In Guzman v. I.C. Sys., 2021 U.S. Dist. LEXIS 42595, 2021 WL 861914 (E.D.N.Y. Mar 8, 2021), Carolina Guzman (plaintiff) alleged that I.C. System, Inc. (defendant) violated the FDCPA by reporting to Experian that her debt to Sprint was “[s]eriously past due date/assigned to attorney, collection agency, or credit grantor’s internal collection department.” Id. at *3. The plaintiff argued that, by including this tradeline status, the defendant violated Section 1692e(5) of the FDCPA, which forbids “threatening to take any action that cannot legally be taken or that is not intended to be taken” Id. at *4. The defendant moved to dismiss, arguing that the statement was not false or misleading. Id. at *3. The court granted the defendant’s motion to dismiss, holding that the plaintiff’s allegations failed to state a claim under the FDCPA because the tradeline status could not have led the least sophisticated consumer to believe that legal action was threatened and imminent. Id. at *7.
The court observed that, although “[a] communication from a debt collector may be a threat if the least sophisticated consumer ‘would interpret th[e] language to mean that legal action was authorized, likely and imminent,” Id. at *4 (citing Moukengeschaie v. Eltman, Eltman & Cooper, P.C., No. 14-CV-7539 (MKB), 2016 U.S. Dist. LEXIS 43725, 2016 WL 1274541, at *5 (E.D.N.Y. Mar. 31, 2016) (quoting Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d Cir. 1993)), “a collection letter that ‘only advises a debtor that the collection agency has several options with which to pursue the debt’ will generally be found insufficient to constitute a threat even in the eyes of the least sophisticated consumer.” Id. (quoting Larsen v. JBC Legal Grp., P.C., 533 F. Supp. 2d 290, 302 (E.D.N.Y. 2008)). The court held that the language of the tradeline status in question would not lead the least sophisticated consumer to conclude that legal action is “authorized, likely and imminent.” The court was persuaded by the fact that the status provided for several options for the assignment of the plaintiff’s debt — i.e., to an attorney, a collection agency, or internal collection department — but did not describe any action those individuals or entities could take or suggest that any such action was imminent.
The case emphasizes the fact that, to be actionable under Section 1692e(5) of the FDCPA, a tradeline must contain language specifically indicating an imminent threat of legal action.