Judge Denies MTD in FDCPA Overshadowing Class Action

A District Court judge in New York has denied a defendant’s motion to dismiss a class-action lawsuit for allegedly violating the Fair Debt Collection Practices Act by allegedly overshadowing the validation notice when it made a reference to initiating “a review of the inquiry” in a collection letter.

A copy of the ruling in the case of Schwebel v. Resurgent Capital Services can be accessed by clicking here.

The plaintiff’s delinquent credit card debt was acquired by LVNV, which placed the account with the defendant. The defendant sent the plaintiff a collection letter. In the body of the main text of the letter, the following statement was included:

Resurgent manages the above referenced account for LVNV and has initiated a review of the inquiry we recently received. For further assistance, please contact one of our Customer Services Representatives toll-free at 1-866-464-1187.

The plaintiff filed suit, alleging the reference to initiating a review of the inquiry overshadowed the validation notice in the letter confused him because he was led to believe by the letter that his account was already under review and he did not need to dispute the debt. As well, the invitation to call if he needed any assistance implied that a phone call was “sufficient to discuss all facets of the account,” including his ability to dispute the debt. The plaintiff alleged violations of Section 1692e(10) and 1692g(a) of the FDCPA.

In seeking the motion to dismiss, the defendant argued that there was nothing in the test of the letter that said no further action was needed for the plaintiff to seek validation of the debt.

But Judge Kenneth Karas of the District Court for the Southern District of New York, determined that a least sophisticated consumer might “assume” that nothing else needs to be done in order to dispute the debt, and that the text of the letter creates “uncertainty” about the appropriate method of dispute resolution.

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