Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are prohibited from using “false, deceptive, or misleading representation[s]” in connection with collecting debts. If a debt collector violates the FDCPA, the debt collector may be liable in the amount of the actual damages incurred by a debtor resulting from the FDCPA violation. Further, additional statutory damages may be imposed against debt collectors for FDCPA violations.
In Trichell v. Midland Credit Management, Inc. the Eleventh Circuit recently considered two cases involving the issue of whether consumers have standing to sue a debt collector under the FDCPA where the debt collector’s correspondence was allegedly misleading, but the consumers were not actually misled.
The Lower Court Cases
In the first case, the debt collector, Midland Credit, sent three letters to plaintiff John Trichell regarding repayment plans for Trichell’s debt. The letters included the following disclaimer: “The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau.” Notwithstanding this disclaimer, Trichell sued Midland under the FDCPA, asserting that the collection letters were misleading by suggesting Midland could sue Trichell for the stale debt or report its nonpayment to credit bureaus.
In the second case, Midland sent plaintiff Keith Cooper a similar letter regarding repayment of Cooper’s credit card debt. The letter sent to Cooper included a disclaimer identical to the one in the letters sent to Trichell. Cooper also sued Midland under the FDCPA, asserting that the letter was misleading because it did not include a warning that, if Cooper made a partial payment on the stale debt, such payment could constitute a new promise to pay and would reset the statute of limitations.
The district courts dismissed both Trichell’s and Cooper’s cases against Midland for failure to state a claim.
The Eleventh Circuit Appeal
In taking up appeals of both cases against Midland, the Eleventh Circuit in Trichell v. Midland examined the issue of whether Trichell and Cooper enjoyed Article III standing to sue. Article III courts have jurisdiction over cases or controversies where standing is comprised of (i) an injury in fact suffered by the plaintiff, (ii) where the defendant caused such injury, and (iii) a decision in favor of the plaintiff will redress the injury. An injury in fact is comprised of an attack on a legally protected interest that is actual and concrete, rather than merely speculative or hypothetical. Further, even if a statute, such as the FDCPA, provides a statutory basis to sue, injury in fact must nonetheless be established for Article III standing to exist.
In their respective complaints, Trichell and Cooper failed to plead any concrete injuries they incurred as a result of the letters sent by Midland, such as payments made in response to the letters or wasted time or money in determining whether to make such payments. Rather, Trichell and Cooper asserted that the letters created a risk that unsophisticated borrowers might make payments on stale debt after receiving such letters.
Joining the Seventh and D.C. Circuits, the Eleventh Circuit held that such risk did not constitute an injury in fact because Trichell and Cooper themselves were not harmed by the letters. The Eleventh Circuit further noted that any risk the letters could have caused Trichell and Cooper had dissipated by the time they filed suit against Midland.
Trichell and Cooper also asserted that the FDCPA creates a right under which consumers must receive truthful information from debt collectors. Trichell and Cooper argued that any violation of that right constitutes an injury in fact. Rejecting this argument, the Eleventh Circuit held that, because Trichell and Cooper merely received the misleading letters but suffered no injury as a result, Trichell’s and Cooper’s alleged informational injuries were insufficient to confer Article III standing.
Debt collectors should always take the necessary steps to ensure their debt collection activity does not run afoul of the FDCPA or other applicable laws. Notwithstanding the foregoing, in defending against claims asserting violations of the FDCPA, debt collectors may raise lack of Article III standing as a defense when plaintiffs fail to assert concrete injuries caused by alleged FDCPA violations. Even if plaintiffs allege concrete injuries in their complaints such that these claims are not disposed of at the motion to dismiss stage, plaintiffs still will need to establish concrete injury to prevail on the merits.