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Financial Services Law Insights and Observations

7th Circuit: Debt collector accurately disclosed creditor to be paid

Courts Appellate Seventh Circuit Debt Collection FDCPA


On December 30, the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s decision that a collection agency was not required to explain the difference between “original creditor” and “current creditor.” After the consumer fell behind on payments owed to a bank, the debt was sold to a company that hired the agency to collect the debt. The agency sent a letter to the consumer identifying the bank as the “original creditor” and the debt buyer as the “current creditor,” listing the principal and interest balances of the debt along with the last four digits of the account number. The consumer alleged that identifying both the bank and the debt buyer without clearly explaining the difference between the companies violated the FDCPA’s requirement that a debt collector state in a written notice “the name of the creditor to whom the debt is owed.” The district court disagreed and held that the letter clearly and accurately disclosed the name of the creditor to whom the consumer owed the debt.

The 7th Circuit affirmed on appeal, calling the consumer’s claim “meritless” and holding that including the names of both companies without a detailed explanation would not be confusing even to an unsophisticated consumer, who would understand that the debt had been purchased by the current creditor. The appellate court concluded that the FDCPA required no further explanation.

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