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The FDCPA’s Un—Or Least—Sophisticated Consumer Still Has a Burden of Proof

And now for something completely different:  Lemke v. Escallate, LLC, No. 17-cv-5234 (N.D. Ill. Mar. 19, 2019).  Although some case law out of Illinois may make one question whether to collect debts there, this case illustrates that just because a consumer may state a plausible claim doesn’t mean they can always prove it. In October 2016, the Plaintiff, Laura Lemke, got a collection letter from Escallate, LLC, for a $1225.00 debt.  The letter listed the amount of the debt and said below it “Accrued Interest: $0.00.”  At the bottom of the letter was a statement warning Lemke that she might incur an additional charge of $20.00 if her payment was returned for insufficient funds, and below that was a form for a credit card payment.

Lemke sued Escallate, raising two claims under the FDCPA:  first, that the letter misled consumers into thinking that interest might accrue on the debt when there was no interest on it at all, in violation of 15 U.S.C. § 1692e, and second, that the letter did not accurately communicate the amount of the alleged debt, in violation of 15 U.S.C. § 1692g(a)(1).  Escallate moved for summary judgment on both claims, which the district court granted.

The court explained that the unsophisticated consumer standard applied to both claims.  That standard (which we have talked about on this blog before) asks a simple question:  whether the average person with limited commercial savvy would likely be deceived by the collection letter.

As for Lemke’s § 1692e claim, even though the court found that the language may not have been crystal clear, it was not clearly misleading either.  Instead, the court determined that the letter was ambiguous.  It explained that because the letter said “Accrued Interest: $0.00” an unsophisticated consumer might (or might not) misinterpret that to think interest could accumulate in the future.  So to survive summary judgment, Lemke had to produce extrinsic evidence, like a consumer survey, to show that the letter could actually mislead consumers the way that Lemke said that it could.  In other words, even if the letter misled her, her own say-so isn’t enough to show that it would mislead the average unsophisticated consumer generally.  Without that kind of evidence, the court had to grant summary judgment in favor of Escallate on the § 1692e claim.

The court also applied the unsophisticated consumer standard to Lemke’s § 1692g claim.  The gist of her argument was that Escallate’s letter was misleading because it did not include the Seventh Circuit’s “safe harbor” language, which reads:

As of the date of this letter, you owe $___ [the exact amount due]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For further information, write the undersigned or call 1–800– [phone number].

The problem with that argument, the court noted, was that the safe harbor language is appropriate only where the amount due on the debt varies from day to day because of interest and other fees.  That wasn’t the case here.  Escallate wasn’t attempting to collect any interest or other fees.  So if anything, including the safe harbor language Lemke urged might have actually made the letter more confusing.  As a result, the failure to include it did not make Escallate’s letter per se misleading.  Just like Lemke’s other claim, with no other evidence that it was misleading, the court granted summary judgment in favor of Escallate on the § 1692g claim.

So maybe you can collect debts in Illinois after all.  Or at least Lemke is one (rare) example of how the often murky area of compliance can help creditors when it comes to litigation — even in Illinois.  Not everything is black and white.  And courts won’t decide that a collection letter is misleading just because a debtor says it is.  Like anything else, if it isn’t obvious, it requires proof.