The CFPB recently submitted an amicus brief to the Eighth Circuit, arguing that a debt collector cannot avoid liability under the FDCPA when it falsely represents the amount of a debt to a consumer’s attorney, rather than to the consumer herself. The Bureau also contends that the violation of the statutory right to receive truthful information about the amount of a debt is a sufficient injury to confer Article III standing under Spokeo, Inc. v. Robins.
The appeal, Johnson v. Admiral Investments, LLC, was filed after the district court dismissed the plaintiff’s FDCPA lawsuit with prejudice for failure to state a claim. The complaint alleged that Admiral Investments, LLC, a debt collector, sent plaintiff’s attorney a letter dated October 23, 2015 that claimed plaintiff owed a balance of $10,812.27. A few months later, however, Admiral claimed in a state court lawsuit filed against plaintiff that she owed only $4,953.47. Based on these facts, plaintiff asserted that Admiral violated the FDCPA “by falsely representing the character, amount, or legal status of the alleged debt, threatening to take action that cannot legally be taken, and using a false representation or deceptive means to collect a debt.”
Admiral moved to dismiss. The district court granted the motion, concluding that the 2015 letter did not violate the FDCPA even if it falsely stated the amount of plaintiff’s debt. The district court applied the Eighth Circuit’s “competent attorney” standard for evaluating whether a communication sent to a consumer’s attorney violates the FDCPA. The court found that a competent attorney would have determined, and if necessary challenged, whether the debt amount set forth in the 2015 letter was correct. Thus, according to the district court, the letter could not provide a basis for an FDCPA claim.
In its amicus brief, the Bureau contends that the FDCPA prohibits a debt collector’s misrepresentation of a debt amount whether the misrepresentation is directed at a consumer or the consumer’s counsel. A consumer and a competent attorney would have the same interpretation of a representation about the amount of a debt. The Bureau further claims that the district court’s application of the competent attorney standard improperly expected counsel to investigate and challenge the debt collector’s representations. According to the Bureau, the court’s holding shifted the burden of uncovering a falsehood to the consumer’s attorney, whose client may not have sufficient resources to fund the required investigation, and undermined the FDCPA provisions requiring debt collectors to be honest about the debt amounts they seek to collect.
The Bureau’s brief invites the Eighth Circuit to conclude that a consumer’s attorney should not be required to investigate a debt collector’s alleged misrepresentation. Such a holding could extend beyond the Eight Circuit to influence cases within the Seventh and Tenth Circuits, which also apply a competent attorney standard to communications with a consumer’s counsel.
The Bureau’s amicus brief also takes issue with Admiral’s argument that the plaintiff lacks Article III standing under Spokeo. The Bureau stresses that the FDCPA provides consumers with the right to receive truthful information about the amount of their debts. The violation of this statutory right is a concrete and particularized injury, claims the Bureau, because the debt amount is “central to the debt-collection/consumer relationship” and implicates the “core object” of the FDCPA.
The Bureau’s arguments on this issue position the Eighth Circuit to weigh in on a developing circuit split. The Eleventh Circuit has concluded, in an unpublished order, that the FDCPA creates a right to receive statutorily-required disclosures, the violation of which is a sufficient injury in fact under Spokeo. The Sixth Circuit recently disagreed, holding that a bare procedural violation of the FDCPA does not satisfy Spokeo where the resulting harm is not the type of harm the FDCPA was designed to prevent.
Admiral’s answering brief currently is due May 5, 2017.