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Financial Services Law Insights and Observations

Seventh Circuit affirms dismissal of FDCPA suit concerning “current balance” reference

Courts Debt Collection FDCPA Appellate Seventh Circuit


On September 25, the U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal of an action against a debt collection agency for allegedly violating the FDCPA by referring to the amount owed as a “current balance” in a letter—even though it was static and not going to change. According to the opinion, the plaintiff contended that  “current balance” falsely implied that the balance might increase in the future, which, she argued, was a violation of the FDCPA’s prohibition on false, deceptive, or misleading representations connected to the collection of a debt. By implying that the amount owed might increase if not paid, the plaintiff argued, the debt collector allegedly misled debtors into giving static debts greater priority. The district court granted the debt collector’s motion to dismiss for failure to state a claim, ruling “that no significant fraction of the population would be misled” by the letter’s use of the “current balance” phrase. The plaintiff appealed, arguing that the phrase would confuse an unsophisticated consumer.

On appeal, the 7th Circuit determined that there is nothing inherently misleading about the reference and stated that, not only did the debt collector’s letter not contain a directive for a debtor to call for a current balance, it also failed to include language implying that a “current balance” means anything other than the balance owed. “It takes an ingenious misreading of this letter to find it misleading,” the appellate court concluded. “Dunning letters can comply with the [FDCPA] without answering all possible questions about the future. A lawyer’s ability to identify a question that a dunning letter does not expressly answer (‘Is it possible the balance might increase?’) does not show the letter is misleading, even if a speculative guess to answer the question might be wrong.”


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