Tuesday, March 27, 2018

House Committee Okays Bill to Amend FDCPA to Exclude Law Firms from Definition of “Debt Collector”

By: Zachary K. Dunn

The House Financial Services Committee voted 35-25 on March 21, 2018 to advance H.R. 5082, officially known as the “Practice of Law Technical Clarification Act of 2018,” to the full House of Representatives. The bill, if enacted, would amend the Fair Debt Collection Practices Act to exclude from the definition of “debt collector” all law firms or licensed attorneys working in connection with “a legal action in a court of law to collect a debt on behalf of a client,” including: 

  • Serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or
  • Communicating in, or at the direction of, a court of law, or in the enforcement of a judgment; or
  • any other activities engaged in as part of the practice of law, under the laws of a State in which the attorney is licensed, that relate to the legal action.
The bill would also amend the Consumer Financial Protection Act of 2010 to clarify that the CFPB may not exercise supervisory or enforcement authority with respect to attorneys engaged in the practice of law and not offering or providing consumer financial products or services.


The bill will now advance to the full House. We will keep you updated as H.R. 5082 proceeds through the lawmaking process.

Zachary K. Dunn practices in Smith Debnam's Consumer Financial Services Litigation and Compliance Group.

Monday, March 26, 2018

D.C. Circuit’s Ruling May Provide Some Potential Relief for the Consumer Financial Services Industry

The D.C. Circuit has issued its long-awaited decision on the FCC’s 2015 TCPA Declaratory Ruling.  ACA International v. Federal Communications Commission, No. 15-1211 (Mar. 16, 2018).  The ruling invalidates the FCC’s definition of an automated telephone dialing system (“ATDS”) and sets aside the FCC’s ruling on reassigned numbers.  The ruling, however, upholds the FCC’s determination that consent can be revoked through any reasonable means.

The 2015 Declaratory Ruling.

In July of 2015, the FCC issued its highly controversial ruling on 21 petitions seeking review of various aspects of the Telephone Consumer Protection Act (the “TCPA”).  In the Matter of Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling & Order, 30 FCC Rcd, 7961 (2015) (“Order”).  Two commissioners issued impassioned dissents, noting that the Order “expands the TCPA’s reach” and “twists the law’s words…to target useful communications between legitimate businesses and their customers.”  Dissenting Statement of Commissioner Ajit Pai.  Immediately following the ruling, ACA International, a major trade group for the collection industry, filed suit against the FCC in the United States Court of Appeals for the D.C.  Circuit seeking a judicial review of the Order. 

While the D.C. Circuit’s review focused on four aspects of the FCC Ruling, this post will limit itself to an examination of the three aspects most relevant to the consumer financial services industry.  Before discussing the D.C. Circuit’s holding, here is a reminder of the FCC’s Ruling on the relevant issues:

  • The Definition of an ATDS.  The FCC Ruling rejected any “present use” or current capacity test.  The FCC held that capacity of an autodialer is not limited to its current configuration and includes its potential functionalities even if it currently lacks the requisite software. Thus, the FCC affirmed that “dialing equipment that has the capacity to store or produce, and dial random or sequential numbers… [is an autodialer] even if it is not presently used for that purpose.” Order at ¶ 10 (emphasis supplied).  The Order further confirmed the majority’s focus on whether the equipment can dial without human intervention and whether it can “dial thousands of numbers in a short period of time”.  Id. at ¶ 17.  The dissent was highly critical of the majority’s holding, particularly as it related to capacity, its statutory interpretation of capacity, and the TCPA’s potential application to smart phones.  As noted by the dissent, if a system cannot store or produce telephone numbers to be called using a random or sequential number generator and it if cannot dial such numbers, it should not be included.  Commissioner (and now chair of the FCC) Pai described the majority’s test as being “whether there is “more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition.  Pai Dissent.

  • Reassigned Numbers. The FCC Ruling addressed the question of where and when, a caller violates the TCPA by placing a call to a wireless number which has been reassigned from a consenting party to a third party without the caller’s consent.  The FCC refused to put any burden on the wrong number consumer to inform the caller that it is the wrong party or opt out of the calls.  Instead, the FCC established a one-call safe harbor stating that “where a caller believes he has consent to make a call and does not discover that a wireless number has been reassigned prior to making or initiating a call to that number for the first time after reassignment, liability should not attach for that first call, but the caller is liable for any calls thereafter.”  Id. at ¶85.

  • Revocation of Consent. The FCC Ruling also clarified the ways in which a consenting party may revoke his consent to receive auto dialed calls.  Pursuant to the Ruling consent generally may be revoked through any reasonable means and the caller may not dictate how revocation may be made.  The FCC therefore held that “the consumer may revoke his or her consent in any reasonable manner that clearly expresses his or her desire not to receive further calls, and that the consumer is not limited to using only a revocation method that the caller has established as one that it will accept.”  Id. at ¶ 70.  Consent must be given by either the current subscriber or the non-subscriber customary user of the phone.

The D.C. Circuit’s Ruling.

The Definition of an ATDS.

Under the TCPA, an ATDS is defined as “equipment which has the capacity- (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”  47 U.S.C. §227(a)(1).   Breaking down the definition, the Court looked at two questions.  First, when does a device have the “capacity” to perform the two enumerated functions (to store and dial numbers) and second, what precisely are those functions.  ACA International, Slip Op. at 12. The Court held that the FCC’s efforts to clarify what equipment qualifies as an ATDS provided an “eyepopping sweep” and the Court set it aside. ACA International, Slip Op. at 16. 

Regarding when a device has capacity to store and dial numbers, the court was highly critical of the FCC’s expansive interpretation of “capacity”, noting that it was incompatible with the statute’s original concern – telemarketing calls.  The Court was particularly troubled by the Order’s inescapable conclusion that “all smartphones, under the Commission’s approach, meet the statutory definition of an autodialer.” The Court concluded that the TCPA cannot be reasonably read to render every smartphone an ATDS subject to the TCPA’s restrictions. Id. At 15-17.    Applying a Chevron analysis, the court held that the FCC’s definition was arbitrary and capricious and lay beyond the FCC’s zone of delegated authority.  The Court concluded that “[n]othing in the TCPA countenances concluding that Congress could have contemplated the applicability of the statute’s restrictions to the most commonplace phone device used every day by the overwhelming majority of Americans.”  Id. at 19.

The Court next reviewed the FCC’s treatment of what functions must be present to constitute an ATDS.  Looking to the TCPA, the Court noted that to constitute an ATDS, a device must have capacity to perform two functions: (a) to store or produce numbers to be called using a random or sequential number generator; and (b) to dial such numbers.  The Court determined that the FCC’s efforts fell short of reasoned decision making, offering no meaningful guidance to affected parties.  As examples of why the FCC Ruling failed to satisfy the requirement of reasoned decision making, the Court noted the two conflicting positions taken by the FCC as to what functionalities are necessary for a device to qualify as an ATDS noting that at certain places in the Order, the FCC takes the position that a device qualifies as an ATDS only if it can generate random or sequential numbers to be dialed while in others, the FCC stated that a device qualifies as an ATDS even if it lacks that capacity.  The Court also noted that the FCC Order was unclear as to whether other certain referenced capabilities (for instance, dialing without human intervention) are necessary for a dialer to qualify as an ATDS.   

What Next? The Court’s refusal to sustain Order’s definition of an ATDS invalidates one of the most disturbing aspects of the 2015 Order but what does it mean for collection agencies and others who use ATDS to make non-telemarketing calls? Absent further rulemaking from the FCC, it will leave the issue open for judicial interpretation and we are likely to see additional litigation seeking to examine equipment on a device by device basis.  The Court’s decision contains some language which may prove helpful to the industry on the issue of what constitutes an ATDS - particularly its parsing of the issue as to functionality and the distinction drawn between the ability to generate random or sequential numbers and the ability to call from a database of numbers generated elsewhere.  It is likely that we will see this definition delved into in litigation to a further degree than previously seen.

Reassigned Numbers.

Regarding reassigned numbers, the court determined the FCC’s one call safe harbor was arbitrary and set it aside. The Court’s ruling was premised in large part upon the FCC’s own interpretation of the TCPA as allowing a caller’s reasonable reliance on prior express consent.  Recognizing that a caller’s reasonable reliance might not cease after one call or text message (for instance, when the recipient does not answer or provide any indication of reassignment), the Court held that there was no reasonable basis for the FCC to conclude that reasonable reliance would cease after the first call.  “Having embraced an interpretation of the statutory phrase ‘prior express consent’ grounded in conceptions of reasonable reliance, the Commission needed to give some reasoned (and reasonable) explanation of why the safe harbor stopped at the seemingly arbitrary point of a single call or message.” Id. at 38.  Importantly, the Court further held that the FCC’s failure regarding the one call safe harbor requires that the Court set aside its treatment of reassigned numbers generally.  As a result, the Court also set aside the FCC’s interpretation of a “called party” as referring to a new subscriber because to leave it in place would in turn “mean that a caller is strictly liable for all calls made to the reassigned number, even if she has no knowledge of the reassignment.”  Id. at 39.

What Next? While setting aside the FCC Ruling, the Court also signaled its agreement with other circuits (notably the Seventh and Eleventh) that the “called party” for purpose of the TCPA is intended to be the current subscriber.  The Court also seemingly embraced the reasonable reliance on prior express consent position espoused by the FCC.  As a result, it is likely we can anticipate a ramp up in reassigned number litigation centering around who is the “called party” and what constitutes reasonable reliance on prior express consent provided by the previous subscriber.  At the same time, the FCC (under new leadership) is already seeking to address the issue of reassigned numbers by looking at mechanisms to address the issue, including a repository of reassigned numbers.  In re Advanced Methods to Target and Eliminate Unlawful Robocalls, Second Notice of Inquiry, 32 FCC Rcd. 6007. 6010 (2017). 

 Revocation of Consent. 
As noted above, the Court sustained the FCC’s ruling that consent can be revoked through any reasonable means that clearly expresses a desire not to receive further messages.  Of note, the Court made clear that the FCC Ruling did not address revocation rules mutually adopted by contracting parties.  “Nothing in the Commission’s order thus should be understood to speak to parties’ ability to agree upon revocation procedures.” Id. at 43.

What Next?  Based upon the court’s clarification as to mutually adopted revocation rules, affected parties may wish to consider incorporating revocation procedures in their contracts with specific mechanisms for consumers to indicate their consent.  Based upon the Court’s ruling, affected parties should also continue to implement policies and procedures for recording revocations of consent.

Thursday, March 15, 2018

Sixth Circuit Holds Consumer Has No Standing to Bring FDCPA Claim

The Sixth Circuit recently made clear its position that “Congress cannot override the baseline requirement[s] of Article III of the U.S. Constitution by labeling the violation of any requirements of a statute a cognizable injury.”  In Hagy v. Demers & Adams, 2018 U.S. App. LEXIS 3710, 882 F.3d 616 (6th Cir. 2018), a letter from a law firm advising the consumer that the creditor would not seek recovery of the deficiency balance resulted in an FDCPA claim.  The alleged violation? The letter violated the 15 U.S.C. §1692e(11) because it did not disclose the communication was from a debt collector.

The letter read as follows:

This letter is in follow up to our conversation of Monday, June 28, 2010 wherein we discussed the above referenced matter.

Pursuant to our conversation, I informed you that we have received the executed Warranty Deed in Lieu of Foreclosure signed by the Hagy[s]. Furthermore, you inquired as to should a deficiency balance be realized after the sale of the collateral would Green Tree pursue Mr. & Mrs. Hagy for the amount of the deficiency. I have been informed by my client that in return for Mr. & Mrs. Hagy executing the Warranty Deed in Lieu of Foreclosure Green Tree will not attempt to collect any deficiency balance which may be due and owing after the sale of the collateral.

I believe this letter satisfies any and all of your concerns.

Should you have any questions with respect to this matter, please do not hesitate to contact me.

Hagy at *7-8. 

As acknowledged by the consumers, the letter was accurate and, “[f]ar from causing the Hagys any injury, tangible or intangible, the… letter gave them peace of mind…”  Importantly, there were no allegations that the consumers suffered actual injury or damages from the letter.

The issue on appeal was whether Congress’ creation of a statutory injury and damages pursuant to 15 U.S.C. §1692e(11) satisfied Article III’s requirement of an injury in fact.  The court held that it did not.  In doing so, the court refused to endorse an “anything-hurts-so-long-as-Congress-says-it-hurts theory” of Article III and further rejected the Eleventh Circuit’s rationale in Church v. Accretive Health, Inc.-  that a bare violation of section 1692e(11) is sufficient to create standing.  Looking to the legislative record and the FDCPA, the court found no finding by Congress that the failure to disclose the communication was from a debt collector always creates injury.  The court concluded that “[a]lthough Congress may ‘elevate’ harms that ‘exist’ in the real world before Congress recognized them to actionable legal status, it may not simply enact an injury into existence, using something that is not remotely harmful into something that is.”  Hagy at *11.  The court’s opinion emphasizes the limitations of statutory violations and the importance for defense counsel to continue to analyze bare statutory violations against the Article III minimum standing requirements.  At a minimum, the court’s opinion should provide debt collectors with some solace against the absurd. 

Thursday, March 8, 2018

District Court Holds that a Debt Collector May Not Rely on Information Provided by Creditor, Rejects Bona Fide Error Defense Claim

By: Zachary K. Dunn


A District Court in the Seventh Circuit has held that a debt collector may not avail itself of the § 1692k(c) bona fide error defense if it “intentionally chose to present conflicting information,” even if that conflicting information was provided to it by the creditor.


In Garcia v. Miramed Revenue Group, LLC, 2018 U.S. Dist. LEXIS 17818 (N.D. Ill. Jan. 30, 2018), the debtor, Garcia, defaulted on a debt to Community First Medical Center (“Community First”). Community First placed the account with Miramed Revenue Group (“Miramed”), and Miramed sent a collection letter to Garcia. The letter stated that the “amount due” was $100.00 in three different places, but also contained the following information:


Following is an accounting of the patient portion now due from you:

            Total Charges:                                 $3665.00

            Insurance Payments:                     $-1759.18

            Adjustments                                     $0.00

            Patient Payments:                          $0.00

            Remaining Patient Balance:        $100.00


Garcia filed suit, alleging the letter violated the FDCPA because it communicated varying amounts owed by Garcia; the stated $100.00, and the difference between the total charges and the stated insurance payments, $1,905.82. The District Court agreed and, in granting her motion for summary judgment, held that “a reasonable consumer would not be certain whether the consumer owed $100.00 or $1,905.82.”


Miramed contended that even if the letter was misleading, it was entitled to the bona fide error defense, 15 U.S.C. § 1692k(c), because it was permitted to rely upon information sent to it by the owner of the debt – here, Community First.  Miramed pointed out that it had a contract with Community First requiring them to send accurate information for each account. Unpersuaded, the District Court found that “whether or not [Community First] gave information concerning payments made, is irrelevant.” While Miramed “may not have intentionally and willfully violated the FDCPA,” it “intentionally chose to present the conflicting information concerning the amount of the debt believing it to be compliant with the law.”


Implications of Garcia 

The Garcia court’s holding that information relayed to a debt collector by a creditor is irrelevant to the determination of whether the collector can rely on a bona fide error defense is novel. Even if a collection letter clearly and repeatedly states the amount owed, debt collectors should take care to ensure that no other information in the letter could be read as suggesting a different amount is owed.    


Zachary Dunn is an attorney practicing in Smith Debnam's Consumer Financial Services Litigation and Compliance Group

Tuesday, March 6, 2018

Second Circuit Remains Firm That Flu Shot Reminders are Health Care Messages Under the TCPA

Following up on its decision in Latner v. Mount Sinai Health System, Inc., 2018 U.S. App. LEXIS 114 (2nd Cir. Jan. 3, 2018), the Second Circuit has again held that a flu shot reminder was a health care message under the TCPA. Zani v. Rite Aid Hdqtrs. Corp., 2018 U.S. App. LEXIS 4354 (2nd Cir. Feb. 21, 2018).

In Zani, the consumer filled a prescription at a Rite Aid pharmacy, provided his phone number and signed a Notice of Privacy Practices which provided that Rite Aid “may contact [Zani] to provide refill reminders or information about treatment alternatives or other health related benefits and services that may be of interest.” Zani at *2. Sometime later, Zani received a pre-recorded message from Rite-Aid’s vendor which stated:

Get your flu shot at Rite Aid today and shield yourself from this season's strains of the flu. Rite Aid now offers patients sixty five and over the Fluzone High Dose vaccine designed for older patients and covered by Medicare Part B. Because our immune systems may need more help as we get older, the Fluzone High Dose vaccine available at Rite Aid may deliver a stronger immune response. Come in today and shield yourself. No appointment necessary and most insurance plans accepted. Vaccines available while supplies last. See your Rite Aid pharmacist for details. Goodbye.

Zani at *3. Zani filed suit contending the message violated the TCPA. Rite Aid moved for summary judgment, contending the message was a health care message provided with the consumer’s prior express consent. The district court granted Rite Aid’s motion for summary judgment.

On appeal, both parties agreed that Zani had provided his prior express consent when he provided his cell number previously. Zani contended, however, because the message did not convey a health care message, express written consent was required and he had not provided it. The court disagreed, noting that its recent decision in Latner involved virtually identical issues. The court reiterated its decision in Latner holding that the message was a “health care” message exempt from the written consent requirements of the TCPA.

Monday, March 5, 2018

Madden Fix Bill Passes House, Faces Uncertain Fate in Senate

By: Zachary K. Dunn

The United States House of Representatives passed H.R. 3299, commonly known as the “Madden fix” bill, by a vote of 245-171 on February 14, 2018. The bill, which is officially entitled “Protecting Consumers’ Access to Credit Act of 2017,” is a response to the Second Circuit’s decision in Madden v. Midland Funding, LLC, 786 F.3d 246 (2nd Cir. 2015), cert denied, ___ U.S. ___, 136 S.Ct. 2505 (2016).

Under the National Bank Act, 12 U.S.C. § 85, nationally chartered banks are permitted to charge interest at the rate allowed by the laws of the State where the bank is located. In Madden, the Second Circuit held that a third-party debt buyer, after purchasing the loan from a national bank, is not permitted to charge the same rate of interest on the loan that the nationally chartered bank is permitted to charge. The Court ruled that allowing third-party debt buyers to charge the same amount of interest would be an “overly broad application” of the Act. This decision, and the Supreme Court’s refusal to weigh in on the issue, lead to uncertainties in the secondary loan market.

Seeking to ameliorate this problem, H.R. 3299 would add the following language to 12 U.S.C. § 85:

A loan that is valid when made as to its maximum rate of interest in accordance with this section shall remain valid with respect to such rate regardless of whether the loan is subsequently sold, assigned, or otherwise transferred to a third party, and may be enforced by such third party notwithstanding any State law to the contrary.

If enacted, this measure would eliminate the uncertainties created by Madden and make clear that a third-party debt buyer may charge the same rate of interest that the nationally chartered bank may charge. The House passed H.R. 3299 mostly along partisan lines, which raises the question of whether it can reach the 60 vote threshold in the Senate. After being passed by the House, the bill was received by the Senate and referred to the Senate Banking, Housing, and Urban Affairs Committee. We will keep you updated as this important piece of legislation moves its way through Congress.

Zachary Dunn is an attorney practicing in Smith Debnam's Consumer Financial Services Litigation and Compliance Group

Sunday, March 4, 2018

CFPB Report Reveals Impact Removal of Public Records Has on Credit Reporting: Did it Make a Difference?

The CFPB recently issued its second Quarterly Consumer Credit Trends Report which examines the impact of changes to credit reporting regarding the reporting of civil public records.  In 2015, the three major credit reporting agencies (“CRAs”) entered into settlements with over thirty states.  The settlements required the three CRAs to implement minimum personal identifying information (“PII”) standards and data collection frequency requirements for civil public records appearing on consumer reports.  The settlements also resulted in the CRAs discontinuing their reporting of civil judgments.

The Report breaks civil public records into three broad categories: bankruptcies, judgments and tax liens. 

Bankruptcies:  The Report spends little, if any, time discussing bankruptcies because the number of bankruptcies being reported remained virtually unchanged after the new standards took effect.  The Report concludes this is an indication that bankruptcies were being reported with sufficient PII prior to July 1, 2017. 

Tax Liens and Civil Judgments:  The Report notes that the number of tax liens being reported dropped off significantly after July 1, 2017 with the reporting of state tax liens declining more than federal tax liens.  The reporting of judgment liens disappeared altogether in July 2017.  The Report then looked at the impact the reporting of tax liens and judgments had on credit scoring.  It should come as no surprise that with the new PII standards and removal of judgment liens, affected consumers’ credit scores increased.  The amount of increase, however, does not appear to be significant (0-15 points) and may be attributable to the fact that many of the consumers in those categories also had other derogatory tradelines.  What is interesting, however, is that the increase in scores did impact a fairly significant number of consumers (17%) and their placement into higher credit bands (for instance, movement from deep subprime to subprime).

As noted by the Report, there remains insufficient data to draw any conclusion as to whether the removal of public records will affect the predictability and accuracy of commercial credit scoring models.   

Thursday, March 1, 2018

District Court Expands on Pantoja, Finds Collection Letter on Stale Debt to Violate FDCPA for Failure to Include Revival Warning

A recent decision from the North District of Illinois has expanded on the Seventh Circuit’s holding in Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679 (7th Cir. 2017) regarding revival warnings in collections letters on time-barred debt.  Pierre v. Midland Credit Management, Inc., 2018 U.S. Dist. LEXIS 18860 (N.D. Ill. Feb. 5, 2018).  The ruling resulted in summary judgment as to liability for a certified class of plaintiffs due to a collection agency failing to include a warning that payment could revive the statute of limitations on time barred debt.


The facts of the case are simple; the plaintiff, Pierre, defaulted on a credit card she took out with Target National Bank (“TNB”), and TNB sold the debt to Midland Funding, LLC for which the defendant, Midland Credit Management, Inc. (“Midland”), was a debt collector. Midland sent a collection letter to Pierre which stated she had been “pre-approved for a discount program” and gave her three “options” to pay off the $7,578.57 balance. The letter also included the following:

The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, we will not report it to any credit reporting agency, and payment or non-payment of this debt will not affect your credit score.

Although the letter included the above warnings, it did not explicitly include any warning that payment could revive the debt and restart the applicable statute of limitations.


Pierre filed a class action arguing that the letter violated the FDCPA. In granting Pierre’s motion for summary judgment, the Court found the letter to be false and deceptive in violation of 15 U.S.C. § 1692e(10) as a matter of law. Applying the least sophisticated consumer standard, the Court found that the letter was misleading because it did not include any warning that a partial payment on the debt “could have revived the statute of limitations and subjected [Pierre] to the debt obligation anew.” Pierre, 2018 U.S. Dist. LEXIS 18860, at *4.


Relying on an earlier Seventh Circuit case, Pantoja v. Portfolio Recovery Assocs., LLC, 852 F.3d 679 (7th Cir. 2017), the District Court brushed aside Midland’s argument that such an omission was not a violation of the FDCPA because no revival warning is required. In Pantoja, the Seventh Circuit affirmed summary judgment for a plaintiff where a collection letter “d[id] not even hint, let alone make clear to the recipient, that if he makes partial payment or even just a promise to make a partial payment, he risks loss of the otherwise ironclad protection of the statute of limitations.” Pierre, 2018 U.S. Dist. LEXIS 18860, at *4 (citing Pantoja, 852 F.3d at 684). The Court found this to be the law of the circuit and that any collection letter on time barred debt must contain a revival warning. Although Midland argued that neither the CFPB nor the FTC required revival warnings in the context of letters concerning time barred debt, the Court found that those determinations were not entitled to deference and the Seventh Circuit’s “explicit holding” in Pantoja controlled.


Midland made two other arguments as to why its letter did not violate the FDCPA: (1) Midland’s internal policy is to never restart the statute of limitations, even if a partial payment is made; and (2) state law in the relevant state – Illinois – dictates that a partial payment on otherwise time barred debt does not restart the statute of limitations. The Court was not persuaded. As to Midland’s internal policy, the Court noted that the consumer could face suit if Midland changed its policies, or if Midland sold the debt to another “less principled” collector. On the state law issue, the Court noted that Illinois law was unclear on the point, and that a partial payment “puts [the consumer] in a worse legal position that she would have been in had she done nothing.”


Although Pierre never made any payments as a result of the letter, the Court nevertheless found the lack of a revival warning to be material: “Materiality does not hinge upon whether the plaintiff actually acted in reliance on a confused understanding, but rather whether the misleading letter has the ability to influence a consumer’s decision.” Id. at * 17 (citation omitted). Since a consumer “may well choose” to pay or promise to do so as a result of the letter, the materiality element was met. Id.


Implications of Pierre for Debt Collectors

Pierre makes clear that any letter sent in an attempt to collect on time-barred debt should include a warning that partial payment may “revive” the debt and restart the statute of limitations. This is true even if the collector maintains a policy to never revive a statute of limitations. While a warning may not be required if state law dictates that partial payment on time-barred debt does not revive the statute of limitations, state law must be clear on that point before a warning can be omitted.


This case also serves as a warning that materiality under the FDCPA can be found even if the plaintiff never took any action in response to the letter. As long as the letter “may lead to a real injury,” a court may find it to be materially misleading.