FDCPA Class Action to Advance; Letter Language Positioning in Question

A federal judge this week decided to allow a potential class action lawsuit against a debt collection agency to move forward that claims violations of the FDCPA due to the presentation and positioning of validation notice language on a collection letter.

U.S. District Judge Gene Pratter, in the Eastern District of Pennsylvania, denied the collection agency’s motion to dismiss Tuesday in Harlan v. TransWorld Systems.

In October 2012, TransWorld (d/b/a North Shore Agency) sent Ms. Harlan a debt collection letter with a text box asking her to “PLEASE RESPOND” to its attempt to collect a $46.39 debt on behalf of its client, Disney Movie Club. A second text box contained a mini-Miranda warning under the heading STATEMENT OF RECOVERY, and a third – labelled “STATEMENT OF INTENTIONS” – read:

Without your response, diligent collection of your account may continue. Govern yourself accordingly. Make your check for the full amount owed payable to our client, Disney Movie Club, and mail it in the enclosed reply envelope. If necessary, you may contact our client directly at 1-877-336-2337.

Under the text boxes, the letter states “NOTICE-SEE REVERSE SIDE FOR IMPORTANT INFORMATION.” On the reverse side of the letter was the required validation notice in smaller text, along with notices required in various states (which did not include the consumer’s home state of Pennsylvania).

Pratter’s opinion contains samples of both the front and back of the letter.

Harlan claimed that the letter violated the FDCPA “by placing the validation notice inconspicuously on the reverse side of the collection letter, without spacing or indenting, along with a cadre of other, inapplicable state notices, such that it is difficult for a consumer to notice.”

North Shore responded by filing a motion to dismiss claiming that Harlan “does not contend that the letter omitted any of the statutorily required information, or misstated the dispute and validation process. In fact, [Ms. Harlan] has no substantive complaint about the content of the letter. Instead, [her] claim is that the format of the validation notice operates to overshadow her validation rights because it is contained on the reverse side of the letter amongst other required disclosures.”

The collection agency further argued that the letter is not misleading to the least sophisticated debtor because it is legible, easily understood, and fulfills the requirements of the FDCPA.

But Judge Pratter did rule that the validation language on the back of the letter was overshadowed by the language on the front.

Calling the case “a close one,” Pratter wrote that rather than focusing on the formatting of the validation notice, she instead focused on the actual language of the letter, specifically what was included in the box labelled STATEMENT OF INTENTIONS. Judge Pratter wrote, “notwithstanding the remedial aims of the FDCPA, debt collectors, such as North Shore here, appear to treat the statute, still, as possible to overcome by gamesmanship. It seems that no debt collector would want to prominently display a notice of validation rights for concern that doing so would reduce the rate at which less sophisticated consumers simply pay to make the inconvenience (or intimidation) go away, even if the debt is not in fact valid.”

With that, Pratter denied North Shore’s motion to dismiss and ordered a pretrial conference for later in April.