Third Circuit Confirms: An Outcome that Could Come to Pass is not Misleading

In Knight v. AR Res., Inc., a Third Circuit district court granted a defendant’s motion to dismiss a plaintiff’s first amended complaint in a Fair Debt Collection Practices Act (FDCPA) case. In its holding, the court emphasized that where there are multiple interpretations of language in a collection letter, neither of which are inaccurate and which reflect an outcome that could come to pass, the language is not false, misleading, or deceptive under the FDCPA.

In Knight, the plaintiff incurred a financial obligation to Union Emergency Med Assoc. (Union Emergency); Union Emergency hired the defendant to collect the debt; and the defendant sent a collection letter, stating in relevant part: “Please be advised that our client is a credit reporting client. Your credit report may have a negative impact if we do not hear from you.”

The plaintiff subsequently filed a putative class action in June 2020, alleging that the letter violated Section 1692e of the FDCPA as (1) it implies that “both [d]efendant and Union Emergency ‘will be credit reporting, which is threatening and deceptive to the least sophisticated consumer'”; and (2) that the statement — “Please be advised that our client is a credit reporting client” — is deceptive because “it is not clear whether either company will actually report to a credit reporting agency.”

First, regarding the plaintiff’s allegations that the letter violated the FDCPA by implying that the debt may be reported by either the defendant or Union Emergency, the court reasoned that it is “not unlawful for two entities to report the same debt,” and the plaintiff still failed to show how either reading of the letter is inaccurate or how the distinction of who would report the plaintiff’s account is material.

Second, the plaintiff alleged that the letter language stating, “Please be advised that our client is a credit reporting client,” was deceptive and violated the FDCPA because Union Emergency never intended to report the plaintiff’s debt. However, the court emphasized Third Circuit precedent in Bordeaux v. LTD Fin. Servs., L.P. that holds “where a letter ‘accurately reflect[s] an outcome that could come to pass, [it] cannot be viewed as “false and misleading” even to the least sophisticated debtor.'” To read more, click here.