Judge Grants MTD in FDCPA Case Over Creditor Name in Letter, Claim of Overshadowing

A District Court judge in New York has granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act because it allegedly did not accurately convey the name of the current creditor to whom the debt was owed in a collection letter and because it allegedly overshadowed the validation notice by using boldface and a slightly larger font to direct the plaintiff to additional disclosures on the back page of the letter.

A copy of the ruling in the case of Muldowney v. American Coradius International can be accessed by clicking here.

The plaintiff received a collection letter from the defendant in regards to an unpaid credit card debt. The top of the letter, which includes information about the account, identified “Comenity Capital Bank” as the “creditor.” While Comenity may have been the creditor, the text of the letter also mentions the retail name that the plaintiff may have been more familiar with, saying “We are writing to you regarding your PayPal Credit account. The servicer of PayPal Credit accounts is Bill Me Later, Inc.”

At the bottom of the letter, under the FDCPA’s validation notice, it read “NOTICE: PLEASE SEE SECOND PAGE FOR IMPORTANT INFORMATION.” That instruction was printed in boldface and in a slightly larger typeface. The information on the second page of the letter were disclosures required by New York State Department of Financial Services.

The plaintiff filed suit, alleging the letter violated Section 1692g of the FDCPA because the letter named Comenity as the “creditor” and not the “current creditor” and for overshadowing the validation notice by directing the reader to the second page of the letter.

Judge Thomas McAvoy of the District Court for the Northern District of New York, ruled that the mention of the other names and that the letter did not explicitly name Comenity as the “current creditor” would not confuse a least sophisticated consumer and did not amount to an FDCPA violation.

“The layout of the document, which sets off COMENITY CAPITAL BANK, in all capitals, in separate boxes in four places that indicate who the creditor is, makes clear to the least sophisticated consumer to whom the debt is owed, even if other companies are mentioned,” Judge McAvoy wrote. “Those boxes purport to name the Creditor in bold print, and the only reasonable reading of the document is to believe the name listed in those boxes, ‘Comenity’ is the creditor. PayPal and Bill Me Later, Inc., are mentioned only incidentally in the letter, and nothing indicates that they currently own any of the debt.”

Directing the reader to the back page of the letter also did not overshadow the validation notice on the front page of the letter, Judge McAvoy ruled.

“Indeed, Plaintiff did not need to go to the second page for important information to get the statutorily required warnings; they were on the first page,” he wrote. “The information on the second page did not contradict those statements, but instead amplified the rights that Plaintiff had in the debt collection process. Nothing about those statements would ‘overshadow’ the statements on the first page of the documents. In many ways, they confirmed them.”

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