A District Court judge in New York has granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act by including language in a collection letter that notified the letter’s recipient that the unpaid debt may be reported to a credit reporting agency.
A copy of the ruling in the case of Sabel v. Halstead Financial Services and LVNV Funding can be accessed by clicking here.
The plaintiff received a collection letter from the defendant. The letter, in part, stated, “Please note that a negative credit bureau report reflecting on your credit record may be submitted to a credit reporting agency by the current account owner if you fail to fulfill the terms of your credit obligations. This notice in no way affects any rights you may have.” Following that disclosure was the mini-Miranda notice, notifying the individual that he had 30 days to dispute the validity of the debt.
The plaintiff filed suit, alleging the letter violated Sections 1692g of the FDCPA by overshadowing the 30-day dispute window, and 1692e by threatening to take action that cannot or does not intend to be taken and making false representations or deceptive means to collect on a debt. Threatening to report the debt to the credit bureaus if he failed to “fulfill the terms” of his credit obligation overshadowed the dispute window, and constituted a false representation, the plaintiff alleged.
But Judge Cathy Seibel of the District Court for the Southern District of New York disagreed. By including the statement that the notice “in no way affects any rights you may have,” the defendant ensured it was not overshadowing the dispute window, Judge Seibel said. “… nothing in this statement — which appears in the same font and size as the validation notice directly below it — threatens imminent credit reporting or demands immediate payment, and ‘[l]anguage that in no way demands immediate payment of the plaintiff’s past due debt, or threatens adverse consequences in the event the debt is not paid within 30 days does not violate the FDCPA,’ ” Judge Seibel wrote.
Similarly, on the count that the letter violated Section 1692e, Judge Seibel noted that the collector does not have to notify the individual that collection activity ceases when a dispute is filed. “Indeed, it would have been misleading for Defendants to have suggested that there could be no collection activity during the thirty-day window in which Plaintiff could decide whether to dispute the debt,” she wrote.
