices Act by including a disclosure from the original creditor that the individual who was sent a collection letter may receive less favorable credit terms in the future if she accepted a offer to settle a debt for less than the full amount owed.

A copy of the ruling in the case of Lantry v. Client Services, Inc., can be accessed by clicking here.

Collection agencies that were working on behalf of JPMorgan Chase were the subject of numerous lawsuits alleging the same violations — that by including the following disclosure — If we settle this debt with you for less than the full outstanding balance, Chase may offer you less favorable terms in the future for some Chase products or services, or may deny your application. — in a collection letter violated the FDCPA.

In this case, however, Judge Rodney Sippel of the District Court for the Eastern District of Missouri, Eastern Division, accused the plaintiff and her attorneys of filing an amended complaint that was “replete with conjecture and conclusory allegations that are styled as factual or plausible allegations.”

The plaintiff contended that the disclosure violated Section 1692e of the FDCPA because it was false, deceptive or misleading, The plaintiff also contended that the disclosure violated the FDCPA because its proximity was too close to the legally required disclosures in the letter, which the plaintiff said implied that doing so made it seem as though the language in question was a required disclosure, too.

In deciding to dismiss the count, Judge Sippel wrote, “The text and location of the Chase Disclosure would not undermine an unsophisticated consumer’s ability to choose intelligently between her options to resolve the debt.”

While Judge Sippel noted that a collection letter that implied an individual would receive more favorable terms if the full amount was repaid could possibly be seen to violate Section 1692e, what was included in this letter did not rise to such a level.

This is especially true in the context of the letter as a whole. The letter never states that full payment of the outstanding debt will result in more favorable terms from Chase in future dealings. It offers to settle Lantry’s balance due for $443.00, and it contains a warning conveying to Lantry that if she accepts the offer, Chase may offer her less favorable terms in the future or deny her application. To an unsophisticated consumer, this statement does not imply that paying the full balance would put a person in the position to receive more favorable terms. Indeed, as Lantry alleges, Chase has already “charged off” her outstanding debt of $2,212.73. Rather, the statement conveys what it says: settling the balance due will not necessarily return Lantry to good standing with Chase.

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