Judge Denies MTD in FDCPA Case Over Inadvertent SOL Disclosure in Letter

A District Court judge in New York has denied a defendant’s motion to dismiss a class-action lawsuit alleging it violated the Fair Debt Collection Practices Act by including statements in two collection letters indicating that the statute of limitations during which the individual could be sued for the unpaid debt had expired, even though it had not.

A copy of the ruling in the case of Chandler v. NCB Management Services can be accessed by clicking here.

The plaintiff defaulted on a credit card debt in 2018. A year later, the defendant sent three letters to the plaintiff. The letters contained the following disclosure on the first page:

For New York City Residents: WE ARE REQUIRED BY LAW TO GIVE YOU THE FOLLOWING INFORMATION ABOUT THIS DEBT. The legal time limit (statute of limitations) for suing you to collect this debt has expired. However, if somebody sues you anyway to try to make you pay this debt, court rules REQUIRE YOU to tell the court that the statute of limitations has expired to prevent the creditor from obtaining a judgment. Even though the statute of limitations has expired, you may CHOOSE to make payments. However, BE AWARE: if you make a payment, the creditor’s right to sue you to make you pay the entire debt may START AGAIN.

and the following statement on the second page:

We are required by regulation of the New York State Department of Financial Services to notify you of the following information. This information is NOT legal advice: Your creditor or debt collector believes that the legal time limit (statute of limitations) for suing you to collect this debt may have expired (emphasis added).

The plaintiff filed suit, alleging the letters violated Section 1692e and 1692f of the FDCPA because they made it seem like he didn’t have to worry about the debt, based on what the first statement said, but also confused him about whether he could be sued for it.

The defendant argued in its motion that the alleged violations of the FDCPA were not material because they encouraged the plaintiff not to make payments, and that the plaintiff did not suffer any adverse effects, such as having interest or additional fees accrue on the unpaid balance or be sued for the debt.

Conceding the defendant’s point that the plaintiff could not find any case law that says a defendant inducing an individual to not pay his or her debt constitutes a violation of the FDCPA, Judge Pamela Chen of the District Court for the Eastern District of New York found that the alleged misrepresentations “clearly had the potential to affect [the plaintiff’s] decision-making process and were misleading as to the debt’s legal status.”

The defendant also attempted to argue that the plaintiff lacked standing because he did not suffer any actual damages, Judge Chen ruled that the plaintiff, as a matter of law, does not have to “plead that he suffered actual damages” in order to have standing to proceed with his lawsuit.

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