D.N.J.: If Relationship Between Collector and Creditor is Clear, Including Chain of Title Does not Make Creditor Identification Unclear

Debt collectors are no strangers to Fair Debt Collection Practices Act (FDCPA) claims regarding how creditors are identified in debt collection letters. Each court decision that comes out on the issue provides some clarity. The District of New Jersey (D.N.J.) provided some of this clarity in Gross v. Lyons, Doughty & Veldhuis, P.C., No. 18-cv-7963 (D.N.J. Dec. 3, 2018), where it granted dismissal of a claim alleging that including chain of title makes a letter unclear.

Factual and Procedural Background

Lyons, Doughty & Veldhuis, P.C. (LDV) send a collection letter to plaintiff that included the following caption:

Re: Capital One Bank (USA), N.A., Assignee of HSBC BANK NEVADA N.A. RCS DIRECT MARKETING/ORCHARD BANK.

The body of the letter stated, “Please be advised that this office represents Capital One Bank (USA), N.A., assignee of HSBC BANK NEVADA N.A. RCS DIRECT MARKETING/ORCHARD BANK in connection with our account.” After the signature line, the letter contains a mini-Miranda disclosure stating that LDV is a debt collector.

Plaintiff filed a putative class action against LDV alleging that the letter did not clearly identify the creditor in a manner understandable to the least sophisticated consumer. Plaintiff points to two items to support the claim: the letter includes more than one entity affiliated with the debt and the letter includes the term “assignee.” LDV filed a motion to dismiss the case.

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The Decision

The court noted that the specific factual scenario is a matter of first impression in D.N.J., so it looked outside of its district to see how other courts ruled on similar claims.

The court first looked at a Seventh Circuit decision that asserted a similar claim. In Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317 (7th Cir. 2016), the letter included a similar caption, “Re: Asset Acceptance, LLC Assignee of AMERISTAR,” and stated that “the account has been transferred from Asset Acceptance, LLC to [the law firm].” The Seventh Circuit found that this letter did not clearly identify the creditor since it did not describe the relationship between the debt collector and the named assignee, leaving the consumer to guess who the creditor was.

While the two letters contain a similar caption, the court found the Janetos case to be distinguishable. Specifically, the letter in question satisfies the gap noted in Janetos because it clearly lists the relationship between LDV and the assignee by stating that LDV “represents Capital One Bank” and that the firm is a debt collector.

The court also notes two other non-dispositive factors that support LDV’s position. First, the creditor’s name appears in two different places: in the caption and in the body. Second, that the creditor’s name is distinguished from the chain of title through capitalization. The court stated:

While this specification is not itself dispositive, such clear declarations support a finding that the content is fair notice, readable, and obviously relating to an outstanding debt owed to the creditor . . . and whose recovery is sought by a debt collector. Put simply, the letter complies with 1692g(a)(2) in that it provides the consumer a written notice clearly indicating the name of the creditor to whom the debt is owed.

(internal citations and quotations omitted.)

After reviewing Janetos, the court then turned to a case out of the District of Delaware, which is in the same circuit as D.N.J. LDV was also the defendant in the Delaware case and the letter was almost identical to the one in question here. The District of Delaware found the letter to not be deceptive as to the identity of the creditor.

Ultimately, the court ruled that the letter was sufficiently clear as to the identify of the creditor and granted LDV’s motion to dismiss.

insideARM Perspective

Several decisions on the creditor identification issue have been released over the past year.

For example, in October, the Eastern District of Wisconsin found that the FDCPA does not require specific labels in the letter for the creditor and that including a reference to the entity more familiar to the consumer is acceptable. In that case, the debt collector identified Comenity Bank as the “Original Creditor” and PayPal Credit as the debt collector’s client.

In another example from April, the District of Oregon likewise found that there is no specific label required by the FDCPA after the plaintiff argued that the letter should have listed the entity as the “current creditor” rather than the “original creditor.”

The current case adds to the trend of courts making reasonable findings on the issue of creditor identification. A chain of title, like the one included in this case, is helpful in case one of the names clicks with the consumer. Explaining the relationship between the debt collector and the assignee helps the consumer to understand why they are receiving the letter and what it pertains to. For branded accounts, such as the PayPal example above or for retail cards obtained at a store but underwritten by a bank, it makes sense that using the entity name that the consumer is familiar with is helpful in identifying the account.

Ultimately, the creditor needs to be identified in a manner that is best understood by consumers. These types of decisions help shut down “bizarre or idiosyncratic interpretations of collection notices” that ultimately harm consumers by making collection notices more confusing.