Earlier this month the Seventh Circuit expanded its typically limited interpretation of what satisfies the injury in fact requirement for purposes of determining whether a party has standing to sue under the Fair Debt Collections Practices Act[i] (“FDCPA”). Mack v. Resurgent Cap. Servs., L.P., No. 21-2792, 2023 WL 3861896 (7th Cir. June 7, 2023). US Bank issued a credit card to Mack.[ii] She made multiple household purchases on the card and then allegedly stopped making payments on the card. US Bank sold the account to LVNV Funding, LLC (“LVNV”) and Resurgent Capital Services, L.P. (“Resurgent”) began servicing the account. LVNV hired Frontline Asset Strategies, LLC (“Frontline”) to collect the outstanding debt.
In April 2018 Frontline sent Mack a dunning letter informing her that her US Bank credit card account had been sold to LVNV and was in collections based on an unpaid balance of $7,179.87. The letter advised Mack that she could dispute the validity of the debt within 30 days and, if she did so, she would be provided with verification of the debt and the name and address of the original creditor. Mack questioned the $7000+ balance on the card and her obligation to LVNV, “an entity with which she was not familiar.” Since Mack did not have a computer, she hand-wrote a validation request, typed out and printed the letter at the library and then mailed the letter to Frontline via certified Priority Mail for a total cost of $10.15.
In response to Mack’s validation request, she received a letter from Resurgent (LVNV’s servicer) indicating it was reviewing her recent inquiry; however, the letter again advised Mack that unless she disputed the validity of the debt in writing within 30 days, it would be considered a valid debt.[iii] This letter confused Mack as to who owned the debt and whether she needed to send a second validation request, this time to Resurgent instead of Frontline. Ultimately, Mack concluded that she was required to send a second validation request, so she repeated the same steps as before, but this time did not send the letter Priority Mail so her total cost was $3.95. The Court noted the process of sending both validation requests was time-consuming and difficult for Mack who was unemployed, caring for sick family members and short on money.
“Mack never received a validation of the debt from Frontline, Resurgent or LVNV” and ended up filing a class action lawsuit against Resurgent and LVNV (“Defendants”) for violations of the FDCPA.[iv] Mack alleged that the second dunning letter (1) used “false, deceptive, misleading and unfair or unconscionable means to collect a debt”; (2) failed to adequately identify the owner of the debt; and (3) “was otherwise deceptive and failed to comply with the FDCPA.” Mack asserted these violations “would lead a consumer to believe that their dispute had not been effective and that they had to re-dispute the debt…”
Defendants moved to dismiss the action arguing that Mack lacked Article III[v] standing because she failed to allege an injury in fact.[vi] Defendants reasoned that “the time and money spent to send the second validation request did not rise to the level of detriment required for standing in FDCPA cases…” The district court agreed and dismissed the case. Mack appealed that order to the Seventh Circuit which first explained that the standard used to assess the sufficiency of complaint allegations when considering a motion to dismiss is whether the factual allegations “raise a right to relief above the speculative level.[vii] The Court rejected Defendants’ argument that “Mack pled nothing more than confusion” explaining that Mack’s allegation that she expended “additional money to preserve rights that she had already preserved” was sufficient to state a claim under the FDCPA and it was the type of injury Congress intended to prevent by the Act.
The Court delved into the injury in fact element of Article III standing explaining that an injury in fact must be actual, concrete and particularized, meaning the injury must be “real” and must have affected the plaintiff “in a personal and individual way.” The Court noted “money damages” almost always qualify as concrete injuries and the fact the “dollar cost [of sending the second validation request] was modest” was irrelevant to the injury in fact analysis.[viii]. The Court also concluded that Mack demonstrated the injury was particular to her because she expended her own money, time and effort to send the second validation request. Lastly, the Court found Mack’s injury to be “fairly traceable” to the letter sent by Resurgent and that the injury was “likely to be redressed by a favorable judicial decision.”
Notably, the Seventh Circuit did not rule on the merits of the case, only that dismissal was improper. After reinstating the case and recertifying the class action suit, Mack and the other class members will be required to prove their claims. The class of claimants will be limited to those who submitted a second validation request after receiving the confusing dunning letters.
[ii] Mack, at *1. Future references, quotations and citations are to this citation unless indicated otherwise.
[iii] Mack, at *2. Future references, quotations and citations are to this citation unless indicated otherwise.
[iv] Mack, at *3. Future references, quotations and citations are to this citation unless indicated otherwise.
[vi] Mack, at *4. Future references, quotations and citations are to this citation unless indicated otherwise.
[vii] Mack, at *6. Future references, quotations and citations are to this citation unless indicated otherwise.
[viii] Mack, at *7. Future references, quotations and citations are to this citation unless indicated otherwise.