In a recent decision, the United States District Court for the District of New Jersey held that an offer to settle a debt can include an optional payment date that falls within the time in which the consumer can dispute the debt. It may do so as long as the offer is not deceptive. D’Addario v. Enhanced Recovery Co., LLC, 2011 U.S. Dist. LEXIS 77682 (D.N.J. July 14, 2011).
The defendant in the case, Enhanced Recovery Co. (“Enhanced Recovery”), sent a letter dated October 15, 2010 to the plaintiff, Adam D’Addario (“D’Addario”). The letter offered D’Addario a repayment opportunity on an $8,744.70 debt that he owed to Chrysler Financial, LLC. The first of several options offered in the letter stated “Option 1: Settlement: $3,497.88, please remit by 10/30/10.” Id. at 2. The letter also notified the reader to “see reverse side for important notices and consumer rights.” Id. One of the rights granted to D’Addario was his right to dispute the debt within thirty days of receiving the letter.
D’Addario claimed that, because the deadline for payment fell within the time period in which he could have disputed the debt, Enhanced Recovery’s letter was a “misleading and inaccurate” “demand” for payment. Id. at 3. As such, he alleged the letter violated the Fair Debt Collections Practice (the “FDCPA”). 15 U.S.C. § 1692. Enhanced Recovery moved to dismiss the case for failure to state a claim upon which relief could be granted.
The FDCPA states that “[a] debt collector may not use any false, deceptive or misleading representation or means in connection with the collection of any debt.” Id. at § 1692(e). A communication is determined to be deceptive for the purposes of the FDCPA if:
1) It can be reasonably read to have two different meanings
2) One of which is inaccurate.
Campuzano-Burgos v. Midland Credit Management, Inc., 550 F.3d 294, 298 (3d Cir. 2008).
When determining a communication is deceptive, the Court is required to adopt the perspective of “the least sophisticated debtor,” which is “less demanding than one that inquires whether a particular debt collection communication would mislead or deceive a reasonable debtor.” D’Addario at 5, 6.
Even when viewing the issue from this lower standard, the Court disagreed with D’Addario’s argument that the letter was misleading. It held that nothing in the statute prohibited settlement of the debt within the validation period. Additionally, “even the least sophisticated debtor could not believe that the letter presented him with an ‘either/or’ proposition – i.e., either dispute the debt’s validity or pay off the debt, but not both.” Id. at 7. The letter did not emphasize one option over the other. Id. The Court also noted that the letter contained no threats or demands and did “not even suggest the possibility of legal action on the debt.” Id. at 8.
The Court’s decision is significant for debt collectors who offer consumers various settlement offers and sheds light on the language that courts will generally permit in such documents.
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