No. 13-2030 

In The United States Court of Appeals For The Seventh Circuit 

______________________________ 

Juanita Delgado, 

individually and on behalf of a class, 

Plaintiff, 

v. 

Capital Management Services, LP, 

CMS General Partner LLC, and CMS Group, Inc., 

Defendants-Appellees. 

______________________________ 

On Appeal from the United States District Court 

For the Central District of Illinois 

Hon. Sara Darrow 

Case No. 12-cv-04057 

_____________________________________ 

Brief of Amici Curiae Federal Trade Commission 

and Consumer Financial Protection Bureau Supporting Affirmance 

_____________________________________ 

Meredith Fuchs 

General Counsel 

To-Quyen Truong 

Deputy General Counsel 

David Gossett 

Assistant General Counsel for 

Litigation 

Nandan M. Joshi 

Counsel 

Consumer Financial Protection Bureau

Washington, DC 20552 

Counsel for Amicus Curiae 

Consumer Financial Protection Bureau

Jonathan E. Nuechterlein 

General Counsel 

John F. Daly 

 Deputy General Counsel for 

Litigation 

*Theodore (Jack) Metzler 

Attorney 

Office of the General Counsel 

Federal Trade Commission 

600 Pennsylvania Avenue NW 

Washington, DC 20580 

(202) 326-3502 (telephone) 

(202) 326-2477 (facsimile) 

tmetzler@ftc.gov 

Counsel for Amicus Curiae 

 Federal Trade Commission 

* Counsel of Record
Table of Contents 

Table of Authorities .................................................................................... ii

Interest of Amici Curiae ............................................................................. v

Introduction ................................................................................................ 1

Statement .................................................................................................... 3

A. The Federal Enforcement Role And Interest In Debt 

Collection Practices....................................................................... 3

B. Facts And Procedural History. ..................................................... 5

Argument .................................................................................................... 8

I. The FDCPA and Time-Barred Debt. .................................................. 8

A. The Legal Standard. ..................................................................... 9

B. In a Range of Circumstances, Collecting Or Attempting 

To Collect Time-Barred Debt Violates The FDCPA. ................. 12

1. Suing or threatening to sue on a time-barred debt 

violates the FDCPA. ............................................................ 14

2. Attempts to collect time-barred debt may also violate 

the FDCPA or trigger an obligation to disclose in 

circumstances other than actual or threatened 

litigation. .............................................................................. 15

II. The District Court Properly Denied The Motion To Dismiss. ......... 19

Conclusion ................................................................................................. 22

 
- ii - 

Table of Authorities 

Page(s)

Cases 

Avila v. Rubin, 84 F.3d 222 (7th Cir. 1996) ...................................... 10, 21 

Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 

632 F. Supp. 2d 842 (N.D. Ill. 2009) .................................................... 14 

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). ................................... 19 

Bridge v. Ocwen Fed. Bank, 681 F.3d 355 (6th Cir. 2012) ................... 5, 9 

Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993) ................................... 10 

Dunham v. Portfolio Recovery Assocs., 663 F.3d 997 

(8th Cir. 2011) ........................................................................................ 5 

Durkin v. Equifax Check Servs., 406 F.3d 410 (7th Cir. 2005) ......... 20, 21 

Engel v. Buchan, 710 F.3d 698 (7th Cir. 2013) ....................................... 19 

Evory v. RJM Acquisitions, 505 F.3d 769 (7th Cir. 2007) ................ 20, 21 

Frey v. Gangwish, 970 F.2d 1516 (6th Cir. 1992) ..................................... 9 

Freyermuth v. Credit Bureau Services, 

248 F.3d 767 (8th Cir. 2001) ................................................................ 15 

FTC v. Check Investors, Inc., 502 F.3d 159 (3d Cir. 2007) ..................... 10 

Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir. 2011) ............. 14, 16 

In re Int’l Harvester Co., 104 F.T.C. 949, 

1984 FTC LEXIS 2 (1984) ............................................................. 11, 22 

In re Peacock Buick, 86 F.T.C. 1532 (1975) ............................................. 12 

In re Stouffer Foods Corp., 118 F.T.C. 746, 

1994 FTC LEXIS 196 (1994) ......................................................... 11, 21 

Kimber v. Federal Fin. Corp., 668 F. Supp. 1480 

(M.D. Ala. 1987) ....................................................................... 10, 14, 18 

McMillan v. Collection Professionals, Inc., 

455 F.3d 754 (7th Cir. 2006) ................................................................ 19 

O’Rourke v. Palisades Acquisition XVI, LLC, 

635 F.3d 938 (7th Cir. 2011) .................................................................. 9 
- iii - 

Peter v. GC Servs. L.P., 310 F.3d 344 (5th Cir. 2002) ............................. 10 

Rawson v. Source Receivables Mgmt., 2012 U.S. Dist. 

LEXIS 125205 (N.D. Ill. 2012) ............................................................ 15 

Rodriguez v. Plymouth Ambulance Serv., 

577 F.3d 816 (7th Cir. 2009) ................................................................ 19 

R.R. Telegraphers v. Ry. Express Agency, 321 U.S. 342 (1944) .............. 12 

Simeon Mgmt. Corp. v. FTC, 579 F.2d 1137 

(9th Cir. 1978) .................................................................................. 5, 11 

Stepney v. Outsourcing Solutions, Inc., 1997 U.S. Dist. 

LEXIS 18264 (N.D. Ill. 1997) ........................................................ 15, 17 

Trans World Accounts, Inc. v. FTC, 594 F.2d 212 

(9th Cir. 1979) ...................................................................................... 10 

United States v. Asset Acceptance LLC, No. 8:12-cv-182-T-27 

(M.D. Fla.) .............................................................................................. 7 

United States v. Kubrick, 444 U.S. 111 (1979) ........................................ 12 

Walker v. Cash Flow Consultants, Inc., 

200 F.R.D. 613 (N.D. Ill. 2001) ............................................................ 16 

Walker v. Nat’l Recovery, Inc., 200 F.3d 500 (7th Cir. 1999) .................. 10 

Wallace v. Capital One Bank, 168 F. Supp. 2d 526 (D. Md. 2001) ... 13, 14 

Williams v. OSI Educ. Servs., 505 F.3d 675 (7th Cir. 2007) .................. 10 

Statutes & Regulatory Materials 

12 U.S.C. § 5481.......................................................................................... v 

12 U.S.C. § 5491.......................................................................................... v 

12 U.S.C. § 5563.......................................................................................... 5 

12 U.S.C. § 5565.......................................................................................... 5 

15 U.S.C. § 45 ............................................................................................. 5 

15 U.S.C. § 53 ............................................................................................. 5 

15 U.S.C. § 1692e ................................................................ 2, 6, 8, 9, 14, 16 

15 U.S.C. § 1692f ........................................................................................ 6 

15 U.S.C. § 1692l .................................................................................... v, 4 
- iv - 

Miss. Code Ann. § 15-1-3 .......................................................................... 13 

Wis. Stat. Ann. § 893.05 ........................................................................... 13 

FTC, Staff Commentary on the Fair Debt Collection 

Practices Act, 53 Fed. Reg. 50097 (Dec. 13, 1988) ................................ 9 

Other 

FTC, Collecting Consumer Debts: The Challenges of 

Change (Feb. 2009) .................................................................. 1, 3, 4, 12 

FTC, Repairing a Broken System: Protecting 

Consumers in Debt Collection Litigation 

and Arbitration (July 2010) ......................................... 1, 3, 4, 13, 17, 18 

FTC, The Structure and Practices of the Debt 

Buying Industry (Jan. 2013) .............................................. 1, 3, 4, 13, 17 
- v - 

Interest of Amici Curiae 

The Federal Trade Commission, an agency of the United States, 

files this brief pursuant to Federal Rule of Appellate Procedure 29(a), 

and in response to the Court’s May 28, 2013 order inviting the 

Commission’s filing. The FTC is the federal agency with principal 

responsibility for protecting consumers from deceptive or unfair trade 

practices, which include violations of the Fair Debt Collection Practices 

Act (“FDCPA”). 15 U.S.C. § 1692l(a). The Commission has closely 

studied the debt-collection industry, and seeks to inform the Court 

regarding the Commission’s reports and recommendations on debt 

collection, including the consumer protection issues raised by the 

collection of time-barred debts and their implications for the FDCPA. 

The Commission is joined in this brief by the Consumer Financial 

Protection Bureau. The Bureau is charged with “regulat[ing] the 

offering and provision of consumer financial products and services 

under Federal consumer financial law,” which includes the FDCPA. 

12 U.S.C. § 5481(12), (14). The FDCPA authorizes the Bureau to enforce 

the FDCPA, 15 U.S.C. § 1692l(b)(6), and generally to “prescribe rules 

with respect to the collection of debts by debt collectors,” 15 U.S.C. 
- vi - 

§ 1692l(d). The Bureau thus has an interest in the Court’s resolution of 

the issues presented in this case. 
- 1 - 

Introduction 

The Federal Trade Commission is committed to protecting 

consumers from false, misleading, or deceptive debt-collection practices. 

In recent years, the Commission has actively sought to identify 

consumer protection problems and potential solutions in the debtcollection industry, and it has published several reports on the subject.1

The Commission also uses its enforcement authority under the FTC Act 

and the Fair Debt Collection Practices Act (“FDCPA”) to stop debt 

collection practices that violate those statutes. The Dodd-Frank Act, 

enacted in 2010, granted the Consumer Financial Protection Bureau 

similar authority to take action—under Dodd-Frank and the FDCPA—

against unlawful debt-collection practices. 

The debt collector in this case sent plaintiff a dunning letter with 

a limited-time offer to settle a debt upon which the statute of 

limitations had expired. Plaintiff filed a class-action complaint, 

contending that the letter violated, inter alia, the FDCPA’s prohibition 

on the use of “any false, deceptive, or misleading representation or 

 

1 See FTC, Repairing a Broken System: Protecting Consumers in Debt Collection 

Litigation and Arbitration (July 2010), http://1.usa.gov/buF50z (“Broken System”); 

FTC, The Structure and Practices of the Debt Buying Industry (Jan. 2013), 

http://1.usa.gov/Z0EjxZ (“Structure & Practices”); FTC, Collecting Consumer Debts: 

The Challenges of Change (Feb. 2009), http://1.usa.gov/3ZLwb (“Challenges”). 
- 2 - 

means in connection with the collection of any debt.” 15 U.S.C. § 1692e. 

The debt collector moved to dismiss, arguing that, as a matter of law, 

the letter could not have violated the FDCPA because it was not an 

explicit or implied threat to sue. 

Several courts have held—and the Commission and the Bureau 

agree—that a collector who sues or threatens suit on a time-barred debt 

violates the FDCPA. But actual or threatened litigation is not a 

necessary predicate for an FDCPA violation in the context of timebarred debt. Rather, a debt collector violates the statute whenever its 

communications tend to deceive or mislead “unsophisticated 

consumers,” whom the FDCPA was enacted to protect. Depending on 

the circumstances, a time-limited settlement offer could plausibly 

mislead an unsophisticated consumer to believe a debt is enforceable in 

court even if the offer is unaccompanied by any clearly implied threat of 

litigation. The district court thus correctly denied the motion to dismiss. 

Given the procedural posture of this case, however, the Commission and 

the Bureau take no position on the ultimate merits of plaintiff’s claims. 
- 3 - 

Statement 

A. The Federal Enforcement Role And Interest In Debt 

Collection Practices. 

The FTC receives more consumer complaints about debt collectors 

than about any other single industry. Structure & Practices, supra n.1 

at i. Since 2007, the Commission has led an effort to identify issues and 

propose reforms for the industry, seeking the views of industry 

representatives, consumer advocates, private attorneys, judges, 

academics, and others through a series of public forums, roundtables, 

and workshops. In 2009, the Commission issued a comprehensive report 

with findings, conclusions, and recommendations concerning consumer 

protection issues related to debt collection. See Challenges, supra n.1 at 

i–ix. The Commission continued its study of the industry with a series 

of public roundtables and an invitation for public comments in 2009, 

issuing a second report in July, 2010. See Broken System, supra n.1 

at i–vi. The Commission also conducted and published a study of the 

debt-buying industry, the growth of which it had concluded was the 

“most significant change in the debt collection business in recent years.” 

See Structure & Practices at i–v. 
- 4 - 

Each of the Commission’s reports recognized the potential that 

consumers will be misled when debt collectors seek payment on timebarred debt. See Broken System at ii, 25–26, 28; Structure & Practices

at 46–48; Challenges at 62–64. The Commission determined that debt 

collectors violate the law not only if they sue or threaten to sue on 

expired debts, but also “if they engage in deception in collecting on” 

such debts. Broken System at 23; Structure & Practices at 46. The 

Commission concluded that in many circumstances, attempts to collect 

on a time-barred debt may create the misleading impression that the 

collector can legally file suit on the debt, and in such circumstances 

collectors would need to make clear disclosures to avoid creating the 

misimpression. See Broken System at 26, 28. 

The FTC also plays an important role as one of the agencies, along 

with the Bureau, primarily responsible for enforcement of the FDCPA. 

A violation of the FDCPA is “deemed an unfair or deceptive act or 

practice in violation of the [FTC] Act,” and the Commission may enforce 

FDCPA violations as if they were violations “of a Federal Trade 

Commission trade regulation rule.” 15 U.S.C. § 1692l(a). The 

Commission enforces the FDCPA through original suits for injunctive 
- 5 - 

and equitable monetary relief under Section 13(b) of the FTC Act. 

15 U.S.C. § 53(b). The Commission may also address deceptive debt 

collection practices under Section 5(b) of the FTC Act, 15 U.S.C. 

§ 45(b).2

Courts have found the Commission’s “accumulated expertise” 

persuasive regarding “the expectations and beliefs of the public, 

especially where the alleged deception results from an omission of 

information instead of a statement.” Simeon Mgmt. Corp. v. FTC, 579 

F.2d 1137, 1145 (9th Cir. 1978); see also, e.g., Bridge v. Ocwen Fed. 

Bank, 681 F.3d 355, 361 (6th Cir. 2012) (finding FTC Staff Commentary 

on the FDCPA “instructive”); Dunham v. Portfolio Recovery Assocs., 663 

F.3d 997, 1002 (8th Cir. 2011) (“[W]e have found [the FTC’s] Staff 

Commentary [on the FDCPA] persuasive in the past.”). 

B. Facts And Procedural History. 

This case arises from the district court’s denial of a motion to 

dismiss the class-action complaint brought by Juanita Delgado against 

 

2 Pursuant to the Dodd-Frank Act, the Bureau may bring an administrative 

proceeding or judicial action to enforce the FDCPA and may seek various legal and 

equitable remedies as well as civil monetary penalties for violations. See 12 U.S.C. 

§§ 5563-5565. 
- 6 - 

a debt collection agency, Capital Management Services, LP, and two 

affiliated companies. (Mem. Op. & Order 1–2.) 

In 2012, Capital sent Ms. Delgado a letter seeking to collect 

$2,404.13 purportedly owed on a credit card. (Id.) The letter offered a 

“settlement” of the debt, stating that Capital “is authorized to accept 

less than the full balance due as settlement of the above account.” (Id.) 

The letter also stated, “The settlement amount of $721.24, which 

represents 30% of the amount presently owed, is due in our office no 

later than forty-five (45) days after receiving this notice,” and 

represented that Capital “is not obligated to renew this offer.” (Id.) The 

parties agree that, though Capital’s letter did not say so, the statute of 

limitations for filing an action to collect the debt had run. (Id. at 3.) 

Ms. Delgado’s class-action complaint alleges that the letter 

violates the FDCPA, 15 U.S.C. §§ 1692e & 1692f, because the failure to 

disclose that the debt was time-barred, together with Capital’s offer to 

settle, amounted to a misleading representation that the debt could be 

legally enforced. (Id.) Capital moved to dismiss the complaint, arguing 

that the FDCPA does not expressly require debt collectors to disclose 
- 7 - 

that a debt is time-barred, and that its letter did not explicitly or 

implicitly threaten litigation. (Id. at 6–7.) 

The district court denied the motion. In analyzing the statutory 

issues, the court considered the FTC’s Broken System and Structure & 

Practices reports, supra n.1, as well as the complaint and settlement in 

United States v. Asset Acceptance LLC, No. 8:12-cv-182-T-27 (M.D. Fla.), 

involving allegations that certain attempts to collect on time-barred 

debts without disclosing that they were time-barred violated the 

FDCPA. (Id. at 7–10.) According to the district court, “the FTC does not 

view the affirmative threat of litigation as a necessary element for a 

consumer to be deceived or misled by a dunning letter that seeks to 

collect on a stale debt. Rather, taking collection action on a time-barred 

debt may be considered deceptive, thus necessitating the need for . . . 

disclosures to consumers regarding the age of their debts and the 

consequences of making payments on them.” (Id. at 10.) 

The court found this position “persuasive,” stating that “absent 

disclosures to consumers as to the age of their debt, the legal 

enforceability of it, and the consequences of making a payment on it, it 

is plausible that dunning letters seeking collection on time-barred debts 
- 8 - 

may mislead and deceive unsophisticated consumers.” (Id. at 10–11.) 

With regard to the specific letter sent to Ms. Delgado, the court “found 

it plausible that an unsophisticated consumer could be deceived into 

believing that the offer of settlement implies a legally enforceable 

obligation to pay the debt.” (Id.) Accordingly, the court concluded that 

Ms. “Delgado has stated plausible claims for relief” under the FDCPA. 

(Id. at 13.) 

The court certified its decision for interlocutory review, and on 

May 28, 2013, this Court issued an order inviting the Commission to file 

an amicus brief. 

Argument 

I. The FDCPA and Time-Barred Debt. 

The FDCPA prohibits, among other things, the use of “any false, 

deceptive, or misleading representation or means in connection with the 

collection of any debt.” 15 U.S.C. § 1692e.3 Section 1692e contains a 

nonexclusive list of prohibited practices. These include making a false 

representation of “the character, amount, or legal status of any debt,” 

threatening “to take any action that cannot legally be taken or that is 

 

3 Ms. Delgado’s complaint alleged violations of both Sections 1692e and 1692f, 

prohibiting “unfair or unconscionable” debt collection practices. This brief focuses on 

misleading or deceptive conduct under Section 1692e. 
- 9 - 

not intended to be taken,” and “using any false or deceptive means to 

collect or attempt to collect any debt.” 15 U.S.C. §§ 1692e(2)(A); 

1692e(5); 1692e(10). The latter prohibition is “particularly broad and 

encompasses virtually every violation, including those not covered by 

the other subsections.” FTC, Staff Commentary on the Fair Debt 

Collection Practices Act, 53 Fed. Reg. 50097, 50105 (Dec. 13, 1988). 

Under this subsection, “[a] debt collector may not [inter alia] mislead 

the consumer as to the legal consequences of the consumer’s actions.” 

Id. at 50106. 

A. The Legal Standard. 

“The Fair Debt Collection Practices Act is an extraordinarily 

broad statute. Congress addressed itself to what it considered to be a 

widespread problem, and to remedy that problem it crafted a broad 

statute.” Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992); see also

O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 941 (7th Cir. 

2011) (Section 1692e “is broadly written.”). Courts thus “apply the Act 

broadly according to its terms.” Bridge, 681 F.3d at 362. 

In assessing whether a debt collector’s communications are 

misleading or deceptive under the FDCPA, this Court looks to whether 
- 10 - 

an “unsophisticated consumer”4 would be misled or deceived. Williams 

v. OSI Educ. Servs., 505 F.3d 675, 678 (7th Cir. 2007). In this Court, 

“[t]o learn how an unsophisticated reader reacts to a letter, the judge 

may need to receive evidence.” Walker v. Nat’l Recovery, Inc., 200 F.3d 

500, 501 (7th Cir. 1999). A debt collector’s communication need not 

contain overtly false statements to be misleading or deceptive; for 

example, omissions may also deceive. Kimber v. Federal Fin. Corp., 668 

F. Supp. 1480, 1489 (M.D. Ala. 1987) (“[I]n order to be deceptive a 

representation need not be expressed and it need not be obvious to 

everyone.”). 

In determining whether conduct is deceptive under the FDCPA, 

the Commission’s interpretation of deception under Section 5 of the 

FTC Act is instructive. See, e.g., FTC v. Check Investors, Inc., 502 F.3d 

159, 174 (3d Cir. 2007); Trans World Accounts, Inc. v. FTC, 594 F.2d 

212, 214 (9th Cir. 1979) (“The deceptive acts or practices forbidden by 

the [FTC] Act include those used in the collection of debts.”). As the 

 

4 Other Circuits apply a “least sophisticated consumer” standard. E.g., Clomon v. 

Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993) (collecting cases). This Court has stated 

that the difference in terminology is “a distinction without much of a practical 

difference in application.” Avila v. Rubin, 84 F.3d 222, 227 (7th Cir. 1996). To the 

extent there is any difference, the complaint in this case states a claim under either 

standard. Cf. Peter v. GC Servs. L.P., 310 F.3d 344, 349 n.5 (5th Cir. 2002). 
- 11 - 

Commission has explained, “it can be deceptive to tell only half the 

truth, and to omit the rest.” In re Int’l Harvester Co., 104 F.T.C. 949, 

1984 FTC LEXIS 2, at *240 (1984). This occurs, for example, “where a 

seller fails to disclose qualifying information necessary to prevent one of 

his affirmative statements from creating a misleading impression.” Id. 

It can also “be deceptive . . . to simply remain silent . . . under 

circumstances that constitute an implied but false representation.” Id.

at 241. Such implied representations can arise from, for example, “the 

circumstances of a specific transaction, or they may be based on 

ordinary consumer expectations.” Id.

To avoid misleading consumers, sellers and debt collectors alike 

may be required to correct consumers’ misimpressions even if they did 

not directly create, or only partially created, the misimpression. The 

Commission has thus held that advertisers may be held liable for 

deception where, by failing to correct misimpressions, their ads 

“capitalize on preexisting consumer beliefs.” In re Stouffer Foods Corp., 

118 F.T.C. 746, 1994 FTC LEXIS 196, at *36 n.1 (1994); see also

Simeon, 579 F.2d at 1145 (affirming Commission holding that seller’s 

“failure to disclose” certain details of its weight loss program, combined 
- 12 - 

with consumers’ preexisting misimpressions, “render[ed]the [seller’s] 

advertisement deceptive”); In re Peacock Buick, 86 F.T.C. 1532, 1555 

(1975), aff’d mem., 553 F.2d 97 (4th Cir. 1977) (“[D]eception can result 

from the setting in which a sale is made and the expectations of the 

[borrower]—whether intent to deceive exists or not.”). 

B. In a Range of Circumstances, Collecting Or 

Attempting To Collect Time-Barred Debt Violates The 

FDCPA. 

Statutes of limitation reflect a legislative judgment that failing to 

put a defendant on notice to defend against a suit within a specified 

period is “unjust.” United States v. Kubrick, 444 U.S. 111, 117 (1979). 

This is because “‘the right to be free of stale claims in time comes to 

prevail over the right to prosecute them.’” Id. (quoting R.R. 

Telegraphers v. Ry. Express Agency, 321 U.S. 342, 349 (1944)). Statutes 

of limitation “protect defendants and the courts from having to deal 

with cases in which the search for truth may be seriously impaired by 

the loss of evidence.” Id. The limitations period also provides a bright 

line for debt holders and consumers, signifying a time when “no further 

legal action to collect on a debt is permitted.” Challenges at 63. The 

running of the statute thus works to the benefit of consumers who owe 
- 13 - 

debts that become stale. Yet the applicable state statutes of limitation 

can be “variable and complex, and [are] generally not understood by 

consumers.” Broken System at 2, 26. 

In most states, the expiration of the statute of limitations on a 

debt does not extinguish the debt.5 Structure & Practices at 45. In other 

words, the running of the statute “does not prohibit the collector from 

using non-litigation means” to collect the debt, so long as those efforts 

do not run afoul of the prohibitions in the FDCPA and other laws. 

Broken System at 22–23. Moreover, consumers may choose for moral or 

other reasons to pay their debts even when they know those debts are 

time-barred. Id. at 23 n.103. 

Accordingly, in some circumstances “a debt collector may seek 

voluntary payment of a time-barred debt” without violating the FDCPA, 

even if the communication is silent as to the statute of limitations.6

Wallace v. Capital One Bank, 168 F. Supp. 2d 526, 528 (D. Md. 2001). 

 

5 Two exceptions are Mississippi and Wisconsin, where the expiration of the statute 

of limitations does extinguish the debt. Miss. Code Ann. § 15-1-3; Wis. Stat. Ann. 

§ 893.05. 

6 The Commission disagrees with Ms. Delgado’s contention (Delgado Br. at 8-10) 

that the Commission’s complaint in Asset Acceptance stands for the proposition that 

every effort to collect a time-barred debt without a disclosure is deceptive. The 

complaint leaves open the possibility that in other circumstances attempts to collect 

on time-barred debt might not create the misleading impression that the debt is 

legally enforceable in court. 
- 14 - 

However, the “contact between a debt collector and a debtor” will violate 

the FDCPA if it explicitly or implicitly “represent[s] that the debt 

collector can sue on the debt” or otherwise violates the FDCPA’s 

prohibitions. See id.; Kimber, 668 F. Supp. at 1489. 

1. Suing or threatening to sue on a time-barred debt 

violates the FDCPA. 

The Commission and the Bureau agree with the many cases 

holding that threatening to sue on a time-barred debt violates the 

FDCPA. E.g., Kimber, 668 F. Supp. at 1480; Basile v. Blatt, 

Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (N.D. Ill. 

2009) (collecting cases). Threats to sue (and actual lawsuits) 

misrepresent the legal status of time-barred debt—violating 15 U.S.C. 

§ 1692e(2)(A)—by implying that the collector “can legally prevail” in a 

lawsuit. E.g., Kimber, 668 F. Supp. at 1488. For similar reasons, filing 

or threatening suit also violates both Section 1692e(5) as an improper 

threat and Section 1692e(10) as a deceptive means of collecting an 

expired debt. 

As most courts have found, an implicit threat is sufficient to 

violate the statute. E.g., Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 33 

(3d Cir. 2011) (looking to whether letter “explicitly or implicitly 
- 15 - 

threaten[ed] litigation”); Rawson v. Source Receivables Mgmt., 2012 

U.S. Dist. LEXIS 125205, at *5 (N.D. Ill. 2012) (threatening “further 

collection efforts” sufficient); Stepney v. Outsourcing Solutions, Inc., 

1997 U.S. Dist. LEXIS 18264, at *1, *5 (N.D. Ill. 1997) (threatening 

“further collection action”). 

2. Attempts to collect time-barred debt may also violate 

the FDCPA or trigger an obligation to disclose in 

circumstances other than actual or threatened 

litigation. 

Although an implicit threat is a sufficient condition of a statutory 

violation in this context, it is not also a necessary condition. That point 

is the subject of some confusion in the case law. Though there is wide 

agreement that actual or threatened lawsuits on stale debts violate the 

FDCPA, a number of courts have inartfully described this principle as if 

it sets the outer limit on FDCPA liability in time-barred debt cases. For 

example, in Freyermuth v. Credit Bureau Services, the Eighth Circuit 

stated that “in the absence of a threat of litigation or actual litigation, 

no violation of the FDCPA has occurred when a debt collector attempts 

to collect on a potentially time-barred debt that is otherwise valid.” 248 

F.3d 767 (8th Cir. 2001). The Third Circuit has similarly stated that a 

plaintiff’s “FDCPA claim hinges on whether [the debt collector’s] letter 
- 16 - 

threatened litigation.” Huertas, 641 F.3d at 28. Other courts have used 

comparable language. E.g., Walker v. Cash Flow Consultants, Inc., 200 

F.R.D. 613, 616 (N.D. Ill. 2001) (“[I]n order to survive a motion to 

dismiss, a defendant’s attempt to collect on a time-barred debt must be 

accompanied by actual litigation or a threat, either explicit or implicit, 

of future litigation.”). 

The Appellants’ brief in this case collects many such decisions (see 

Opening Br. 6–7). But most of those cases involved the claim that any

attempt to collect a stale debt without telling the consumer it is timebarred violates the FDCPA. E.g., Huertas, 641 F.3d at 32–33; Walker, 

200 F.R.D. at 616 (“[I]t is [not] a violation of the FDCPA to merely 

attempt to collect a time-barred debt.”). In rejecting that broad claim, 

these courts did not consider that some attempts to collect stale debts—

unaccompanied by any threat of suit—may be misleading in other ways.

 In fact, some such attempts clearly are unlawful. Under its plain 

terms, a debt collector violates the Act by (among other things) 

misrepresenting the “character, amount, or legal status” of a debt; or by 

using any other “false representation or deceptive means” to collect the 

debt. 15 U.S.C. §§ 1692e(2)(A), 1692e(10). The “critical issue” is not 
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simply whether there has been an actual or threatened lawsuit, but 

whether the unsophisticated consumer would be misled or deceived by 

the debt collector’s conduct. Stepney, 1997 U.S. Dist. LEXIS 18264, at 

*13; see Structure & Practices at 46–47 (Efforts to collect time-barred 

debt that “convey or imply to consumers that the collectors could sue 

them if they do not pay” are “false or misleading.”); Broken System at 

26. Suing and threatening to sue on a time-barred debt are two specific 

examples of conduct that qualifies. But they are not the only ones. 

In a related context, the Commission has concluded that 

consumers can be misled or deceived when debt collectors seek partial 

payments on stale debt. Broken System at 27–28; Structure & Practices

at 47. In most states, a partial payment restarts the statute of 

limitations for the entire amount of the debt. Structure & Practices at 

47 & n.195 (collecting cases). The Commission observed that 

“consumers do not expect” that a partial payment “will have the serious, 

adverse consequence of starting a new statute of limitations.” Broken 

System at 28. 

Accordingly, the Commission concluded that a debt collector’s 

solicitation of a partial payment on a time barred debt—implying, 
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incorrectly, that the payment will reduce the consumer’s legal 

obligation—can “create a misleading impression as to the consequences 

of making [a] payment,” thereby violating the FDCPA, 15 U.S.C. 

§ 1692e. Id. at 28. The Commission stated that “[t]o avoid creating a 

misleading impression, collectors would need to disclose clearly and 

prominently to consumers prior to requesting or accepting such 

payments that (1) the collector cannot sue to collect the debt and (2) 

providing a partial payment would revive the collector’s ability to sue to 

collect the balance.” Id. 

In sum, the debt collector need not make an overt threat or a false 

or misleading representation about the debt to violate the FDCPA. 

Rather, the court must consider a practice’s effect on unsophisticated 

consumers from their perspective—for example, in light of 

circumstances such as their prior collections experience and any 

preexisting misconceptions. In particular, it will often be relevant that 

most consumers do not know or understand their legal rights with 

respect to time-barred debt. See Broken System at 2, 26; Kimber, 668 F. 

Supp. 1480, 1486–88 (“[F]ew unsophisticated consumers would be 

aware that a statute of limitations could be used to defend against 
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lawsuits based on stale debts,” and “would unwittingly acquiesce to 

such lawsuits.”). In some circumstances, a debt collector may be 

required to make affirmative disclosures in order to avoid misleading 

consumers. 

II. The District Court Properly Denied The Motion To 

Dismiss. 

To survive a motion to dismiss, Ms. Delgado’s “complaint must 

‘state a claim to relief that is plausible on its face,’ which in turn 

requires sufficient factual allegations to permit the court to draw a 

reasonable inference that the defendant is liable for the misconduct 

alleged.” Engel v. Buchan, 710 F.3d 698, 709 (7th Cir. 2013) (quoting 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court draws all 

reasonable inferences in favor of the plaintiff. Rodriguez v. Plymouth 

Ambulance Serv., 577 F.3d 816, 820 (7th Cir. 2009). 

Whether a debt collector’s letter is false, deceptive, or misleading 

requires “a fact-bound determination of how an unsophisticated 

consumer would perceive the letter.” McMillan v. Collection 

Professionals, Inc., 455 F.3d 754, 759 (7th Cir. 2006). Accordingly, 

district courts should “act with great restraint” when ruling on a motion 
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to dismiss a complaint brought under Sections 1692e and 1692f of the 

FDCPA. Id. at 759. 

Here, the question before the district court was whether Capital’s 

letter could plausibly mislead an unsophisticated consumer to believe 

that her debt was enforceable in court. As noted, Capital’s dunning 

letter included an offer of “settlement,” a 45-day deadline for payment 

of the “settlement amount,” and a representation that the company “is 

not obligated to renew this offer.” (Mem. Op. & Order 2.) Under the 

circumstances, the district court properly denied the motion to dismiss.

But because Ms. Delgado has not moved for judgment on the pleadings, 

this Court need not decide—and the Commission and the Bureau take 

no position on—whether “an FDCPA violation is so ‘clearly’ evident” 

that judgment should be granted to her without further factual 

development. Cf. Durkin v. Equifax Check Servs., 406 F.3d 410, 415 (7th 

Cir. 2005). 

This Court’s opinion in Evory v. RJM Acquisitions helps guide the 

motion-to-dismiss inquiry. 505 F.3d 769, 775–76 (7th Cir. 2007). In 

Evory, the question was whether apparently time-limited offers to settle 

at a discount would mislead an unsophisticated consumer to believe 
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that the offer represents the only “chance to settle their debt for less 

than the full amount.” Id. at 775. After determining that an appropriate 

disclosure could prevent consumers from being misled, the Court looked 

to whether a settlement offer without any disclosures would be 

deceptive. Id. at 776. The Court found a “potential for deception of the 

unsophisticated in those offers,” which could be shown by extrinsic 

evidence. Id.7 

Here, as in Evory, the collector’s offer of “settlement” has at least 

“the potential for deception.” 505 F.3d at 776. An unsophisticated 

consumer may well have a preexisting belief that “settlement” and 

litigation are mutually exclusive options, such that rejecting a formal 

offer of “settlement” will result in a lawsuit. Cf. Stouffer Foods, 118 

F.T.C. 746, 1994 FTC LEXIS 196, at *36 n.1. 

Moreover, Capital’s 45-day deadline for paying “[t]he settlement 

amount,” combined with its admonition that “[w]e are not obligated” to 

renew the settlement offer, may also have contributed to an 

unsophisticated consumer’s impression that litigation could follow 

 

7 This is not to say, of course, that extrinsic evidence is required to show a violation 

in all FDCPA cases. See Avila, 84 F.3d at 226-227; Durkin, 406 F.3d at 415. 
- 22 - 

rejection of that offer.8 The deadline, for example, could imply that 

failure to pay by that date would result in litigation. In short, Capital’s 

failure to include “qualifying information necessary to prevent [the 

settlement offer] from creating a misleading impression” could therefore 

be deceptive. Cf. Int’l Harvester, 104 F.T.C. 949, 1984 FTC LEXIS 2, at 

*240.9 

In sum, because the letter could plausibly mislead an 

unsophisticated consumer to believe that a time-barred debt could be 

enforced through litigation, the district court properly denied the 

motion to dismiss.

Conclusion 

The district court’s denial of the motion to dismiss should be 

affirmed. 

 

 

8 The letter’s disclaimer that “We are not obligated to renew this offer” may have 

been inspired by Evory, in which the Court suggested that language as a “safe 

harbor” to address the possibility that unsophisticated consumers would be misled 

about the potential for future discounts. 205 F.3d at 776. When the underlying debt 

is time-barred, however, that language, in the absence of additional disclosures 

regarding the legal status of the debt, could strengthen the impression that a 

lawsuit would follow if the debtor did not pay the deadline. 

9 Even if Capital were correct (it is not) that “an implied threat of litigation” is a 

necessary condition for FDCPA liability (Br. 6), this case might satisfy that 

condition. 
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Respectfully submitted, 

Jonathan E. Nuechterlein 

General Counsel 

John F. Daly 

Deputy General Counsel for Litigation 

Dated: August 14, 2013 /s/ Theodore (Jack) Metzler 

Theodore (Jack) Metzler 

Attorney 

Office of the General Counsel 

Federal Trade Commission 

600 Pennsylvania Avenue NW 

Washington, DC 20580 

(202) 326-3502 (telephone) 

(202) 326-2477 (facsimile) 

tmetzler@ftc.gov 

Counsel for Amicus Curiae 

 Federal Trade Commission 

Meredith Fuchs 

General Counsel 

To-Quyen Truong 

Deputy General Counsel 

David Gossett 

Assistant General Counsel for 

Litigation 

Nandan M. Joshi 

Counsel 

Consumer Financial Protection 

Bureau 

Washington, DC 20552 

Counsel for Amicus Curiae 

Consumer Financial Protection 

Bureau 
 

CERTIFICATE OF COMPLIANCE 

This brief complies with Federal Rules of Appellate Procedure 

29(d) and 32(a)(7) in that it contains 4,709 words, excluding the parts of 

the brief exempted by Rule 32(a)(7)(B)(iii). 

This brief complies with the typeface requirements of Federal 

Rule of Appellate Procedure 32(a)(5) and the type style requirement of 

Rule 32(a)(6) because it has been prepared in a proportionally spaced 

typeface using Microsoft Word 2010 in 14-point Century Schoolbook. 

Dated: August 14, 2013 /s/ Theodore (Jack) Metzler 

Theodore (Jack) Metzler 

Attorney 

Office of the General Counsel 

Federal Trade Commission 

600 Pennsylvania Avenue NW 

Washington, DC 20580 

(202) 326-3502 (telephone) 

(202) 326-2477 (facsimile) 

 tmetzler@ftc.gov 
 

CERTIFICATE OF SERVICE 

 I hereby certify that on August 14, 2013 I filed and served 

the foregoing with the Court’s appellate CM-ECF system. I certify that 

all participants in the case are registered CM/ECF users and that 

service will be accomplished by the CM/ECF system. 

Dated: August 14, 2013 /s/ Theodore (Jack) Metzler 

Theodore (Jack) Metzler 

Attorney 

Office of the General Counsel 

Federal Trade Commission 

600 Pennsylvania Avenue NW 

Washington, DC 20580 

(202) 326-3502 (telephone) 

(202) 326-2477 (facsimile) 

 tmetzler@ftc.gov