Tatis v. Allied Interstate, LLC
– 3d Cir. – February 12, 2018
A collection letter sent to
collect a time-barred debt that makes a “settlement offer” to accept payment
“in settlement of” the debt may violate the FDCPA general prohibition
against “any false, deceptive, or misleading representation or means in
connection with the collection of any debt.” 15 U.S.C. § 1692e.
The collection letter stated as
follows: “[The creditor] is willing to accept payment in the amount of $128.99
in settlement of this debt. You can take advantage of this settlement offer if
we receive payment of this amount or if you make another mutually acceptable
payment arrangement within 40 days . . . .”
Huertas v. Galaxy Asset
Management, 641 F.3d 28, 32–33 (3d Cir. 2011) (per curian) stands for the
proposition that debt collectors do not violate 15 U.S.C. § 1692e(2)(A) when
they seek voluntary repayment of stale debts, so long as they do not threaten or
take legal action. But the FDCPA sweeps far more broadly than the specific
provision found in § 1692e(2)(A). It prohibits “any false, deceptive, or
misleading representation” associated with debt-collection practices. 15 U.S.C.
§ 1692e (emphasis added). Accordingly, this appeal requires us to decide
whether collection letters may run afoul of the FDCPA by misleading or
deceiving debtors into believing they have a legal obligation to repay
time-barred debts even when the letters do not threaten legal action.
Since Huertas, three
other United States Courts of Appeals have addressed the question presented in
this appeal. All three have determined that, even absent threats of litigation,
it is plausible that offers to “settle” time-barred debts could mislead the
least-sophisticated debtor. McMahon v. LVNV Funding, LLC, 744 F.3d 1010
(7th Cir. 2014); Buchanan v. Northland Group, Inc. held that a settlement
offer could “plausibly mislead an unsophisticated consumer into thinking her
lender could enforce the debt in court.” 776 F.3d 393, 395 10 (6th Cir. 2015);
Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 513 (5th Cir.
2016). The court was persuaded that these decisions offer the best
interpretation of the FDCPA.
The court reiterated what it
said in Huertas and elsewhere: standing alone, settlement offers and
attempts to obtain voluntary repayments of stale debts do not necessarily
constitute deceptive or misleading practices. See Huertas, 641 F.3d at
32–33; see also Campuzano-Burgos, 550 F.3d at 299 (noting that “[t]here is
nothing improper about making a settlement offer”). Nor did the
court impose any specific mandates on the language debt collectors must use,
such as requiring them to explicitly disclose that the statute of limitations
has run.
The court did not, therefore, hold that the use of
the word “settlement” is “misleading as a matter of federal law.” Buchanan, 776
F.3d at 400 (Kethledge, J., dissenting). Rather, in keeping with the text and
purpose of the FDCPA, “we merely reiterate that any such letters, when read in
their entirety, must not deceive or mislead the least-sophisticated debtor into
believing that she has a legal obligation to pay the time-barred debt.”
See, e.g., Caprio, 709 F.3d at 149 (noting that “even the ‘least sophisticated
debtor’ is expected to read any notice in its entirety”); Huertas, 641
F.3d at 33 (examining the specific language used in the letter from the
perspective of the least-sophisticated debtor); Campuzano-Burgos, 550 F.3d at
300 (analyzing letters “as a whole”).
