Joining an “overwhelming majority of the courts in this district,” the United States District Court for the District of New Jersey recently held that a plaintiff alleging misleading representations in a debt collection letter under 15 U.S.C. § 1692e of the Fair Debt Collection Practices Act (“FDCPA”) demonstrated concrete injury sufficient to confer Article III standing.  The Court also certified a statewide class of consumers who received the same form letter. 

In Hovermale v. Immediate Credit Recovery, Inc., a debtor sued the a debt collector for violations of the FDCPA based on alleged misrepresentations made in a collection letter sent to the debtor to collect on her defaulted Perkins student loan.  Specifically, the letter stated that interest and late charges may accrue after default on Perkins loans.  While Hovermale acknowledged that interest may accrue, she argued (correctly) that late charges may not accrue after default on such loans.  Thus, she claimed that she mistakenly believed that late charges could increase from the date of the letter to the date of payment, creating a false sense of urgency to make payment. 

IRC filed a motion to dismiss on the grounds that Hovermale lacked Article III standing under the standard articulated by the U.S. Supreme Court in Spokeo, Inc. v. Robins.  Specifically, IRC argued that Hovermale did not suffer any injury–in–fact because her loan amount increased anyway (i.e. due to accruing interest).  Thus, the late fees could not have created a “false sense of urgency [to pay]” – that already existed vis-à-vis accruing interest. 

The Court rejected IRC’s argument, finding that the FDCPA – and particularly, Section 1692e – provides debtors a substantive right to receive truthful information.  An allegation that this substantive right has been violated is enough to show “concrete injury” for purposes of satisfying the Spokeo standard.  The Court characterized this injury as “informational harm” and emphasized that a claim that a letter is misleading is exactly the type of harm the FDCPA aims to prevent. 

In addition to denying IRC’s motion to dismiss, the Court certified Hovermale’s putative class of New Jersey consumers who received debt collection letters with the same language.  The Court found that the same legal issue – whether the language of the letters violates the FDCPA – must be resolved for all putative class members.