3rd Circuit: Collection letter failed to properly identify creditor in violation of FDCPA

Courts Debt Collection Third Circuit Appellate FDCPA Least Sophisticated Consumer

On July 10, the U.S. Court of Appeals for the 3rd Circuit reversed the dismissal of a FDCPA action against a debt collector, holding that the collection letter failed to apprise the least sophisticated debtor of the creditor’s identity. The complaint alleges that the debt collector “failed to identify ‘the name of the creditor to whom the debt is owed’” as required by the FDCPA because the letter listed “at least four entities” that were connected in some way to the debt. The district court dismissed the complaint, concluding the debt collector sufficiently identified the creditor.

On appeal, the 3rd Circuit concluded that the letter failed to notify the least sophisticated debtor of the creditor’s identity for three reasons: (i) the letter did not expressly state that the bank was  the creditor or the owner of the debt; (ii) the letter identified the bank as the “assignee of” three other financial entities and “assignee” is a legal term that does not assist a debtor in understanding the relationships between the parties; and (iii) the letter as a whole failed to sufficiently identify the bank as the creditor, as the reference to three other entities “‘overshadowed’ the creditor’s identity.” The appellate court concluded that the letter failed to properly disclose the creditor and therefore, violated the FDCPA, reversing the district court’s dismissal of the complaint.