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Failed N.D. Ind. Class Action Plaintiff Appeals Claim for Allegedly Misleading Collection Letter

The losing plaintiff in a Northern District of Indiana FDCPA putative class action is appealing to the Seventh Circuit. The case involves allegations of false and misleading representations in connection with the collection of a debt. 

Specifically, the named plaintiff, Erin Johnson, highlights this language in a debt collection letter sent on April 21, 2018:

“This letter serves as notification that your delinquent account may be reported to the national credit bureaus.  Payment of the offered settlement amount will stop collection activity on this matter....”

The debt collector reported the account to the credit bureaus on April 24.  The April 21 letter, which the debtor did not receive until May 5, also contained offers to settle the debt if the debtor made certain payments by specified deadlines, all of which were beyond the date the collector first reported to the credit bureaus.

The plaintiff alleges that the letter was misleading with respect to the process for reporting the debt to the credit bureaus:

“Johnson testified that the April 21 letter was not clear whether her debt would be reported or had already been reported.  Johnson interpreted the April 21 letter to mean that she could prevent [the] account from appearing on her credit reports if she made a payment as requested in the letter, or disputed the debt within 30 days as referenced in the letter.”

In granting summary judgment for the debt collector, the court applied the Seventh Circuit’s “unsophisticated customer” standard, which examines “whether the debt collector’s communication would deceive or mislead an unsophisticated, but reasonable, consumer.”  The court concluded that the language in the letter could not reasonably be considered misleading, as the plaintiff argued, without extrinsic evidence of consumer confusion (which the plaintiff did not offer).

While applying the controlling Seventh Circuit law, the district court judge emphasized that the Seventh Circuit’s “unsophisticated consumer” test is “out of step” with the “least sophisticated consumer” test applied to FDCPA claims in other circuits.  As noted previously, a pending cert petition to the Supreme Court, if granted, could eventually resolve this circuit split.

The case below is Johnson v. Enhanced Recovery Co., LLC, No. 2:16-cv-330, 2019 WL 316713 (N.D. Ind. Jan. 24, 2019). At the Seventh Circuit, the case is No. 19-1210.

Mark Rooney