Judge Grants MTD in FDCPA Case Over Settlement Offer in Letter

Have you ever heard the phrase, “Never look a gift horse in the mouth?” If you had owed someone more than $3,500 and were sent two letters offering you the opportunity to settle that debt for 25% of what you owed, would you take the deal? Or would you turn around and sue the company that sent you the letters? You can likely guess which option the consumer in this situation chose, only to have a District Court judge from New York grant the defendant’s motion to dismiss. Not because the plaintiff should have taken the deal, but because mentioning that there was no obligation to renew the offer and then offering it again in a subsequent letter is not a violation of the Fair Debt Collection Practices Act.

A copy of the ruling in the case of Kahn v. United Collection Bureau can be accessed by clicking here.

The plaintiff received two letters offering to settle a $3,558.95 debt for $889.74. In each letter, the defendant noted that it was “not obligated to renew the offer.”

He filed suit, alleging the letters violated Sections 1692e, 1692f, and 1692g of the FDCPA because the language misled him into believing the defendant intended to withdraw the offer, that a lack of a clear deadline put more pressure on him to accept the offer, by inciting fear in the plaintiff that the settlement offer might not come around again, and that the offer overshadowed the validation period.

None of the arguments were able to convince Judge Nelson S. Roman of the District Court for the Southern District of New York that the letters were anything other than a good-faith attempt to collect on an unpaid debt.

“The inclusion of language alerting the consumer that the debt collector is not obligated to renew the settlement offer would not impact the Court’s analysis under Section 1629g,” Judge Roman wrote. “Plaintiff argues this language ‘stokes the fears of the least sophisticated consumer to abide by the sophistry it was intended to guard against, a one-time offer that will quickly expire.’ However, this is even less likely in this case, where the settlement offer has no deadline and cannot be described as a one-time offer.”

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