Consumer Finance Litigation

In Webb et al. v. Midland Credit Management, Inc. et al., 2013 WL 1285570 (N.D. Ill. Mar. 27, 2013), the Northern District of Illinois held that a plaintiff cannot state a claim under the Fair Debt Collection Practices Act ("FDCPA") merely by alleging that a debt collector sought to collect a greater amount in a settlement letter than it sought to collect in a subsequent collection lawsuit. Rather, a plaintiff must specifically allege a factual basis for why the "inflated" amount is false, deceptive, or misleading. The plaintiffs in Webb brought a class action lawsuit under the FDCPA against two debt collector affiliates and their parent company based on the debt collectors' attempts to collect debts from the representative plaintiffs, Webb and Fuller, and others similarly situated. The debt collector defendants had sent a collection letter to Webb demanding $2,427.05, but sought only to collect $2,203.16 in a later collection lawsuit. Similarly, the debt collector defendants had sent a collection letter to Fuller demanding $7,201.63, but sought only to collect $4,905.47 in a later collection lawsuit. The plaintiffs alleged that, by sending collection letters that "inflat[ed] the amount of the claimed debt" in an effort to "collect amounts greater than that which defendants actually intend to seek" in a collection lawsuit, the defendants violated the FDCPA. In dismissing the plaintiffs' claims, the court emphasized that the complaint did not allege that the "inflated" amount was false, deceptive, or misleading. Rather, the plaintiffs merely assumed that "the letters violated the FDCPA simply because defendants later sought to recover less in court." The court rejected such an assumption, holding that a complaint must allege specific facts demonstrating that the "inflated" amount sought was not authorized by agreement or law. The court also dismissed the parent company defendant on other grounds. Under the reasoning of Webb, inconsistencies in amounts sought by a debt collector cannot support an inference that a debt collector engaged in false, deceptive, or misleading practices. Instead, a plaintiff must allege reasons why an amount sought was improper. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.