Seventh Circuit: Reference to Amount of Static Debt as 'Current Balance' Didn't Violate FDCPA

The Seventh Circuit held in Koehn v. Delta Outsource Group, Inc., et al. that using the term “current balance” in a collection letter to reference a static amount of debt was not misleading and did not violate the Fair Debt Collection Practices Act (FDCPA).

The plaintiff alleged that a collection letter she received from the collection agency Delta Outsource Group, Inc. (Delta) was false, deceptive, and misleading in violation of the FDCPA because it referred to her debt as the “current balance” even though her account was static, meaning additional fees and interest could no longer be added. According to the plaintiff, the term “current balance” falsely implied that the “current balance” might increase, thereby misleading debtors to give such static debts greater priority than they otherwise would. Delta successfully moved to dismiss the complaint for failing to state a claim, arguing it was apparent on the face of the letter that no significant fraction of the population would be misled. 

Although the Seventh Circuit observed that “whether a dunning letter will mislead or confuse is often a question of fact that cannot be resolved on a motion to dismiss,” it cited a 2012 Seventh Circuit decision that stated, “If it is apparent that ‘not even a significant fraction of the population would be misled by a collection letter, then the complaint can and should be dismissed.’”

The Seventh Circuit also distinguished its 2004 decision in Chuway v. Nat'l Action Fin. Servs., where it held a collection letter stating the debtor’s “balance” was a specified amount but included a sentence saying to call a toll-free telephone number to “obtain your most current balance information” violated the FDCPA. According to the Seventh Circuit, “the letter implied that the only way the debtor could obtain the current balance was to call the debt collector (although in fact the printed balance was not subject to change).” The Seventh Circuit observed that while the plaintiff’s interpretation of the collection letter in Chuway was “reasonable,” the decision “did not reach as far as the common and innocuous language plaintiff challenges here.” According to the Seventh Circuit,  Delta’s letter “contain[ed] no directive to call for ‘a current balance,’ nor does it include any language implying that ‘current balance’ means anything other than the balanced owed.”

Affirming the district court’s dismissal of the complaint, the Seventh Circuit commented that “[i]t takes an ingenious misreading of this letter to find it misleading. And that same ingenuity would call into question the even simpler phrase that ‘the balance is $____.’ After all, the simple present-tense verb ‘is’ also implies ‘current,’ doesn’t it?”

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