A judge in the District Court for the Western District of New York has sided with a debt collector and granted summary judgment over a plaintiff after the agency was sued for allegedly violating the Fair Debt Collection Practices Act by including language in a letter that referred to the tax implications of accepting a settlement offer.
A copy of the ruling in the case of Mary Rozzi Church v. Financial Recovery Services, Inc. can be accessed here.
The plaintiff owed $2,170.50 on an unpaid debt. The defendant sent a letter, offering three settlement opportunities to pay pff the balance for less than what was owed. Following the details of the offer, the letter included the following statement:
These settlement offers may have tax consequences. We recommend that you consult independent tax counsel of your own choosing if you desire advice about any tax consequences which may result from this settlement. FRS is not a law firm and will not initiate any legal proceedings or provide you with legal advice. The offers of settlement in this letter are merely offers to resolve your account for less than the balance due.
A number of rulings have been issued on language similar to what was mentioned in this letter. The only real difference, the court pointed out, was the inclusion of the word “offers” in the statement. The plaintiff argued that including the word “offers” in that sentence violates the FDCPA, specifically Section 1692e(10), which states: A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Among the conduct deemed to be a violation is: The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
The plaintiff argued that the statement – These settlement offers may have tax consequences – is false because unaccepted offers do not have any implications. A least sophisticated consumer would be confused in reading that statement, the plaintiff alleged.
The judge, however, read the rest of the statement and ruled that even though including the word “offers” is the result of “sloppy drafting,” the least sophisticated consumer defense “cannot be stretched” to permit such a hyper technical violation.
Rather, when read in full, Defendant’s collection letter would convey to even the least sophisticated consumer that potential tax consequences would only attach once an offer has been accepted.
