$1.90 Can’t Buy You an FDCPA Violation

A consumer who sued a debt collector over an inaccurate statement as to the amount of a settlement offer recently saw his complaint dismissed for lack of standing.  In Allgire v. HOVG, LLC, the plaintiff was contacted regarding a medical debt and offered a settlement for the discounted sum of $318.00.  Allgire v. HOVG, LLC , C.A. No. 1:16-cv-961, 2017 U.S. Dist. LEXIS 37739 (S.D. Ind. Mar. 16, 2017). The debt collector advised Mr. Allgire that the settlement amount represented a 25% discount of the balance owed.  In reality, a 25% discount of the amount owed was $316.10 not $318.00, a difference of $1.90. 

In his complaint, Mr. Allgire contended the statement misled him “by describing the discounted settlement amount to be equal to 25 percent of the total amount of the debt when the dollar amount stated was $1.90 more than 25 percent of the debt.” Allgire at *3.   Allgire further contended the representation violated both 15 U.S.C. 1692e(2)(A) and e(10) which prohibit a debt collector from using any false, deceptive or misleading representation or means to collect a debt and prohibit the false representation of the character, amount or status of any debt.  Problematic for Mr. Allgire, however, was his acknowledgement that he did not accept the offer to settle.  The debt collector moved to dismiss asserting Allgire did not have standing to bring the claim.

In reviewing Allgire’s Article III standing, the court was quick to point out that it is possible to allege  statutory violations of 15 U.S.C. 1692e without any resulting harm or risk of harm; however, in order to be actionable under the FDCPA, the representations must be material.  “The court therefore concluded that “bare allegations of the types of violations alleged by the Plaintiff do not entail a degree of risk sufficient to establish a concrete injury.“  Id.  at * 9. 

The court was equally dismissive of the consumer’s assertion that he was confronted with the threat of concrete harm and specifically, that he “had no reason to believe that the settlement offer given was valid or would be honored by the Defendant.”  As the plaintiff acknowledged that he did not pay the settlement amount, the court noted that such harm was, at best, conjectural and hypothetical and not sufficient to establish an actual injury in fact.

The case continues a trend of good news for the ARM industry as courts continue to use standing as a basis to dismiss hyper technical violations of the FDCPA and other consumer protection statutes.