‘Least Sophisticated Consumer’ Allegations Not Enough for Plaintiff to Have Standing, Judge Rules

I know that a lot of legal experts across the accounts receivable management industry view legal victories built on whether the plaintiff had standing to sue the same as they view Andy Dufresne’s escape from prison in “The Shawshank Redemption” in that it’s great that he got out, but wasn’t there a better way than crawling through sewage to do it? But, a District Court judge in New Jersey may have opened an interesting door when she granted a defendant’s motion to dismiss a class-action lawsuit because the plaintiff lacked standing — ruling that a claim asserting that a “least sophisticated consumer” would have been harmed by the alleged infraction is not enough for the plaintiff to have grounds to pursue her claim.

A copy of the ruling in the case of Lahu v. I.C. System can be accessed by clicking here.

Background: The plaintiff received a collection letter from the defendant that added a collection charge of $8.50 to the unpaid balance, none of which had been paid at the time the charge was assessed. The suit alleges the defendant was not yet entitled to a collection fee because nothing had been collected. The letter also mentioned that the debt would be reported to the credit reporting agencies — even though it never was — and that the name of the defendant was visible through the glassine window of the envelope.

  • The plaintiff filed a class-action lawsuit, alleging the letter violated Sections 1692e, 1692e(2), 1692e(2)(A), 1692e(5), 1692e(10), 1692f, 1692f(1), 1692f(8), 1692g, and 1692g(a)(1) of the FDCPA. The defendant subsequently filed a motion to dismiss.
  • In her suit, the plaintiff claimed that a least sophisticated consumer would be “uncertain as to the amount allegedly owned, how to properly prioritize their expenses versus their indebtedness and uncertain as to actual amount.”

Ruling: Because the plaintiff did not claim to have suffered from any uncertainty or anxiety as a result of what was included in the letter, let alone taking any action after receiving it, and only claimed that a least sophisticated consumer would be harmed, the plaintiff lacks standing to sue, ruled Judge Claire C. Cecchi of the District Court for the District of New Jersey. “…Plaintiff’s general allegations that the least sophisticated consumer would be confused by the letter, without additional facts regarding actions or inactions taken by Plaintiff upon receipt of the letter, cannot establish standing,” Judge Cecchi wrote.

  • Regarding the claim that the name of the defendant was visible through the window of the envelope, Judge Cecchi noted that there is nothing in the name of the defendant — I.C. System — that would make it known that the defendant was in the business of collecting debts.

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