Judge Grants MTD in FDCPA Case Over Settlement Offer

A District Court judge in New Jersey has granted a defendant’s motion to dismiss, ruling that a discount offer conveyed in a collection letter did not overshadow the plaintiff’s right to dispute the debt nor did offering multiple discount offers constitute a deceptive or misleading violation of the Fair Debt Collection Practices Act.

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

Background: The plaintiff received a collection letter from the defendant. The letter, dated October 15, 2020, offered to settle the full balance if the plaintiff paid 60% of what was owed. The top of the letter stated, “40% off your balance.” The letter also offered another discount if the plaintiff was not able to pay the balance in one lump sum — by making three equal payments that totaled 80% of the balance. The letter also informed the plaintiff that the defendant was not obligated to renew the offers after December 1.

The Allegations: The plaintiff alleges that a December 1 deadline on the discount offers overshadowed and contradicted the 30-day dispute window and would confuse a least sophisticated consumer about whether acceptance of the discounted offer dissolved her right to dispute the debt or if she disputed the debt, but the defendant did not respond before December 1, whether the discount offer would be extended.

The plaintiff also alleged that by making two offers — one payment equal to 60% of the total balance or three payments equal to 80% of the total balance — but only mentioning the one discount at the top of the letter, the defendant was making a false, deceptive, or misleading representation.

Not Overshadowing: The plaintiff “clearly and unambiguously” had the option to request validation and dispute the debt for 30 days, noted Judge Esther Salas of the District Court for the District of New Jersey. “The Letter does not demand payment, threaten legal recourse, or emphasize any of Plaintiff’s options over the others,” she wrote.

Not Misleading: The letter clearly offers the plaintiff a 40% discount on the total balance, which is what it said it does, Judge Salas ruled. And the second offer is explicitly presented “if” the plaintiff is not able to take advantage of the first offer. “Critically, the least sophisticated consumer cannot be misled because the second compromise offer is presented as an alternative to the first,” Judge Salas wrote.

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