In addition to the hotly litigated mandatory disclosure of the "amount of the debt," the Fair Debt Collection Practices Act also requires a seemingly straightforward statement of "the name of the creditor to whom the debt is owed" as set forth in 15 U.S.C. § 1692g(a)(2). However, even this requirement has given rise to a multitude of FDCPA lawsuits that share a common theme. In particular, such claims exploit the difference between the creditors' official business names and their "doing business as," or commonly-used, names and acronyms.
This distinction creates a catch-22 situation for debt collectors because if they disclose the creditor by its full business name, they may—and they do—get sued under the FDCPA on the grounds that such disclosure is misleading since the creditor has communicated with the consumer using only its commonly-used name or acronym, not its official name. Equally, disclosing a commonly-used moniker still results in consumer claims of deception for failure to list the name of the creditor by its "real" name.
In yet another recent variation of such claims, plaintiff Sergio Maximiliano filed an FDCPA lawsuit claiming that Simm Associates, Inc.'s demand letter was confusing because it included both names of the creditor—its commonly used acronym "PayPal Credit" and its official name "Comenity Capital Bank." The demand letter listed Paypal Credit as "Client" and Comenity as "Original Creditor." Simm Associates moved for summary judgment, arguing that Comenity held itself out as PayPal Credit for purposes of extending credit to Maximiliano and, thus, the demand letter was not confusing or misleading. Maximiliano countered that Comenity does not normally transact business as PayPal; instead, it extends credit to customers in many retail stores and transacts business using the name of store-branded credit cards. Maximiliano brought his claims not only under § 1692g but also under § 1692e that prohibits false and misleading representations.
The Court agreed with Simm Associates in finding that Maximiliano's argument missed the point: at issue was not any least sophisticated consumer but the one who was "receiving the demand letter relating to his or her PayPal Credit account." The undisputed material facts revealed that such consumer was "unlikely to know that Comenity is the bank ultimately providing the credit" because none of the steps through which a consumer goes to obtain PayPal Credit account—from advertising to paying off the account—makes reference to Comenity. The demand letter "left no room for confusion in the eyes of the least sophisticated consumer." It identified PayPal Credit as Simm Associates' client and Comenity as the original creditor, as well as provided the amount of debt and the PayPal Credit account number. The Court also rejected Maximiliano's argument that Simm Associates had to identify Comenity as the "current creditor" and not the "original creditor." The Court noted that "[n]owhere in § 1692g is there a requirement that such verbiage be used. All that is required is that the debt collector disclose the creditor to whom the debt is owed and [defendant] adequately satisfied this requirement."
Citing the materiality threshold, the Court also gave short shrift to Maximiliano's claims under § 1692e. "Even accepting that there exists a hyper-technical FDCPA violation here, the Court's review of the demand letter leads it to conclude that it is not material as there is nothing misleading about its content."
The Court's decision can be accessed here and is another example of a common-sense approach to resolving FDCPA "letter claims."
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