A District Court judge in Indiana has granted a defendant’s motion to dismiss because a plaintiff relied “too heavily” on the strict liability of the Fair Debt Collection Practices Act in trying to argue that a rounding error which created a $0.01 difference in the amount of a settlement error constituted a material violation of the law.
A copy of the ruling in the case of Freeman v. Financial Business and Consumer Solutions (FBCS), can be accessed by clicking here.
The plaintiff received a collection letter from the defendant, offering a 35% discount on the $539.76 that was owed on an unpaid cell phone debt. The letter starts by asking if the plaintiff was “interested in saving $188.92” and continues to offer three options:
- Make a one-time payment of $350.84
- Make a $70.17 down payment and then pay $280.67 30 days later
- Make three equal payments of $116.95 each
Well, all the math wizards will note that three payments of $116.95 is $350.85, not the $350.84 in the one-time payment, and $188.91 less than the total amount owed, not the $188.92 that was cited at the top of the letter. That one-penny-difference — a result of having to round the amount of the discount ($539.76 x 35% = $188.916) was enough for the plaintiff to file suit, alleging the letter violated Section 1692e(10) of the FDCPA by making a false representation in trying to collect on a debt.
But Magistrate Judge Matthew Brookman of the District Court for the Southern District of Indiana, Indianapolis Division, did not buy that even the least sophisticated consumer is that dim-witted.
“The court is hard pressed to imagine that even an unsophisticated but reasonable consumer would interpret the Letter in the manner proposed by Ms. Freeman resulting in difficulty determining the amount owed to satisfy the voluntary settlement offer,” Judge Brookman wrote.
The $0.01 difference represents less than 0.0002% of the total amount owed and “whether or not Ms. Freeman would save the additional penny would be immaterial to the unsophisticated consumer’s decision of whether or not to accept this settlement option, which was only one of three offered to Ms. Freeman,” Judge Brookman wrote, in granting the motion to dismiss.