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Student Loan Collection Letter Violates FDCPA

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Bieber, ex al v. Pioneer Credit Recovery, Inc. (EDVA Case No. 1:16-cv-804, January 11, 2017)
This was a class action that stemmed out of a collection letter sent by Pioneer alleging various allegations of false representations, false implications, and that Pioneer used unfair and unconscionable means to collect a debt, all violations under the Fair Debt Collection Practices Act, 15 U.S.C. 1692e et seq.
The Court first tackled the issue of whether or not the Plaintiff has standing to sue under Article III, an issue recently addressed by the Supreme Court in Spokeo, Inc. V. Robbins. To that end, the Court noted that a plaintiff cannot allege a bare procedural violation, divorced from any actual harm, and satisfy the injury-in-fact requirement of Article III. However, the Court pointed out that the Supreme Court also held that “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute an injury-in-fact.”
The Court noted that a majority of Court’s in circumstances similar to the Plaintiff in this case have found that the FDCPA created a right to accurate debt-related information and non-abusive collection practices and that a debt collector’s false, misleading, deceptive, or abusive conduct concretely harms a debtor by detrimentally affecting that debtor’s decisions regarding his debt. Based on this, the Court ruled that the Debtor did have standing to pursue all of his claims.
The Court continued to to evaluate whether the claims contained sufficient factual matter, if accepted as true, to state a claim to relief that is plausible on its face. Under the current standard in the Fourth Circuit, a statement is false or misleading if it can be reasonably read to have two or more meanings, one of which is inaccurate. The test requires a court to consider a statement’s capacity to mislead, such that evidence of actual deception is unnecessary. The misrepresentation must be “material,” meaning that it is one which could affect a consumer’s ability to make intelligent decisions with respect to the alleged debt.
Because of this, the Court ruled that all of the “false representation” claims survived. The Court dismissed the claims alleging there was the false implication that the letter was legal process as well as the claim that there was a deprivation of a statutory verification right. Finally, the court ruled that the Defendant used unfair and unconscionable means to collect as there was no additional conduct other than that alleged in the “false representation” claims.

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