FDCPA: Sixth Circuit Strikes Down FDCPA Claims

The Sixth Circuit struck down FDCPA claims involving letters from a mortgage servicer to a consumer last week in Goodson v. Bank of America, C.A. No 14-5419 (6^th Cir. Jan. 28, 2015).  In an opinion not recommended for publication, the court held that the letters regarding a defaulted mortgage were not communications made in connection with collection of a debt.  In Goodson, the mortgage servicer sent the consumer a letter on July 8, 2011 to inform her that, "[e]ffective July 1, 2011, the servicing of home loans by our subsidiary—BAC Home Loans Servicing, LP, transfers to its parent company—Bank of America, N.A." The letter included a standard FDCPA disclaimer, notifying Goodson that "Bank of America, N.A. is required by law to inform you that this communication is from a debt collector attempting to collect a debt." On the second page, the servicer misinformed Goodson that as of June 30, 2011, she owed $278,681.40 to the creditor, GNMA-MSS-TBW 9262 AA.  Subsequently, in October of 2011, after receiving a request for validation of the debt, a law firm sent Goodson a letter on behalf of the servicer.  The letter provided that "[t]his firm represents Bank of America, N.A., as successor by merger to BAC Home Loans Servicing, LP ("Bank of America") for the sole purpose of responding to your correspondence dated July 8, 2011." The law firm also provided a payment history.  Goodson filed suit alleging, among other things, that these two letters violated the FDCPA by misrepresenting the balance owed and by misidentifying the creditor. 

The court granted Bank of America’s motion for summary judgment with respect to the letters after determining they did not constitute communications in connection with the collection of a debt.  Under 15 U.S.C. §1692e, "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." (emphasis added).  In reviewing the letters, the court considered: “(1) the nature of the relationship of the parties; (2) whether the communication expressly demanded payment or stated a balance due; (3) whether it was sent in response to an inquiry or request by the debtor; (4) whether the statements were part of a strategy to make payment more likely; (5) whether the communication was from a debt collector; (6) whether it stated that it was an attempt to collect a debt; and (7) whether it threatened consequences should the debtor fail to pay.”

With respect to the July 2011 letter, the court noted that even though the letter provided a balance owed on the second page, its “animating purpose” was not debt collection.  In so ruling, the court reviewed the structure and content of the letter,  emphasizing that the first page of the letter opened with the header "IMPORTANT MESSAGE ABOUT YOUR LOAN" followed by a discussion of the service provider change, without any mention of payment or Goodson's outstanding balance.  The balance owed was not disclosed until the second page of the letter and then only in the context of language tracking the requirements of 15 U.S.C. §1692g where it provided “The amount of the debt: As of June 30, 2011, you owe $278,681.40. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Therefore, if you pay the amount shown above, an adjustment may be necessary after we receive your payment, in which event we will inform you or your agent before accepting the payment for collection.”  The court further noted that the letter did not make an express demand for payment, list a payment due date or threaten consequences should Goodson fail to pay. Further, the standard disclaimer language—which stated that BANA was "a debt collector attempting to collect a debt"—did not, by itself, transform the informational letter into debt collection activity.  Based upon the structure of the letter and the fact that the balance was not disclosed until the second page of the letter, the court surmised that its inclusion was solely for the purpose of trying to conform to the FDCPA requirements. The court therefore concluded that “additional disclosures tracking the notice requirements of  15 U.S.C. § 1692g—a provision intended to ensure that the consumer is informed—should not automatically transform an otherwise informational letter into a debt collection activity.” 

Similarly, the court determined that the October 2011 letter was sent not as an attempt to collect a debt, but instead for informational purposes.  The court noted that the law firm from the outset stated that its representation was limited to responding to Goodson’s correspondence seeking validation of the debt.  Again, the court noted that the letter did not make a demand for payment, state a balance due, indicate that it was an attempt to collect a debt, or threaten negative consequences should Goodson fail to pay.  The court determined, therefore, that the letter was for informational purposes and not in connection with the collection of any debt.

While the case is not recommended for publication, the case provides insight as to when a letter from a debt collector may not be considered a communication to collect a debt and, thus, not a violation of the FDCPA.