Who Is the Creditor? Who Is the Debt Collector? Labels vs. Inferences

Maribel Ocampo v. Client Services, Inc. (1:18-cv-04326-BMC,EDNY, 7/3/2019) is a recent case with some interesting perspectives on identifying creditors in FDCPA validation letters and object lessons for debt collectors in writing them.

Let’s get right to it by looking at the disputed terms of the letter, reproduced in the debt collector’s filings:

RE:                                                 Synchrony Bank Walmart MC.


BALANCE DUE:                          $6,490.19

REFERENCE NUMBER:             [Redacted]7830


The above account has been placed with our organization for collections.

                            Balance Due At Charge-Off:           6,490.19

                            Interest:                                            0.00

                            Other Charges:                                 0.00

                            Payments Made:                              0.00

                            Current Balance:                              6,490.19

. . . If you request of this office in writing within thirty (30) days after receiving this notice,

this office will provide you with the name and address of the original creditor, if different

from the current creditor.

The plaintiff claimed the debt collector defendant, Client Services, Inc., failed to adequately describe “the name of the creditor to whom the debt is owed” in violation 15 U.S.C. s. 1692g(a)(2) The plaintiff also alleged the defendant violated 15 U.S.C. s. 1692e, which prohibits false or misleading statements, because the “least sophisticated consumer” would be confused as to whether Synchrony Bank was the original creditor, the current creditor, or the creditor to whom the debt is owed.

In this case it was helpful to review the parties’ filings to discern the parties’ ‘label’ vs. ‘inference’ approaches.

The plaintiff cited a lengthy survey of cases with wording similar to the current case, where the debt collector listed the purported creditor after the designation “Re:” without further identifying the creditor as such.  In the cases the plaintiff cited, the court sided with the debtor, finding the letters confusing as to who was the creditor, who was the debt collector, and what was the relationship between the letter-writer and the entity appearing after the “Re”. The plaintiff argued the letter was open to more than one reasonable interpretation as to the owner of the debt, and therefore violated 15 U.S.C.  1692e. Based solely on the volume of previously reported cases cited, it seemed the plaintiff  had the better argument.

In response, the defendant cited law suggesting the legal standard ‘least sophisticated consumer’ was higher than the plaintiff indicated. The defendant quoted cases stating the least sophisticated consumer “is neither irrational nor a dolt…” and “can be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care…”

Against this backdrop the defendant argued there were only two entities mentioned in the letter, the debt collector and the creditor, and the debt collector was clearly identified as such by the language “…the above account has been placed with [Client Services, Inc.] for collection…”. It also cited the last paragraph of the letter reproduced above, mandated by 15 U.S.C. s. 1692g, and argued that language led to the unmistakable inference that the defendant was the debt collector. The defendant claimed the court was required to take into account that the plaintiff undoubtedly knew of the creditor and her account history and had admitted, in the complaint, she had fallen behind on her payments.

The court agreed with the defendant, but there was an implicit recognition of the limits of the defendant’s inferential approach in interpreting the letter. The court appeared to use a process of elimination method of analysis, finding that since no parties other than the debt collector and the creditor were mentioned in the letter, and it was clear that the debt collector was not the creditor, the creditor was adequately identified. The court resorted to rhetorically asking “What possible interpretation of the name, account number, and amount due could the plaintiff have besides what which was clearly intended … This is her Walmart card; it simply cannot be anything else.”

Whether it formed the basis of the court’s holding or mere observation, the court also delved into whether the acts complained of were really at the level of abusive acts that the FDCPA were intended to combat, and the possible harms to consumers in the form of increased borrowing costs of debt collectors engaging in costly litigation. This really was not related to the actual controversy in the case.

Breaking the plaintiff’s argument down further, the letter violated the FDCPA because it failed to identify by name and label the original creditor, current creditor, or creditor to whom the debt is owed. Simple use of the term, “Re:” followed by the name of a bank, without explicitly identifying with labels who placed the account to the defendant debt collector, who the defendant represents, and who is the defendant’s client, were, to the plaintiff, fatal to the letter.

In that sense the plaintiff’s argument is somewhat inferential as well. The plaintiff appears to be arguing the least sophisticated consumer would naturally conjecture that there may be a chain of ownership of the debt such that naming a single entity without labeling it as original creditor, current creditor, etc., is confusing.

The Ocampo case is an object lesson for debt collectors that the simple expedient of explicitly labeling original creditor, current creditor, etc. can help to protect them from claims under 15 U.S.C. s. 1692g(a)(2) and  15 U.S.C. s. 1692e. For example, instead of stating ‘Re:’ followed by the name of the creditor, several FDCPA debt validation letters I have seen explicitly state: “Original Creditor: _____________” followed by “Current Creditor: ______________” (I do this in my letters)

Similarly, debt collectors should stay abreast of developments in the law because the two sides of the argument in the Ocampo case can and likely will change over time.


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