Judge Grants MTD in FDCPA Class Action Over Settlement Offer in Letter

I think I’m probably not the only person in the world, who, when wandering around a store and coming across an item without a price tag, makes a comment about how said item must be free. We all know that just because there is no price tag, the item isn’t free, but I guess some people are willing to try harder than others. That has led a District Court judge in New Jersey to grant a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit after a plaintiff received a collection letter offering a 20% discount to settle a debt but the discount applied to only one of the two payment plan options that were offered.

A copy of the ruling in the case of Pistone v. Halsted Financial Services can be accessed by clicking here.

The plaintiff received a collection letter from the defendant, offering to settle a debt for 80% of the full balance that was owed. The letter offered two options – make a one-time payment of 80% of the full balance that was owed, or make three payments that would cover 90% of the balance that was owed. Can you see where this is going?

The plaintiff filed a class-action lawsuit, alleging the letter violated Section 1692e of the FDCPA because the second payment option was not a 20% savings on the balance that was owed as indicated at the top of the letter. The letter also advised the plaintiff that the defendant was not obligated to renew the offer after a specific date, which the plaintiff claimed was misleading because it was not clear whether the payment needed to be mailed in by that date to accept the offer.

Judge Michael A. Shipp of the District Court for the District of New Jersey followed precedent in ruling that a least sophisticated debtor would not be confused by multiple payment options, especially because the second offer was preceded by the phrase, “[i]f you cannot take advantage of the above offer,” which indicated it was a distinct offer from the first one.

“The letter clearly offers two separate options, and simple logic dictates that only one of those options can equal the 20% offer,” Judge Shipp wrote.

With respect to the deadline to take advantage of the offer, whether the payment needed to be mailed or received by the date in question is mostly irrelevant because the difference was “only a matter of days,” Judge Shipp noted. “At worst, the debtor would pay a few days earlier,” he wrote. “Furthermore, in the Collection Letter, Halsted only explicitly provides means of payment by phone or online. Even if the least sophisticated debtor decided to take advantage of the offer on April 21, the debtor could make immediate payment through those means. By either of those methods, the least sophisticated debtor would not be misled to pay too late.”

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