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Misleading Collection Letter Alone Doesn't Establish Article III Standing

  • Written by John L. Culhane, Jr.

In an unpublished opinion, a New Jersey federal district court has ruled that a plaintiff did not have Article III standing to assert a claim under the Fair Debt Collection Practices Act based solely on her receipt of an allegedly misleading collection letter. In Valentine v Unifund CCR, LLC; Distressed Asset Portfolio III, et al., the plaintiff had received a collection letter from Distressed Asset Portfolio III (DAP), the purchaser of her debt, and Unifund, the company to which DAP had assigned her debt for collection.  The letter identified DAP as the current creditor.  In her class action complaint, she alleged that because DAP was not licensed under the New Jersey Consumer Finance Licensing Act, it could not lawfully purchase her debt and therefore defendants had no right to collect her debt which was rendered void by DAP’s unlicensed purchase.  She claimed that, as a result, the defendants had misrepresented the amount of the debt in the collection letter in violation of the FDCPA.

The district court found that the plaintiff had not established that she had suffered a concrete injury from the alleged FDCPA violation as required for Article III standing.  Observing that the plaintiff had not alleged the misleading information was shared with any third parties, the court distinguished the U.S. Supreme Court’s TransUnion decision because “the communications in Transunion which gave rise to a concrete injury were, crucially, made to third parties.”  It also cited several New Jersey federal district court decisions as support for its conclusion that “merely receiving a ‘misleading’ collection letter, as alleged here, is insufficient to establish a concrete injury, absent some action or inaction taken in response or other form of injury.” 

The court observed that the plaintiff had not alleged “that she experienced any downstream consequence or adverse effect as a result of the Unifund Letter, or that she took any action or inaction in reliance on the Unifund Letter—she merely claims that she and other New Jersey consumers were ‘deprived…of truthful, non-misleading information’.”  In the court’s view, the “informational injury” alleged by the plaintiff did not constitute an injury in fact.  

The court also distinguished the Third Circuit’s decision in Morales which held that a plaintiff had standing to bring an FDCPA claim after the debt collector had placed a QR code on an envelope mailed to the debtor.  According to the district court, the Third Circuit’s finding of a concrete injury in Morales was based on the disclosure of protected information resulting from the placement of the QR code on the envelope. To read more click here.