Wisconsin District Court Rules in Favor of ACA Member in a Case Supported by the Industry Advancement Fund

A collection letter’s innocuous statements encouraging the consumer to respond were not misleading or deceptive and did not violate the FDCPA.

11/20/2018 2:00 PM

Industry Advancement ProgramNewsFDCPA
Wisconsin District Court Rules in Favor of ACA Member in a Case Supported by the Industry Advancement Fund

The U.S. District Court for the Western District of Wisconsin recently handed the accounts receivable management industry a win in Larkin v. Finance System of Green Bay, Inc., No. 18-C-496, 2018 WL ------- (E.D. Wis. Nov. 8, 2018). ACA’s Industry Advancement Program supported its member, Finance System of Green Bay Inc., in an effort to combat an industrywide increase in lawsuits involving threadbare letter language cases where consumers have not suffered any identifiable concrete harm that would confer Article III standing.

In Larkin, the debt collector mailed a form debt collection letter to a consumer, attempting to collect a debt in the amount of $57.08 that was originally owed to a health care provider. The letter included the following language:

You do not want to lose our confidence. You want to be worthy of the faith put in you by your creditor; yet the above past due account remains unpaid, possibly through an oversight on your part.

Please contact your creditor or our office to make arrangements for payment on the above account. We are interested in you preserving a good credit rating with the above creditor.

After receiving the letter, the consumer filed a class action lawsuit alleging that the letter violated § 807 of the FDCPA because it was confusing, misleading, and deceptive to the unsophisticated consumer.  The consumer argued the letter falsely implied that the collection agency had confidence in her, that the healthcare provider placed faith in her, and that the healthcare provider maintained a credit rating for her. The consumer also claimed that the letter constituted an unconscionable means to collect or attempt to collect a debt in violation of § 808 of the FDCPA.

On its own accord, the court requested the parties provide supplemental briefing on the issue of standing. While the court ultimately found the complaint was sufficient to allege an injury in fact as required by Article III, it nevertheless dismissed the complaint for failure to state a claim. In making its ruling, the court opined that the comments in the letter were “not misleading or deceptive, they are the kind of comments that are generally considered to be ‘puffing’ . . . Moreover, it would be perfectly obvious to the dimmest of debtors that a collector would like her to pay the debt off and would create positive reinforcement—through the use of terms like faith and trust—to encourage payment of the debt.” Accordingly, the court ruled the claims failed as a matter of law.

Klutho Michael

ACA International attorney member Michael Klutho offered the following analysis of the court’s decision:

“Federal district courts continue to be reticent to dismiss FDCPA claims based on lack of standing, post-Spokeo.  On the bright side, district courts do appear to be taking a renewed interest in analyzing the issue.  In this case, the district court ultimately concluded that allegations of alleged “false and deceptive” conduct were sufficient to create a “risk of harm” under the FDCPA in turn sufficient to allege a concrete, injury-in-fact in order to confer standing. So, until the industry receives definitive direction on the Spokeo standing issue, we should continue to bring this issue before the courts as the tide might well be shifting in favor of the industry.  

Fortunately, the district court ultimately concluded that the allegations were insufficient on their merits, even if the consumer had standing. The district court determined that innocuous statements encouraging the consumer to respond were not “false or deceptive” and, instead, found the consumer’s interpretations of the challenged statements to be “bizarre” and “idiosyncratic.”   Here are a few takeaways from this case:

  • Consider bringing a motion to dismiss for lack of standing on claims based solely on alleged “technical” violations.
  • Provide the court with other bases to dismiss the claims on the merits if standing is found. Give the court a reason (and path) to dismiss claims based on bizarre and strained interpretations of letters.   
  •  Even if your letter complies with the letter of the law, consider eliminating extraneous statements which might provide fodder for consumer attorneys to attempt to bring “creative” claims – which in the end costs money to defend (even when you win).
  • Consider submitting claims that could have industry-wide impact to ACA’s Industry Advancement Fund for assistance in fighting such claims.
  • And don’t forget to have outside counsel regularly review your collection letters for suggested revisions to lessen risks in any event.”

ACA is pleased it was able to help stop the consumer’s effort to create unfavorable precedent for the accounts receivable management industry by providing assistance to its member agency as it fought yet another battle against aggressive consumers’ attorneys who will argue that they or their clients are confused or deceived by words in a collection notice that would not mislead even the least sophisticated consumer. As a result of the effort, the district court’s decision in Larkin is expected to have positive litigation and financial impact for the many ACA members currently involved in similarly frivolous letter language cases pending in federal courts across the country. The Larkin decision evidences that ACA is continuing to fulfill its commitment to help its members take on important legal battles of a national or regional significance to the industry to achieve industry-favorable precedent-setting court decisions meaningfully impacting industrywide concerns and providing compliance clarity. 

Michael Klutho may be reached at:

Bassford Remele

100 S. 5th Street Suite 1500

Minneapolis, MN 55402


(612) 376-1619

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