Plaintiff Joseph Degroot defaulted on a credit card debt, which was subsequently placed with a collection agency. The agency sent the plaintiff a collection letter stating that “interest and fees are no longer being added to your account,” which the plaintiff took to mean that the account had been charged off. The debt was then placed with a second agency, which sent the plaintiff its own collection letter that included an itemized breakdown of the debt, as follows:

Balance Due at Charge-Off: $425.86
Interest: $0.00
Other Charges: $0.00
Payments Made: $0.00
Current Balance: $425.86

The plaintiff filed a class-action suit against the second agency under the Fair Debt Collection Practices Act (FDCPA), alleging that he was confused because the first agency’s letter indicated that no fees and interest were accruing on the balance, while the defendant’s letter implied that they might be because the items were included in the breakdown of his debt, albeit with a zero balance. Specifically, the plaintiff claimed that the defendant had violated (1) 15 U.S.C. § 1692e by using false, deceptive, and misleading representations or means to collect a debt under; and (2) 15 U.S.C. § 1692g by failing to disclose the amount of the debt in a clear and unambiguous fashion.

The district court granted the defendant’s motion to dismiss, finding that the second letter had accurately and correctly disclosed the amount of the debt, and that letter did not imply fees or interest would be added to the debt in the future. The court also noted that even if the letter did imply that fees and interest would begin to accrue at a later date if the debt remained outstanding, the statement was not false or misleading given that state law provided for the assessment of fees and interest on “static” debts in certain circumstances.

The plaintiff appealed to the Seventh Circuit, which affirmed the dismissal. Notably, the appellate court agreed with the Consumer Financial Protection Bureau (CFPB), which filed an amicus brief in support of the defendant, contending that an itemized breakdown of a debt in a collection letter is an explanation of what has happened in the past and “cannot be construed as forward looking and therefore misleading.”

“That is why a statement in a dunning letter that relates only to the present reality and is completely silent as to the future generally does not run afoul of the FDCPA,” the court explained. “While dunning letters certainly cannot explicitly suggest that certain outcomes may occur when they are impossible, … they need not guarantee the future.” Thus, “[t]he use of an itemized breakdown accompanied by zero balances would not confuse or mislead the reasonable unsophisticated consumer.”

A copy of the decision can be accessed by clicking here.