Roundup of 2023 FDCPA Appellate Court Reported Decisions

This article summarizes all of the 2023 Fair Debt Collection Practices Act (FDCPA) reported appellate court decisions. The published 2023 decisions summarized here are from the Third, Sixth, Seventh, Eighth, Ninth, and Tenth Circuits. The fourteen decisions are organized below under eight topics.  For each topic, links are provided to the relevant section of NCLC’s Fair Debt Collection for further discussion and additional case law related to that topic.

Federal Court Standing 

Bassett v. Credit Bureau Servs., Inc., 60 F.4th 1132 (8th Cir. 2023). The consumer alleged that the collectors violated the FDCPA by sending a collection letter to collect medical bills that demanded interest on the debt without a judgment. The consumer received the letter but did not make a payment. Concluding that the consumer’s alleged harm was not analogous to the type of harm recognized in common-law fraudulent misrepresentation and conversion, the Eighth Circuit held that the consumer lacked Article III standing. In a footnote, the court noted that “infliction of emotional distress and intrusion upon seclusion may be close common-law analogues” but noted that the consumer did not present these analogues.

Bouye v. Bruce, 61 F.4th 485 (6th Cir. 2023). The consumer alleged violations of the FDCPA arising from a state court lawsuit on a debt that allegedly was never properly transferred to the collector. The Sixth Circuit held that the consumer had standing because “[s]he alleged that she suffered an injury because she had to defend against a state lawsuit that [the collector] had no right to bring in the first place.” [See also the summary at “FDCPA Statute of Limitations,” infra, for more about this decision.]

Choice v. Kohn L. Firm, S.C., 77 F.4th 636 (7th Cir. 2023). The majority held that neither lack of sleep nor the decision to retain counsel, even if the consumer did so to resolve confusion as the result of contradictory statements by the collector, were sufficient to establish concrete injury. The dissent wrote that the expense of hiring a lawyer to defend a baseless or illegal lawsuit is a concrete injury that supports standing and called for the case to be vacated and remanded for the consumer to clarify the theory of injury.

Huber v. Simon's Agency, Inc., 84 F.4th 132 (3d Cir. 2023). A consumer’s injury was not an “informational harm” because she did not allege the omission of information. Instead, the Third Circuit found that the consumer had standing for her § 1692e claim for deceptive communication because it was analogous to the tort of fraudulent misrepresentation and there was detrimental action—paying to consult a financial advisor and failure to pay down other debts based on that consultation—in addition to the consumer’s confusion.

Collection letter disclosing both the “amount” and the “various other accounts total balance” was a deceptive communication in violation of § 1692e where a least sophisticated consumer could read the letter in two ways.

The majority remanded the case to determine whether the proposed class satisfies predominance “notwithstanding the individualized evidence class members must submit to demonstrate standing and recover damages.” 

Mack v. Resurgent Capital Services, L.P., 70 F.4th 395 (7th Cir. 2023). After disputing a debt with a collection agency collecting on behalf of Resurgent and before receiving a response to her dispute, the consumer received a collection letter from Resurgent again telling her that her debt would be assumed to be valid unless she disputed in 30 days. The consumer then disputed the debt directly with Resurgent. The consumer did not receive a response to either of the disputes and filed suit for violations of §§ 1692e, 1692e(10), 1692f, and 1692g(a)(2). Reversing the lower court decision, the Seventh Circuit held that the $3.95 in postage that the consumer paid to mail her second dispute letter was sufficient to establish concrete injury sufficient for Article III standing. The court also noted that the class definition would need to be modified “to limit the class to persons who acted to their detriment upon receiving the second letter.”

Nabozny v. Optio Solutions L.L.C., 84 F.4th 731 (7th Cir. 2023). The consumer alleged the collector violated § 1692c(b) by disclosing information to a third-party letter vendor. The Seventh Circuit held that the consumer did not have Article III standing because the harm that the consumer claimed—invasion of privacy—was not analogous to the common law tort claim where she did not allege publicity of the information.

Pucillo v. National Credit Sys., Inc., 66 F.4th 634 (7th Cir. 2023). The consumer alleged violations of §§ 1692e and 1692c(c) after receiving two letters to collect a debt that had previously been discharged in bankruptcy. Affirming dismissal by the lower court, the majority held that the consumer did not have Article III standing because the consumer’s belief that the bankruptcy did not provide him with a real fresh start and fear that non-payment would impact his credit alleged risk of harm, which was insufficient to establish concrete injury. Additionally, the majority held that allegations that the consumer was concerned, upset, confused, and alarmed were insufficient without demonstrating “harm beyond emotional response.” The majority also rejected the consumer’s argument that his harms were sufficiently concrete because they were analogous to the common law tort intrusion upon seclusion, concluding that “there is nothing inherently bothersome, intrusive, or invasive about a collection letter delivered via U.S. Mail” but noting that the opinion does not “encompass[] intrusive uses of either the mail or other kinds of contact not now before us.” 

The dissent rejected the majority’s distinction between postal mail and forms of communication like text messages, concluding that the receipt of the two letters is the kind of harm at issue in the tort of intrusion upon seclusion and therefore sufficient for Article III standing. Moreover, the dissent also wrote that the current emotional harm caused by the risk of harm to the consumer was sufficient for standing even without detrimental reliance.

Ward v. NPAS, Inc. (Ward II), 63 F.4th 576 (6th Cir. 2023). The consumer alleged that the collector violated § 1692e(14) by using a shortened form of its name (NPAS instead of NPAS, Inc.) and that it violated § 1692c(a)(2) & (c) by calling him after he sent a cease and desist letter. On appeal a second time, the Sixth Circuit concluded that the consumer did have standing after he amended his complaint to allege that a voicemail message after the cease and desist letter was an unwanted intrusion upon seclusion. The court held that a single unwanted call was sufficient injury for standing purposes because the “intrusion caused by unwanted phone calls bears a ‘close relationship’ to the kind of harm that the common law sought to protect.” The court also held that whether the consumer effectively notified NPAS about his cease communication request went to the merits of the FDCPA claim and not to standing.  [See also the summary at “FDCPA Definition of Debt Collector,” infra for more about this decision.]

See also NCLC’s Fair Debt Collection § 11.15 (“Article III Standing as applied to the FDCPA”); NCLC’s Fair Debt Collection Appendix I (state-by-state analysis of state court standing requirements).

FDCPA Statute of Limitations

Bouye v. Bruce, 61 F.4th 485 (6th Cir. 2023). The consumer alleged violations of the FDCPA arising from a state court lawsuit on a debt that allegedly was never properly transferred to the collector. The Sixth Circuit held that the consumer had standing because “[s]he alleged that she suffered an injury because she had to defend against a state lawsuit that [the collector] had no right to bring in the first place.”

Noting that “every alleged, discrete FDCPA violation has its own statute of limitations,” the Sixth Circuit concluded that the alleged misrepresentation about ownership of the debt happened after the filing of the state court complaint and that the filing of the false assignment of the debt was within the FDCPA’s one-year statute of limitations. The court rejected the collector’s argument that this claim was time-barred as a continuing violation that dated back to the initial filing of the state lawsuit, explaining that “the continuing-violation doctrine has no vitality in the FDCPA context.”

Brown v. Transworld Sys., Inc., 73 F.4th 1030 (9th Cir. 2023). Walls v. Wells Fargo Bank, 276 F.3d 502 (9th Cir. 2002) precluded the consumer’s FDCPA claims based on collection of amounts that were allegedly discharged in bankruptcy. However, claims based on filing a lawsuit without being able to prove ownership of the account were not precluded since they were not based on an alleged violation of the discharge order.

Each alleged violation of the FDCPA triggers its own one-year statute of limitations period and some actions during litigation may constitute independent violations with their own statute of limitations. The collector’s filing of a new affidavit to affirm ownership of the debt in a collection lawsuit was a separate alleged violation of the FDCPA. However, mailing the lawsuit and summary judgment arguments in state court were not independent FDCPA violations. 

The majority also held that “when service occurs before filing, filing constitutes an independent violation of the FDCPA.” A concurring judge said that the court need not reach the issue in this decision and that while in some cases filing could constitute an independent violation, which should be a factual issue for determination in each case.

See also NCLC’s Fair Debt Collection § 12.3 (“FDCPA Statute of Limitations”).

FDCPA Definition of Debt Collector

Ward v. NPAS, Inc. (Ward II), 63 F.4th 576 (6th Cir. 2023). The consumer alleged that the collector violated § 1692e(14) by using a shortened form of its name (NPAS instead of NPAS, Inc.) and that it violated § 1692c(a)(2) & (c) by calling him after he sent a cease and desist letter. On appeal a second time, the Sixth Circuit concluded that the consumer did have standing after he amended his complaint to allege that a voicemail message after the cease and desist letter was an unwanted intrusion upon seclusion. The court held that a single unwanted call was sufficient injury for standing purposes because the “intrusion caused by unwanted phone calls bears a ‘close relationship’ to the kind of harm that the common law sought to protect.” The court also held that whether the consumer effectively notified NPAS about his cease communication request went to the merits of the FDCPA claim and not to standing.

The court held that the collector did not qualify as a debt collector pursuant to § 1692a(6) because the debt was not in default at the time it was obtained. Although bills from the medical provider stated that payment was “due on receipt,” failure to pay immediately did not mean that the consumer was in default where the statements did not say that failure to pay immediately was a default and the medical provider did not treat the account as in default. Moreover, the contract stated that the debt was not in default while held by the collector, which it designated as an “extended business office servicer” and which also did not treat the account as if it were in default.

See also NCLC’s Fair Debt Collection § 4.7 (“Debt Collector, § 1692a(6)”).

Communications in Connection with the Collection of a Debt

Aargon Agency, Inc. v. O'Laughlin, 70 F.4th 1224 (9th Cir. 2023). Nevada’s S.B. 248 requires collectors to provide written notification 60 days before taking action to collect a medical debt. Collectors filed suit—arguing that they could not comply with both the Nevada statute and notice requirements in the FDCPA. 

Concluding that the notices required by S.B. 248 were not communications “in connection with the collection of any debt,” the majority held that the Nevada statute did not conflict with the notice requirements in §§ 1692e(11) or 1692g(a). The majority held that since S.B. 248’s notice requirement provided more protection to consumers it was not preempted under § 1692n. 

The dissent wrote that the notices required by S.B. 248 are communications “in connection with the collection of a debt” because “there is only one reason debt collectors reach out to debtors—to collect debts” and that § 1692n should preempt S.B. 248.

See also NCLC’s Fair Debt Collection § 4.3 (“Connection with Collection of a Debt”).

FDCPA Bona Fide Error Defense

Ross v. Financial Asset Mgmt. Sys., Inc., 74 F.4th 429 (7th Cir. 2023). The wife of the alleged debtor sued the collector for violations of §§ 1692d, 1692d(5), and 1692g(b). Affirming on other grounds, the court did not reach the question of whether the wife was a “consumer” for the purpose of § 1692g(b).

The court held that collector was entitled to a bona fide error defense on the § 1692g(b) claim where the husband did not follow the dispute instructions provided by the collector but instead emailed his dispute to two company executives using non-public email addresses.  The court concluded that “the absence of procedures designed to guard against malign conduct like [husband’s] does not mean that [collector] failed to maintain ‘reasonably adapted’ procedures.”

The court held that the collector was also entitled to a bona fide error defense on the §§ 1692d and 1692d(5) claims because the collector had a reasonably adapted procedure in place to code calls that were made to a wrong number. The wife waived any claim that the collector’s failure to follow its procedures to code the call as a wrong number twice meant that the error was not “bona fide” by failing to raise the argument previously. 

See also NCLC’s Fair Debt Collection § 12.2 (“Bona Fide Error Defense”).

Rooker-Feldman Doctrine Application to FDCPA Case

Brown v. Duringer Law Group P.L.C., 86 F.4th 1251 (9th Cir. 2023). Tenants alleged that memorandum filed in state court claimed duplicative interest and unreasonable collection costs in violation of the FDCPA. The Ninth Circuit held that the lower court never issued a judgment on the validity of these particular amounts, and, therefore, the consumers claims were not barred by Rooker-Feldman.

See also NCLC’s Fair Debt Collection § 12.6.4 (“The Rooker-Feldman Doctrine”).

Attorney Fee Award to Collector Based on Consumer Attorney’s Conduct

Chung v. Lamb (Chung III), 73 F.4th 824 (10th Cir. 2023). The lower court awarded attorney fees to the collection attorney under 28 U.S.C. § 1927 after granting summary judgment to the collection attorney in a case where the consumer assigned her FDCPA claims to her attorney and the consumer’s attorney hid that she was the real party in interest. The Tenth Circuit affirmed the award of attorney fees except for the portion that was not related to work on the real-party-in-interest defense.

See also NCLC’s Fair Debt Collection § 12.10 (“Attorney Fees and Sanctions Against Consumers or Their Attorney”).

FDCPA Attorney Fees to the Prevailing Consumer

Beckler v. Rent Recovery Sols., L.L.C., 83 F.4th 693 (8th Cir. 2023). The district court did not abuse its discretion in determining that the number of hours the consumer’s attorney worked on a straightforward FDCPA case were unreasonable. The Eighth Circuit upheld the 50% reduction in hours, noting that §1692k(a)(3) allows for “reasonable” attorney fees.

See also NCLC’s Fair Debt Collection § 11.13 (“Attorney Fees and Costs for Prevailing Consumers”).

Published: December 29, 2023