On January 4, the District Court of New Jersey dismissed a Fair Debt Collection Practices Act (FDCPA) complaint against an unlicensed debt collector for lack of standing. In Valentine v. Unifund CCR, LLC, et al., the court held that merely receiving a letter from an unlicensed debt collector is insufficient to establish a concrete injury for Article III purposes.
As background, the plaintiff incurred a debt for personal purposes and subsequently fell behind on her payments. The past-due debt was first sold to Distressed Asset Portfolio III, LLC (DAP III), then to Unifund CCR (Unifund) for collection. DAP III, however, was not licensed by the New Jersey Department of Banking and Insurance under the New Jersey Consumer Financing Act (NJCFLA). The defendants then mailed a collection letter to the plaintiff.
The complaint alleged that the defendants misrepresented the amount of the debt in violation of the NJCLFA and §1692e of the FDCPA. Specifically, the plaintiff alleged that because DAP III was not licensed under the NJCFLA, it could not collect on the debt, and thus the mailing of a collection letter necessarily misrepresented the amount of the debt as the debt was uncollectible.
The defendants moved to dismiss arguing that the plaintiff lacked standing as she had not suffered an “injury in fact” that is “concrete and particularized” from merely receiving a misleading collection letter.
The court, looking to TransUnion v. Ramirez, 141 S. Ct. 2190 (2021), found that the plaintiff did not have a concrete injury sufficient to confer standing based on the defendants’ unlicensed acquisition of the debt. The court rejected the plaintiff’s argument that every violation of law presumes injury and held that merely receiving a “misleading” collection letter is insufficient to establish concrete injury absent some other action or inaction taken in response or other form of injury.
With a growing number of “technical” FDCPA violation cases being filed across the country, this case reminds us that not every violation of the FDCPA is actionable. In the wake of TransUnion, courts have, fortunately, been apt to strike down these claims under Article III.