E.D. Wisconsin: FDCPA Does Not Require Specific Labels for Creditor, Identifying Both Comenity and PayPal is Not Misleading

In a September 30, 2018 decision, the Eastern District of Wisconsin found that there is no specific labelling requirement in the Fair Debt Collection Practices Act (FDCPA) for identifying the creditor and found nothing wrong with listing both PayPal Credit and Comenity Capital Bank in a collection letter in Smith v. Simm Associates, Inc., No. 17-cv-769 (E.D. Wisc. Sept. 30, 2018).

Factual and Procedural Background

Simm Associates, Inc. (Simm) sent a debt collection letter to plaintiff notifying her of an outstanding debt. The letter identifies PayPal Credit as Simm’s client and Comenity Capital Bank (Comenity) as the “Original Creditor.” As stated in the decision, “Comenity Capital Bank is the actual creditor, [but] the bank holds itself out as PayPal Credit in its transactions with consumers and thus would be more familiar with the PayPal name.”

[article_ad]

Plaintiff filed a two-pronged FDCPA lawsuit against Simm alleging that: (1) Simm failed to list the current creditor since it identified Comenity as the “original creditor” and (2) that the letter was false, deceptive, or misleading.

After the court granted class certification, the parties filed cross motions for summary judgment.

The Decision

The court found that Simm’s letter stated the creditor information “clearly enough that the recipient is likely to understand it.” (Internal citation omitted.)

The court agreed with Simm that the FDCPA does not require that the letter explicitly include the label “current creditor.” According to the court, it was clear from the letter that Comenity is the entity to whom the debt was owed.

The court also found no issue with the letter listing both Comenity and PayPal Credit. The court cited and agreed with the reasoning of another case against Simm containing similar allegations: Maximiliano v. Simm Associates, Inc., No. 17-CV-80341 (S.D. Fla. Feb 8, 2018).

The court summarized the Maximiliano decision as follows:

The Maximiliano court found that Simm's demand letter left "no room for confusion in the eyes of the least sophisticated consumer." It reasoned that by disclosing PayPal Credit as Simm's client, Comenity as the original creditor, the amount of the debt, and the PayPal Credit account number, Simm's letter allowed a consumer to easily identify the nature of the debt. The court therefore held that the letter, read in whole, properly identified the current creditor because the "least sophisticated consumer" is unlikely to know that Comenity is actually providing the credit line. The court concluded that "from the perspective of the least sophisticated consumer receiving the demand letter at issue, Simm identified the name under which Comenity transacted business with PayPal Credit account holders, such as Plaintiff."

(Internal citations omitted.)

Persuaded by the Maximiliano ruling, the court granted summary judgment in favor of Simm.

insideARM Perspective

Debt collectors that collect on accounts that are owed to an entity that may not be as familiar to the consumer as another entity that the consumer regularly transacted with (for example, branded credit card accounts) might now have a little more guidance on how to proceed with identifying the creditor in collection letters. We now have two district courts from different parts of the country that found the value of helping the consumer recognize the debt by identifying the entity with which the consumer is familiar.

On a procedural note, this decision came after the court already certified the class in this suit. While class certification may be discouraging to an FDCPA defendant, this case illustrates that it is still worth fighting the case if the merits are strong.