April 08, 2016

But Who Cares If You Were Actually Confused? No Proof of Confusion Required for Claims Under Section 1692g of the FDCPA

by Guest Blogger

This week the Seventh Circuit Court of Appeals ruled that claims under Section 1692g of the FDCPA can survive summary judgment, even without extrinsic proof the plaintiffs were confused by a creditor's correspondence. In Janetos v. Fulton Friedman & Gullace, Case No. 15-1859, 2016 U.S. App. LEXIS 6361 (7th Cir. Apr. 7, 2016), the Plaintiffs brought suit alleging a law firm/debt collector had violated the FDCPA by failing to disclose the identity of the current creditor and by failing to disclose that the current creditor could be vicariously liable for the law firm's actions. The district court granted the law firm's motion for summary judgment, recognizing the letters at issue were ambiguous as to the identity of the current creditor but ruling that the Plaintiffs needed to present extrinsic evidence of confusion to survive summary judgment. The district court also concluded that, even if the Plaintiffs had presented evidence they were confused by the law firm's correspondence, their claims would still fail because the ambiguity about the current creditor's identification was immaterial and "would neither contribute to nor undermine the [FDCPA's] objective of providing 'information that helps consumers to choose intelligently.'"

The Seventh Circuit reversed. Although it agreed with the district court that the law firm's correspondence failed to clearly identify the name of the current creditor, the Seventh Circuit disagreed that additional evidence of confusion was necessary to establish a violation of Section 1692g. The Court pointed out that Section 1692g requires debt collectors to disclose the name of the creditor, and failure to do so constitutes a violation of the Act regardless of whether the consumer was actually confused. The Court also rejected the district court's application of a materiality requirement to claims under Section 1692g: "[F]or good reason, we have not extended the materiality requirement of Section 1692e to reach claims under Section 1692g(a)â¦Since Section 1692g(a)(2) clearly requires the disclosure, we decline to offer debt collectors a free pass to violate that provision on the theory that the disclosure Congress required is not important enough."

The Court also addressed whether the owner of the debt, also a debt collector itself under the FDCPA's definition, could be vicariously liable for the law firm's violations. Following the Third Circuit and the Ninth Circuit, the Seventh Circuit decided that vicarious liability could exist. This reiterates the importance of determining if you are a "debt collector." If the owner of the debt is not a "debt collector," the Sixth Circuit has held that it is not vicariously liable for its debt collector's actions.

Opinions like this should give "debt collectors" a reason to pause and reevaluate the letters they are sending and those that are being sent on their behalves. In addition to putting letters through a thorough in-house evaluation before they are sent, test the letters on friends and relatives from various backgrounds. If any confusion arises, no matter how slight, revisions should be considered. And don't forget the mandated disclosures under Section 1692g(a)(2) where actual confusion apparently does not matter.