Judge Dismisses FDCPA Case Over Settlement Offer for Lack of Standing

A District Court judge in California has dismissed a Fair Debt Collection Practices Act case, ruling the plaintiff lacked standing to sue because she did not suffer a concrete injury based on receiving a letter that allegedly used the wrong pronoun and by stating it was not obligated to renew an offer made to settle the debt for less than the amount owed.

Background: The plaintiff received a collection letter from the defendant, offering to settle a debt for less than the full amount owed.

  • The letter, in part, stated, “We are willing to settle your account for 50% of the balance due. Once your payment in the amount of $498.45 is received and clears, …”
  • “This offer will expire 45 days from the date of this letter. We are not obligated to renew this offer.”

The Claim: The plaintiff claims that using the word, “We” falsely implies that the defendant had the authority to decide the condition of the debt settlement, when only the creditor had such power, and that the contract between the defendant and the creditor requires the defendant to settle a debt for 50% of the balance during the entire time the defendant collects on an account, meaning it must always renew the offer. The plaintiff claimed the content of the letter violated Sections 1692e, 1692e(5), 1692e(10), and 1692f of the FDCPA.

  • At a hearing to argue the defendant’s motion to dismiss, the judge raised the issue of whether the plaintiff suffered a concrete injury and had standing to sue.

Standing: The plaintiff did not suffer an Intentional Infliction of Emotional Distress because the content of the letter did not rise to the level needed for such an injury to occur, ruled Judge Edward M. Chen of the District Court for the Northern District of California.

Likewise, the plaintiff was not defrauded by the defendant because she was not in a position to be able to pay off the debt and could not allege any form of financial loss.

The Last Word: “Plaintiff has not alleged actual harm or a material risk of harm to the interests protected by the FDCPA,” wrote Judge Chen. “As discussed above, the FDCPA is designed to protect a consumer’s ability to intelligently choose his or her responses. The purported misrepresentation here did not harm that protected interests because Plaintiff did not and could not have changed her response even if the misrepresentation were corrected. She therefore lacks Article III standing.”

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EDITOR’S NOTE: This article is part of a series that is sponsored by WebRecon. WebRecon identifies serial …

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