Consumer Financial Services Law Blog
Dykema Gossett PLLC
Dykema Gossett PLLC

Consumer Financial Services Law Blog

Consumer Financial Services Law Blog

News and analysis regarding Consumer Financial Services litigation and regulation, and activities of the Consumer Financial Protection Bureau


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Seventh Circuit Holds That Filings in Court Can Fall Within the FDCPA

Last month, the Seventh Circuit reversed the dismissal of a putative class action alleging that debt collector defendants used misleading language in their state court collection complaints in violation of the federal Fair Debt Collection Practices Act (FDCPA). In so ruling, the Seventh Circuit joined the numerous other circuits that have already addressed the issue in concluding that “pleadings or filings in court can fall within the FDCPA.”

Three debtors filed a putative class action alleging violations of Section 1692 of the FDCPA through the following statement contained in state court collection complaints: “the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in party within thirty (30) days from the date hereof.” The district court determined that the subject paragraph was not misleading or deceptive as a matter of law and dismissed the plaintiffs’ complaint. 

On appeal, the debt collectors argued that the subject paragraph was not misleading as a matter of law because Section 1692e of the FDCPA “does not regulate the content of state court pleadings.” The Seventh Circuit, however, citing decisions from “numerous circuits” that previously addressed the issue, concluded that “pleadings or filings in court can fall within the FDCPA.”

Ultimately, the Seventh Circuit, like the other courts before it, relied on the Supreme Court’s ruling in Heintz v. Jenkins, 514 U.S. 291 (1995), which held that the FDCPA applies to the litigation activities of lawyers. The Seventh Circuit reasoned that “[n]othing in the broad language in Heintz would support an interpretation that would apply the FDCPA to attorneys whose debt collection activity consisted of litigation, but limit it to only those representations made by those attorneys outside of that litigation.”

The Court further reasoned that its interpretation was consistent with the purpose of the FDCPA, “to eliminate abusive debt collection practices, to ensure that those debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers.” This purpose, the Seventh Circuit held, “would be undermined if the FDCPA was inapplicable to communications that occurred in the context of litigation, particularly in the debt collection area in which judgments are overwhelmingly reached through forfeiture, and thus misleading or deceptive statements are more likely to influence the response of the defendant without ever coming to the attention of the court in any meaningful way.”

Turning to the substance of the offending paragraph, the Seventh Circuit found that it was indeed misleading because it did not track Section 1692g(a)(3), which requires debt validation notices to contain a statement that “unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector.” The state court complaints at issue did not contain the limiting language that the debt will be considered valid by the debt collector, instead stating that after the 30-day period "the debt will be considered valid.” The Seventh Circuit concluded that an unsophisticated consumer would be led to believe that the debt will be considered valid by the court if not disputed within that 30 days, because the relevant language that would have limited the assumption to only the debt collector was absent, “whether intentionally or otherwise.”

Debt collectors sending 1692g validation notices or including such language in collection complaints are reminded to track the statutory language as closely as possible. 

Marquez v. Weinstein, Pinson & Riley, P.S., – F.3d – (publication pending) (7th Cir. 2016)