South-Western Legal Studies in Business

Language in Debt Collection Letter Must Be Precise in Meaning
Description Appeals court held that for a debt collector to make an offer to settle a debt that was implied to be a unique offer, but in fact was not, was deceptive and so violated the Fair Debt Collection Practices Act.
Topic Consumer Protection
Key Words Debt Collection; Unfair and Deceptive Practices; Language
C A S E   S U M M A R Y
Facts ACEI collected unpaid debts for Capital One on a contingency fee basis. ACEI was authorized to settle accounts according to a formula, such as a 50% discount for unpaid balances more than six months past due. Goswami owed $900 on her credit card and failed to pay. The second letter she received, when the debt was more than six months overdue, had a blue bar across the envelope saying "Priority Letter." That was only an effort to get debtors to open the letter; it was not priority mail. The letter offered to settle the account within 30 days with a 30% discount only if she paid in 30 days. Goswami sued for violation of the Fair Debt Collection Practices Act (FDCPA) because of the markings on the envelope. She claimed that was deceit. She also claimed that the offer of a 30% discount was deceptive because the creditor was willing to give a 50% discount. The district court dismissed the suit; Goswami appealed.

Affirmed in part; reversed in part. The statement "Priority Letter" merely expressed the importance of the letter. It did not serve to intimidate a consumer and was not deceptive. The offer to settle at a 30% discount only if paid within 30 days did violate the FDCPA. Since the creditor would in fact settle for up to 50%, and put no time limit on such settlements, it was deceptive to state that the matter must be settled more quickly and at a smaller discount than in fact may have been negotiated. Settlement offers must be non-deceitful.

Citation Goswami v. American Collections Enterprise, Inc., 377 F.3d 488 (5th Cir., 2004)

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