Judge Partially Dismisses FDCPA Class Action Over Collection Letter, Dispute

A District Court judge in Illinois has dismissed one of the two counts in a Fair Debt Collection Practices Act class action against a debt buyer and collection agency, ruling that the plaintiff did not have standing to sue by claiming that the addition a phrase to the outside of the envelope containing a collection letter violated the statue, but denying the motion to dismiss on the other count because the defendant’s argument did not address the issue of the plaintiff’s standing.

A copy of the ruling in the case of Lueck v. The Bureaus, Inc., and Stoneleigh Recovery Associates can be accessed by clicking here.

The plaintiff received a collection letter from Stoneleigh seeking to recover a credit card debt that had been purchased by The Bureaus. The envelope containing the letter included the phrase “Personal & Confidential” beneath the return address on the outside of the envelope. The plaintiff’s attorney sent a letter to the agency disputing the accuracy of the amount owed as well as the debt buyer’s ownership of the debt. The debt buyer responded with a letter indicating that the plaintiff had opened the credit card in question, but did not provide any information about how it came to own the account.

A few weeks later, the plaintiff obtained a copy of her credit report, which included a tradeline for the debt in question. The debt was marked “Account previously in dispute-now resolved.”

The plaintiff filed a class action, arguing that the defendant should have know that the dispute had not yet been resolved, and that falsely communicating information to the credit reporting agency “materially” lowered her credit score. She also alleged that adding “Personal & Confidential” to the outside of the envelope disclosed private information about the debt to anyone who saw the envelope.

The defendants filed a motion to dismiss, arguing the plaintiff lacked standing to sue. And while Judge John Z. Lee of the District Court for the Northern District of Illinois sided with the defendant on the “Personal & Confidential” allegation, he denied the motion to dismiss on the dispute allegation, ruling that the defendant’s arguments why the plaintiff lacked standing attacked the merits of her claim, and not whether she had standing to sue.