Reversing the lower court's judgment order, the U.S. Court of Appeals for the Third Circuit recently ruled in a putative class action suit under the federal Fair Debt Collection Practices Act that language in a debt collection letter contradicted and overshadowed the FDCPA validation notice, pointing among other things to the statements in the letter to "please call us" "if you feel you do not owe" the debt, the font, typeface and other characteristics.
A copy of the opinion is available at: http://www.ca3.uscourts.gov/opinarch/121846p.pdf
Defendant debt collector ("Debt Collector") sent plaintiff debtor ("Debtor") a letter in an attempt to collect a debt which Debtor supposedly owed for medical services. The letter stated in part: "if you feel you do not owe [the debt], please call us toll free at . . . or write us at the above address. . . SEE REVERSE SIDE FOR IMPORTANT INFORMATION." The phrase "please call" was in bold face, and the front side of the letter supposedly contained a confusing admixture of font sizes, typeface, contact phone numbers, and mailing and website addresses.
On the reverse side of the letter was the language stating in part: "unless you notify this office within 30 days after receiving this notice that you dispute the validity of this or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt . . . , this office will . . . [verify the debt]. . . . If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor . . . ."
Debtor filed a putative class action complaint under section 1692(e)(10) and section 1692g of the federal Fair Debt Collection Practices Act ("FDCPA"), alleging that Debt Collector's letter was a false or deceptive means of collecting on the debts in question because the least sophisticated debtor could reasonably, but incorrectly, believe that he could effectively dispute the debt by calling the phone number listed in the letter.
Debt collector moved for judgment on the pleadings, which the lower court granted. Debtor appealed. The Third Circuit vacated the lower court's order granting the judgment on the pleadings.
As you may recall, the federal Fair Debt Collection Practices Act requires that a debt collector provide to a consumer: (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that the debt will be assumed valid unless the consumer disputes the debt in writing within 30 days after receipt of the notice; (4) a statement that if the consumer does so notify the debt collector in writing that the debt is disputed, the debt collector will verify the debt and send such verification to the consumer; and (5) a statement that, upon the consumer's written request within the 30-day period, the debt collector will provide the name and address of the original creditor. 15 U.S.C. § 1692g(a).
In addition, section 1692g(b) of the FDCPA provides in part that if the consumer disputes the debt in writing, the debt collector must cease collection of the debt "until the debt collector obtains verification of the debt . . . or the name and address of the original creditor, and a copy of such verification . . . or name and address of the original creditor, is mailed to the consumer by the debt collector. . . ." That section further provides that "[a]ny collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt or request the name and address of the original creditor." 15 U.S.C. § 1692g(b).
Moreover, Section 1692e specifically prohibits "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." 15 U.S.C. § 1692e.
Addressing Debtor's claim that the validation notice was inadequate to apprise "the least sophisticated consumer" of his rights under the FDCPA, the Third Circuit observed that "more is required than the mere inclusion of the statutory debt validation notice in the debt collection letter – the required notice must also be conveyed effectively to the debtor." See, e.g., Wilson v. Quadramed Corp., 225 F.3d 350 (3rd Cir. 2000); Graziano v. Harrison, 950 F.2d 107 (3rd Cor. 1991)(statutory notice must effectively explain a debtor's rights).
In so doing, the Third Circuit examined the Debt Collector's collection letter in terms of both its form and substance to determine whether the validation notice was "'overshadowed' or 'contradicted' by accompanying messages from the debt collector" that would lead the least sophisticated consumer to derive different meanings from the letter. See Graziano, 950 F.2d at 111, 354.
In reaching its conclusion that Debt Collector's letter was substantively deceptive, the Third Circuit took issue with the lower court's assessment that the "please call" language, when read in the context of the whole letter, would not be confusing to the least sophisticated debtor. In the Court's view, the least sophisticated debtor, although charged with the responsibility of reading the letter in its entirety, could nevertheless reasonably "feel" that he did not owe the debt "if he . . . actually disputed the debt and its validity." According to the Court, therefore, the "please call" language suggested to such a debtor that a phone call was an effective means of disputing the validity of the debt.
Moreover, noting that Debt Collector's letter lacked "repeated instructions" to read the reverse side of the letter before taking any further action, the Third Circuit also concluded that the form of the letter rendered the letter similarly deceptive and confusing in light of: (1) the fact that the "please call" words and the toll-free telephone number were printed in bold typeface; (2) the same phone number appeared again in the letterhead in an even larger font; (3) neither the instruction to "write us" nor the validation notice were in bold print or large font; (4) Debt Collector's mailing address for sending a written dispute only appeared in the letterhead and in smaller font than that used for the telephone number; and (5) the validation notice itself was relegated to the back side of the collection letter.
With respect to Debtor's section 1692e(10) claim, the Third Circuit referred to its analysis of the Section 1692g claim in concluding that the lower court erred in granting judgment on the pleadings in favor of Debt Collector.
Accordingly, the Court concluded that the least sophisticated consumer would likely take the legally ineffective alternative of calling in an attempt to dispute the debt. The Court thus ruled that the collection letter was deceptive, as the validation notice was overshadowed and contradicted in that the letter could "be reasonably read to have two or more different meanings, one of which is inaccurate." See Russell v. Equifax A.R.S., 74 F.3d 30, 35 (2d Cir. 1996).
For these reasons, the Third Circuit reversed the lower court's order granting judgment in Debt Collector's favor and remanded for further proceedings.
Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
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