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Financial Services Law Insights and Observations

Splitting from the 6th Circuit, 7th Circuit holds mere procedural violation of FDCPA not sufficient harm for standing

Courts Spokeo Seventh Circuit Sixth Circuit Appellate FDCPA

Courts

On June 4, the U.S. Court of Appeals for the 7th Circuit held that the receipt of an incomplete debt collection letter is not a sufficient harm to satisfy Article III standing requirements to bring a FDCPA claim against a debt collector. According to the opinion, a consumer received a collection letter which described the process for verifying a debt but did not specify that she had to communicate with the collector in writing to trigger the protections under the FDCPA. The consumer filed a class action against the debt collector alleging the omission “‘constitute[d] a material/concrete breach of her rights’” under the FDCPA. In the complaint, the consumer did “not allege that she tried—or even planned to try—to dispute the debt or verify that [the stated creditor] was actually her creditor.” The district court dismissed the action, concluding that the consumer had not alleged that the FDCPA violation “caused her harm or put her at an appreciable risk of harm” and therefore, the consumer lacked standing to sue.

On appeal, the 7th Circuit affirmed the district court’s decision, concluding that because the consumer did not allege that she tried to dispute or verify the debt orally, leaving her statutory protections at risk, she suffered no harm to her statutory rights under the FDCPA. The appellate court emphasized that “procedural injuries under consumer‐protection statutes are insufficiently concrete to confer standing.” The court acknowledged that its opinion creates a conflict with a July 2018 decision by the U.S. Court of Appeals for the 6th Circuit, which held that consumers had standing to sue a debt collector whose letters allegedly failed to instruct them that the FDCPA makes certain debt verification information available only if the debt is disputed “in writing.” (Covered by InfoBytes here.) The appellate court also agreed with the district court’s decision to deny the consumer’s request for leave to file an amended complaint, noting that she did not indicate what facts she would allege to cure the jurisdictional defect.

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