The Supreme Court on Tuesday denied to hear arguments in a case in which two lower courts have ruled that Portfolio Recovery Associates violated the Fair Debt Collection Practices Act by not providing enough information about a time-barred debt when sending a letter to an individual.
The Court of Appeals for the Seventh Circuit had previously ruled on the case last March. A copy of the ruling can be accessed here. The Supreme Court did not provide any reason why it denied to hear arguments in the case.
PRA had argued that split decisions at the District and Appellate court levels had created a need for the Supreme Court to step in and offer a final ruling on the topic.
That nearly identical communications subject a debt collector to liability in the Fifth, Sixth and Seventh Circuits, but not in the Third and Eighth Circuits, is a scenario that invites forum shopping, particularly in the class action context. The split is entrenched and merits this Court’s review.
Manuel Pantoja, the plaintiff in this case, applied for, but never used a credit card from Capital One back in 1993. That didn’t stop Capital One from assessing an activation fee, annual fees, and late fees on his account, which accumulated to more than $1,900. The unpaid debt was subsequently sold to Portfolio Recovery Associates around 1998. PRA tried to collect on the debt by attempting to contact Pantoja via phone calls, but was not successful. Fast forward to 15 years later, and PRA sent a letter to Pantoja, offering to settle the debt.
Pantoja was presented with three settlement offers, each requiring a “down payment,” followed by a number of monthly payments. The letter also included the language, “Because of the age of your debt, we will not sue you for it and we will not report it to any credit reporting agency.”
The District Court, in granting summary judgment for the plaintiff, said that the letter failed to warn the plaintiff that if he accepted the settlement offer by either making a payment or agreeing to make a payment, he would be restarting the clock on the debt’s statute of limitations. The court also ruled that the letter was deceptive by inferring that PRA had chosen not to sue Pantoja instead of saying that the “debt was so old that Portfolio Recovery could not sue him for the alleged debt.”
While the Seventh Circuit stopped short of providing language that PRA could have used in its letter that would have made it clearer that had the plaintiff made a payment or agreed to make a payment that the statute of limitations clock would have been re-started, it did say:
we believe the FDCPA prohibits a debt collector from luring debtors away from the shelter of the statute of limitations without providing an unambiguous warning that an unsophisticated consumer would understand.
The Seventh Circuit also noted that PRA opted to slightly change language that was included in a consent decree between a debt collector and the Federal Trade Commission, which stated, “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it.”
Calling the letter an “example of careful and deliberate ambiguity,” the Appeals Court ruled that the least sophisticated consumer would be misled and deceived.
