The Court of Appeals for the Ninth Circuit has upheld a lower court’s summary judgment in favor of a defendant that was sued for allegedly violating the Fair Debt Collection Practices Act by using “will not sue” language in a collection letter attempting to collect on a time-barred debt and for not warning individuals that making payments on time-barred debts may revive the statute of limitations.
A copy of the ruling in Stimpson v. Midland Credit Management can be accessed by clicking here.
The plaintiff defaulted on a credit card debt — his last payment was made in December 2008 — which was purchased by the defendant about a year later. The defendant sent a collection letter to the plaintiff in 2017, more than two years after the statute of limitations in Nevada — where the plaintiff lived — had expired. The letter, which listed an expiration date on the offers made in the letter — contained the following statements: “Available Payment Options. Option 1: 40% OFF. Option 2: 20% OFF Over 6 Months. Option 3: Monthly Payments As Low As: $50 per month. Call today to discuss your options and get more details.” The letter was signed by a representative of the defendant. Underneath the signature, there was a disclosure: “The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau.”
The plaintiff sued, alleging the defendant violated the FDCPA by attempting to collect on time-barred debts without making the proper disclosures. The defendant was granted a motion for summary judgment. The plaintiff appealed, alleging the letter violated Section 1692e of the FDCPA by making false representations about his debt. By saying that the defendant “will not sue” instead of “can not sue,” the plaintiff alleged the defendant misrepresented the status of the debt. The Appeals Court disagreed, ruling that a least sophisticated consumer “would understand the letter’s disclosure to mean that Midland cannot take a legal action to collect the debt.” As well, the Appeals Court pointed to an enforcement order between the Consumer Financial Protection Bureau and the defendant that required the defendant to use the exact disclosure it used in the letter.
“Given the consensus that language substantially similar to that used by Midland provides appropriate notice to consumers, we conclude that the least sophisticated debtor would not be confused by Midland’s disclosure,” the Appeals Court ruled. “Accordingly, we reject Stimpson’s argument that the letter’s statute-of-limitations disclosure would mislead the least sophisticated debtor into thinking that Midland could use legal means to collect the debt.”
The plaintiff also tried to allege that the failure to include a notification in the letter that a payment could revive the statute of limitations was also an FDCPA violation. But there is nothing in the FDCPA that requires collectors to “provide legal advice on revival statutes. Nor is the failure to provide such specific legal advice misleading,” the Appeals Court wrote.
In short, no part of the letter, standing alone, is deceptive or misleading. Nor is the letter deceptive or misleading when “read as a whole.” Gonzales, 660 F.3d at 1064. The disclosure “we will not sue” dispels the possibility that the least sophisticated debtor will read any of the “Benefits of Paying Your Debt” as falsely implying that non-payment will result in adverse consequences (such as Midland taking legal action in violation of § 1692e(5)) if the debtor does not avail himself of one of the “Available Payment Options” before the “Offer Expiration Date.”
In sum, we reject Stimpson’s argument that a letter is deceptive or misleading if a debt collector tries to persuade debtors to pay what they owe. Congress could prohibit, or otherwise restrict, attempts to collect time-barred debts, but it has not done so. Instead, liability attaches under § 1692e only if a debt collection letter is “false, deceptive, or misleading.” Stimpson has not identified anything false, deceptive, or misleading in Midland’s letter, so his FDCPA claim fails.
