Consumer Finance Litigation

In line with the recent trend of courts giving increased scrutiny to standing in consumer finance cases, the Sixth Circuit Court of Appeals dismissed an appeal this week under the Fair Debt Collection Practices Act (“FDCPA”) for lack of Article III standing in Ward v. National Patient Account Services Solutions, Inc., No. 20-5902, 2021 WL 3616067, -- F.4th -- (6th Cir. Aug. 16, 2021).  The plaintiff alleged that NPAS, Inc. left him voicemails regarding his medical debt which simply identified itself as “NPAS” rather than “NPAS, Inc.,” which confused him as to the correct entity and caused him to send a cease and desist letter to an unrelated NPAS entity. The plaintiff claimed that NPAS thus violated the FDCPA by (1) failing to identify itself as a debt collector in violation of 15 U.S.C. § 1692e(11), (2) failing to identify the true name of its business in violation of § 1692e(14), and (3) failing to meaningfully disclose NPAS’ identity in violation of § 1692d(6). The district court entered summary judgment for NPAS on the grounds that it did not qualify as a “debt collector” as defined by the FDCPA, and the plaintiff appealed.

On appeal, the issue of standing was raised for the first time and centered on whether the plaintiff had satisfied the concreteness requirement of the “injury in fact” analysis. The plaintiff alleged that he suffered a concrete injury on the basis of the procedural violation of the FDCPA alone, or, alternatively, on the basis of the confusion he suffered, the expense he incurred by hiring counsel, and by receiving a phone call from NPAS after he submitted a cease and desist request to the wrong entity.

The Sixth Circuit noted that, in light of the Supreme Court’s recent ruling in TransUnion v. Ramirez, 141 S. Ct. 2190, 2208 (2021), the plaintiff could not establish a concrete injury based on the mere risk of harm, but instead must show “either that the procedural harm itself is a concrete injury of the sort traditionally recognized or that the procedural violations caused an independent concrete injury.” In an attempt to demonstrate standing based on the procedural violation alone, the plaintiff argued that the FDCPA created an enforceable right to know who is calling about a debt. The plaintiff further argued that NPAS’ failure to identify its full name was a type of harm traditionally recognized by courts because it was comparable to the harm of invasion of privacy. The court disagreed, noting that the “mere failure to provide certain information does not mirror an intentional intrusion into the private affairs of another.” Because the plaintiff failed to show that the procedural injuries closely resembled any harm traditionally giving rise to the right to sue, the court held he could not demonstrate standing based on the statutory violation alone.

The court next examined whether the plaintiff sufficiently demonstrated that the statutory violation caused him an independent injury. The court held that, based on prior Sixth Circuit precedent, the plaintiff could not establish a concrete injury based on merely being confused by the defendant’s conduct. The court likewise rejected the plaintiff’s claim that he suffered concrete harm by having to hire counsel to prevent further phone calls from the defendant, noting that this logic would give Article III standing to any plaintiff who hires counsel to pursue an FDCPA claim. Finally, the court held that the plaintiff could not establish harm based on the receipt of a voicemail he received after sending the cease and desist letter to the wrong entity because he “did not clearly assert in his complaint that he received—let alone was harmed by—an additional phone call.” Because the plaintiff failed to establish standing, the Sixth Circuit vacated the district court’s entry of summary judgment and remanded the case to be dismissed for lack of jurisdiction.

One of the judges on the three-judge panel dissented, arguing that the plaintiff had in fact been injured by receiving a voicemail after sending the cease and desist letter to the wrong entity. The dissent opined that the receipt of the additional voicemail was analogous to the tort of invasion of privacy, which encompassed unwanted phone calls within its scope. The dissent noted that the plaintiff’s receipt of the additional voicemail was undisputed in the record, even if not properly alleged in the complaint, and that the court should not find standing lacking because of a “technical pleading deficiency” where the undisputed record confirmed that the plaintiff had standing when the suit was filed.