In In re FDCPA Mailing Vendor Cases, a New York district court dismissed six FDCPA complaints after plaintiffs in each of the respective cases failed to demonstrate injury-in-fact sufficient for Article III standing in response to show cause orders . The court’s holding shows the potential impact of the TransUnion v. Ramirez decision and standing law’s interaction with the 11th Circuit’s Hunstein v. Preferred Collection & Management Services decision.

In each of the six complaints (filed in the following cases: Stergakos v. I.C. System; Ford v. Alpha Recovery; Nasca v. International Recovery; Colas v. Sentry Credit; Kivo v. State Collection Service; and Babst v. Phoenix Financial) plaintiffs alleged that defendant “employed an outside firm to print and mail… “dunning” letters to the plaintiffs” in violation of 15 U.S.C. § 1692c(b) of the Fair Debt Collection Practices Act (FDCPA).

The court observed that while the “mailing vendor” theory, “emanat[ed] from” the 11th Circuit’s decision in Hunstein, the holding in Hunstein was not binding on the Second Circuit. It further emphasized the implications of the Supreme Court’s decision in TransUnion LLC v. Ramirez, decided in June 2021, on whether plaintiffs sufficiently demonstrated injury-in-fact for Article III standing.

In TransUnion, a class action case under the Fair Credit Reporting Act (FCRA), the class of plaintiffs alleged that TransUnion “failed to comply with statutory obligations (i) to follow reasonable procedures to ensure the accuracy of credit files so that the files would not include OFAC alerts labeling the plaintiffs as potential terrorists; and (ii) to provide a consumer, upon request, with his or her complete credit file, including a summary of rights.” The Court held that plaintiffs who had erroneous OFAC alerts in their credit files, but whose credit files were not disseminated to third parties, failed to demonstrate concrete harm sufficient for Article III standing. Indeed, it emphasized that even “risk of future dissemination” was not sufficient to demonstrate standing.

Here, the court applied the holding in Ramirez in three respects to find that the plaintiffs lacked Article III standing.

First, it reasoned that Ramirez’s holding that “mere presence of an inaccuracy in an internal credit file, if it is not disclosed to a third party, causes no harm,” was dispositive regarding the plaintiffs’ “mailing vendor” theory. Specifically, the court highlighted language in the Ramirez decision providing that “[m]any American courts did not recognize intra-company disclosures as actionable publications for purpose of the tort of defamation. Nor have they necessarily recognized disclosures to printing vendors as actionable publications.”

Second, as the letters had only been released to the mailing vendors in each of the instant cases, the court emphasized the Ramirez holding that the “mere risk of future harm, standing alone” is insufficient to constitute concrete harm sufficient for Article III standing “unless the exposure to the risk of future harm itself causes a separate concrete harm.” Specifically, it held that the “specter” of potential future release of information is insufficient for standing.

Third, the court contrasted the factual allegations of class members in Ramirez — erroneous OFAC potential terrorist labeling — for whom the Court found insufficient standing, with the factual allegations in the instant cases, involving “debts ranging from $482.28 to as little as $25.” It emphasized the “exponential “difference between the two cases and the futility of bringing any action for common law torts such as defamation, invasion of privacy, or intentional infliction of emotional distress in the instant matters.

Finally, the court held that despite claims in two of the six cases that plaintiffs did not actually owe the debts, plaintiffs still failed to allege any actual injury as a result of the “purportedly false notice.” Additionally, it emphasized that “informational violations of the statute” without further allegation of harm, were insufficient to confer standing for each of the instant cases.

The court dismissed each of the complaints without prejudice, granting plaintiffs 14 days to amend and refile in state or federal court.