A District Court judge in Pennsylvania has denied a defendant’s motion to dismiss a class-action Fair Debt Collection Practices Act lawsuit, ruling that a letter announcing the purchase of an account was a communication in connection with the collection of a debt even though the letter never asked for payment.
The background: The case turns on a single notice a debt buyer mailed after acquiring a consumer account.
- The plaintiff incurred a consumer debt that was later purchased by the defendant.
- Two years ago, the defendant sent a letter identifying itself as the new owner of the account and directing that all future correspondence go to it. The letter closed by stating, “This communication is from a debt collector.”
- The letter also told the plaintiff that “No collection efforts will occur on [his] account for at least 30 days after the date of this notice,” and that if he “ha[d] already sent payment to [the former debt owner], the payment will be forwarded to [the defendant].”
- The letter did not state the amount owed or explain how to dispute the debt, and the defendant never sent a follow-up communication about the account.
- The plaintiff alleged the defendant placed the account on his credit report at the same time it mailed the letter.
- He sued under the FDCPA over the missing disclosures. An earlier version of the complaint was dismissed without prejudice, and after he amended, the defendant moved to dismiss again, arguing the letter was not a communication covered by the statute in the first place.
The ruling: Judge Juan R. Sanchez of the District Court for the Eastern District of Pennsylvania denied the motion, noting that no court has drawn a bright line for when a communication is made in connection with the collection of a debt and that the question is answered by looking at the totality of the circumstances.
- Under the governing test, the question is whether the “animating purpose of the communication [was] to induce payment by the debtor.” A letter need not contain an explicit demand for payment, and even a letter that is not itself a collection attempt qualifies if it “aims to make . . . such an attempt more likely to succeed.”
- Four features of the letter pushed it across that line. It called itself a communication from a debt collector without disclaiming any collection purpose, which judges have treated as meaningful. It told the plaintiff where to send future correspondence, which the judge said “may make a collection attempt more likely to succeed.”
- The alleged simultaneous credit reporting could itself count as a collection effort, Judge Sánchez wrote, citing older case law recognizing that collectors furnish accounts in the hope it “will result in prompt payment of the debt.”
- The line about forwarding a payment sent to the prior owner “could suggest that facilitating payment was at least one purpose of the communication as it directly contemplates the transfer of debt funds” to the defendant.
- Because the FDCPA “must be broadly construed in order to give full effect to [its] purposes,” and because the inquiry depends on the full circumstances, the judge said dismissal at the pleading stage was not warranted.
