7TH CIRCUIT RULES THAT SAFE HARBOR LANGUAGE DOESN'T PROTECT COLLECTOR

In the class action lawsuit Boucher v. Finance System of Green Bay, Inc., No. 17-2308 (January 17, 2018), the 7th Circuit Court of Appeals ruled when state law prohibits a collector from lawfully or contractually impose “late charges and other charges” the collector's letter indicating that those charges will be imposed violates the Fair Debt Collection Practices Act even when the letter uses the "safe harbor" language established in the 7th Circuit's decision Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, LLC, 214 F.3d 872 (7th Cir. 2000).  The collection letter in this case contained the following language taken from Miller v. McCalla:

As of the date of this letter, you owe $[a stated amount]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check. For further information, write to the above address or call [phone number].

The plaintiffs claimed that this language was false because under Wisconsin law because the collector could not  cannot lawfully or contractually impose “late charges and other charges.” Plaintiffs further alleged that the letter would cause unsophisticated consumers to incorrectly believe that they would avoid such charges, and thus benefit financially, if they were to immediately send payment. For these reasons, plaintiffs claimed that the letter was false, misleading, and deceptive in violation of § 1692e. Plaintiffs also claimed that the letter failed to properly state the amount of debt, as required by § 1692g(a)(1). 

The 7th Circuit agreed with the plaintiffs and held that by threatening to impose "late charges and other charges" the letter was impermissibly deceptive because such charges could not lawfully be imposed under Wisconsin law. Although the letter used the safe harbor language set forth in Miller v. McCalla, the 7th Circuit found that the collector could not immunize itself by using that language when it was not accurate under circumstances of the case.

FDCPA class action lawsuits based on collection letters are common since collection agencies can send tens of thousands of identical letters to consumers.  A class action lawsuit can put an agency out of business.  It is imperative that collection agencies have their collection letters reviewed for FDCPA compliance by qualified legal counsel.  If you would like to have your agency's letters reviewed, or if you have questions regarding this case or FDCPA compliance in general, contact Joseph Messer for a free consultation.  Mr. Messer can be reached at (312) 334-3440 or jmesser@messerstrickler.com.