In the 

United States Court of Appeals 

For the Seventh Circuit ____________________

No. 12‐3504

SCOTT MCMAHON, individually and on

behalf of a class,

Plaintiff‐Appellant,

v.

LVNV FUNDING, LLC, et al.,

Defendants‐Appellees.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 12 C 1410 — Charles P. Kocoras, Judge.

____________________

No. 13‐2030

JUANITA DELGADO, individually and on

behalf of a class,

Plaintiff‐Appellee,

v.

CAPITAL MANAGEMENT SERVICES, LP, et al.,

Defendants‐Appellants.

____________________
2 Nos. 12‐3504 & 13‐2030

Appeal from the United States District Court for the

Central District of Illinois.

No. 4:12‐cv‐4057‐SLD‐JAG — Sara Darrow, Judge.

____________________

ARGUED SEPTEMBER 25, 2013 — DECIDED MARCH 11, 2014

____________________

Before WOOD, Chief Judge, and FLAUM and SYKES, Circuit

Judges.

WOOD, Chief Judge. The underlying question presented by

these two appeals, which we have consolidated for purposes

of an opinion, relates to the circumstances under which a

dunning letter for a time‐barred debt could mislead an

unsophisticated consumer to believe that the debt is

enforceable in court, and thereby violate the Fair Debt

Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.

After oral argument in these cases, we held that efforts to

collect time‐barred debts can violate the statute. See Phillips

v. Asset Acceptance, LLC, 736 F.3d 1076, 1079 (7th Cir. 2013). In

Delgado, we face a variant on that issue; it concerns the effect

of a settlement offer in the dunning letter. McMahon raises a

question of possible mootness in the wake of the defendants’

effort to buy out the putative named plaintiff. We conclude

that McMahon is not moot, and thus that the district court’s

dismissal of the action must be reversed. In Delgado, which is

before this court on an interlocutory appeal based on 28

U.S.C. § 1292(b), the district court denied the defendants’

motion to dismiss. We affirm that decision.
Nos. 12‐3504 & 13‐2030 3

I. Facts

A. McMahon

In 1997, Scott McMahon received a bill from a utility

company, Nicor Gas. Apparently McMahon did not pay that

bill. Fourteen years later, in September 2011, defendant

LVNV Funding, LLC, purchased the debt, which by then

was for $584.98. LVNV retained a collection agency, Tate &

Kirlin (Tate), to pursue payment. (Although there are several

defendants, we refer to them as LVNV for ease of exposi‐

tion.) Tate sent the letter that sparked this lawsuit to

McMahon on December 19, 2011. At the top of the letter, in‐

formation about the immediate creditor (LVNV), the previ‐

ous creditor (Nicor Gas), and the total due ($584.98) ap‐

peared. The text of the letter read as follows:

This account has been listed with our office for

collection. This communication is from a debt

collector. This is an attempt to collect a debt

and any information obtained will be used for

that purpose.

An Opportunity: We are pleased to extend to

you an offer to settle your account in full for

$233.99. This represents a savings of 60% off

your balance.

Unless you notify this office within 30 days af‐

ter receiving this notice that you dispute the

validity of this debt or any portion thereof, this

office will assume this debt is valid. If you noti‐

fy this office in writing within 30 days from re‐

ceiving this notice that you dispute the validity

of this debt or any portion thereof, this office
4 Nos. 12‐3504 & 13‐2030

will obtain verification of the debt or obtain a

copy of a judgment and mail you a copy of

such judgment or verification. If you request of

this office [sic] in writing within 30 days after

receiving this notice this office will provide

you with the name and address of the original

creditor, if different from the current creditor.

At the bottom of the page there was a tear‐off payment cou‐

pon, which the recipient was instructed to detach and return

with his payment. The letter said nothing about when the

debt was incurred, and it contained no hint that the four‐

year statute of limitations applicable in Illinois had long

since expired. See 810 ILCS 5/2‐725.  

On receiving the letter, McMahon responded to Tate with

a request for verification, stating that “we can settle this

quickly” once the debt was verified. In January 2012, one of

LVNV’s affiliates (defendant Resurgent) replied to McMah‐

on. It gave him some details, including the fact that LVNV

now owned the debt, that LVNV had acquired the debt from

Nicor on September 23, 2011, and that the amount was

$584.98. Resurgent kept mum, however, about the advanced

age of the debt—a detail that would have alerted either

McMahon or his lawyer to the fact that he had an iron‐clad

defense under the statute of limitations.

The next month, McMahon filed a suit under the Fair

Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692e,

1692f, on behalf of himself and a class. On July 5, 2012, the

district court issued an order dismissing McMahon’s class‐

wide allegations, but denying LVNV’s motion to dismiss his

individual claims. McMahon promptly filed a motion to re‐

consider. In an order dated August 13, 2012, the court denied
Nos. 12‐3504 & 13‐2030 5

the motion to reconsider “our earlier dismissal of his class‐

wide claims,” but it granted him leave to amend his class

complaint. Hours later, LVNV’s attorney sent a fax to

McMahon’s attorney offering to settle the case. In exchange

for McMahon’s dropping his class claims, LVNV offered to

pay McMahon (1) statutory damages in the amount of $1,000

to satisfy his remaining individual claim under the FDCPA,

(2) costs incurred on his individual claim, (3) a reasonable

attorney’s fee, and (4) “any other reasonable relief” in the

event the court concluded that more was necessary. McMah‐

on did not respond to the offer. Instead, two days later, he

filed an amended class complaint along with an amended

motion for class certification. LVNV responded with the

same settlement offer, but McMahon again ignored it.

At that point, LVNV moved for dismissal of the entire

case under Federal Rule of Civil Procedure 12(b)(1). LVNV

took the position that its settlement offer rendered McMah‐

on’s individual claim moot, and that this made McMahon an

inadequate representative of the proposed class. The district

court found that the August 13 fax offered McMahon com‐

plete recovery for his individual claim, that it was made pri‐

or to class certification, and thus that it had the effect of de‐

priving McMahon of a personal stake in the litigation. With

no controversy meeting the requirements of Article III before

it, the court granted LVNV’s motion to dismiss for want of

jurisdiction. In his appeal, McMahon contests both the find‐

ing that LVNV’s settlement offer mooted the case and the

original dismissal of the class claims under the FDCPA.

B. Delgado

On February 7, 2012, defendant Capital Management

Services LP (CMS) sent a debt‐collection letter to plaintiff
6 Nos. 12‐3504 & 13‐2030

Juanita Delgado, another resident of Illinois. The letter stat‐

ed, in relevant part:  

Dear Juanita Delgado,

This company has been engaged by

RESURGENT CAPITAL SERVICES, LP, the

servicer of the account, to resolve your delin‐

quent debt of $2404.13. Please submit your

payment and make your check or money order

payable to Capital Management Services, LP, to

the above address.

Unless you notify this office within 30 days

after receiving this notice that you dispute the

validity of this debt or any portion thereof, this

office will assume this debt is valid. If you noti‐

fy this office in writing within 30 days from re‐

ceiving this notice that you dispute the validity

of this debt or any portion thereof, this office

will obtain verification of the debt or obtain a

copy of a judgment and mail you a copy of

such verification or judgment. If you request

this office in writing within 30 days after re‐

ceiving this notice this office will provide you

with the name and address of the original cred‐

itor, if different than the current creditor.  

Capital Management Services, LP is author‐

ized to accept less than the full balance due as

settlement of the above account. 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
Nos. 12‐3504 & 13‐2030 7

this notice. We are not obligated to renew this

offer.

For your convenience, this settlement may

be made online at: www.cms‐trans.com. For

other payment options, please contact Capital

Management Services ... .

This is an attempt to collect a debt; any in‐

formation obtained will be used for that pur‐

pose. This communication is from a debt col‐

lector.  

The letter did not say that CMS was time‐barred from en‐

forcing the debt under Illinois’s statute of limitations, nor did

it disclose when the debt was incurred. In fact, Delgado’s let‐

ter was about an eight‐year‐old debt, which meant that any

collection action would have been barred by Illinois’s statute

of limitations, if the debtor were savvy enough to raise the

point. The letter also instructed the recipient to “detach and

return [the] top portion with payment.”

Using the same lawyer as McMahon, Delgado filed a

complaint under the FDCPA charging that CMS violated that

statute by sending a dunning letter on a time‐barred debt

and including an offer of “settlement” which, if accepted,

would in fact make the debtor worse off. CMS filed a motion

to dismiss for failure to state a claim. In considering that mo‐

tion, the district court decided that it was appropriate to give

Skidmore deference to the views of the Federal Trade Com‐

mission, the Consumer Financial Protection Bureau, the Fed‐

eral Deposit Insurance Corporation, the Federal Reserve

Board, and the Office of the Comptroller of the Currency. See

Skidmore v. Swift & Co., 323 U.S. 134 (1944). As those agencies
8 Nos. 12‐3504 & 13‐2030

had argued in other cases, the court held that when “collect‐

ing on a time barred debt a debt collector must inform the

consumer that (1) the collector cannot sue to collect the debt

and (2) providing a partial payment would revive the collec‐

tor’s ability to sue to collect the balance.” The court also

found the reference in Delgado’s letter of a possible “settle‐

ment” of the debt to be deceptive, because it implied that a

legally enforceable obligation to pay the debt existed. CMS

filed a motion under 28 U.S.C. § 1292(b) for immediate ap‐

peal, given the importance of the issues. This court accepted

the appeal on May 8, 2013. Delgado’s request for class certifi‐

cation is still before the district court, which has suspended

proceedings pending the outcome of this appeal.

II. District Court Decisions

In reaching their respective conclusions, both district

courts noted that at least the Third and Eighth Circuits have

found that sending dunning letters for time‐barred debts

does not violate the FDCPA unless the letter is accompanied

by a threat of litigation. See Huertas v. Galaxy Asset Mgmt.,

641 F.3d 28, 33 (3d Cir. 2011) (plaintiff’s FDCPA claim regard‐

ing the attempt to collect a time‐barred debt “hinges on

whether [the dunning] letter threatened litigation”); Frey‐

ermuth v. Credit Bureau Servs., Inc., 248 F.3d 767, 771 (8th Cir.

2001) (“[I]n the absence of a threat of litigation or actual liti‐

gation, no violation of the FDCPA has occurred when a debt

collector attempts to collect on a potentially time‐barred debt

that is otherwise valid.”).

The district courts acknowledged that several federal

agencies do not agree with the Third and Eighth Circuits.

For example, the FTC has found that nondisclosure of the

fact that a debt is time‐barred might deceive a consumer in
Nos. 12‐3504 & 13‐2030 9

at least two ways: first, because most consumers do not

know or understand their legal rights with respect to the col‐

lection of time‐barred debt, attempts to collect on such debt

may create a misleading impression that the consumer has

no defense to a lawsuit; and second, consumers often do not

know that in many states the making of a partial payment on

a stale debt actually revives the entire debt even if it was

otherwise time‐barred. Given the potential for confusion,

and to avoid creating a misleading impression, the FTC rec‐

ommended that if a collector knows or should know that it is

collecting on a time‐barred debt, it must inform the consum‐

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

providing partial payment would revive the collector’s abil‐

ity to sue to collect the remaining balance. FED. TRADE

COMM’N, THE STRUCTURE AND PRACTICE OF THE DEBT BUYING

INDUSTRY 47 (2013) (FTC Report 2013). Both district courts

were also aware that the FTC had secured a consent decree

with Asset Acceptance, LLC. See United States v. Asset Ac‐

ceptance, LLC, No. 8:12‐cv‐182‐T‐27EAJ (M.D. Fla. 2012). That

decree requires the company to disclose to consumers

whether it knows or believes that a debt was incurred out‐

side the limitations period, using this language: “The law

limits how long you can be sued on a debt. Because of the

age of your debt, we will not sue you for it.”

In Delgado, the district court found the FTC’s position

persuasive and thus denied CMS’s motion to dismiss. It held

that, for debts that have aged beyond the period of limita‐

tions, a dunning letter that contains no disclosure about

when the debt was incurred, the implications of that date for

its enforceability, and the consequences of making a pay‐

ment on it, may mislead and deceive unsophisticated con‐

sumers. As for the specific letter Delgado received, which
10 Nos. 12‐3504 & 13‐2030

included an offer to “settle,” the district court found it plau‐

sible that an unsophisticated consumer could be deceived

into believing that the offer of settlement implies a legally

enforceable obligation to pay the debt.  

In McMahon, the district court took a different turn. After

providing its views on the merits in the interim order dis‐

missing McMahon’s class allegations, refusing to dismiss his

individual claim, and giving him leave to replead, the court

dismissed the entire action for want of jurisdiction. As we

noted earlier, hours after the district court denied a motion

for reconsideration of its order dismissing the class claims,

LVNV sent a fax to McMahon with an offer to settle his indi‐

vidual claim. That offer, LVNV argued, rendered McMahon’s

individual claim moot, and at the same time made him an

inadequate representative of the class. The district court

agreed with that analysis and so dismissed the case for want

of a proper Article III case or controversy.  

Although the district court’s order in Delgado was inter‐

locutory, the case is properly before us under 28 U.S.C.

§ 1292(b). The judgment in McMahon was a final judgment,

and so our jurisdiction over it is secure under 28 U.S.C.

§ 1291. On May 28, 2013, we invited the FTC to file a brief as

amicus curiae in Delgado. The FTC accepted our invitation and

filed a brief jointly with the Consumer Financial Protection

Bureau (CFPB). We appreciate their willingness to assist the

court.  

III. Mootness

Even though possible mootness haunts only McMahon,

we think it best to discuss this point before turning to the is‐

sues common to the two appeals. The pertinent cases from
Nos. 12‐3504 & 13‐2030 11

this court include Scott v. Westlake Servs. LLC, 740 F.3d 1124

(7th Cir. 2014), Espenscheid v. Directsat USA, LLC, 688 F.3d

872 (7th Cir. 2012), Damasco v. Clearwire Corp., 662 F.3d 891

(7th Cir. 2011), and Rand v. Monsanto Co., 926 F.2d 596 (7th

Cir. 1991). Ultimately, however, the governing principles

come from the Supreme Court’s decisions in Genesis

Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), U.S. Parole

Comm’n v. Geraghty, 445 U.S. 388 (1980), and Deposit Guar.

Nat’l Bank, Jackson, Miss. v. Roper, 445 U.S. 326 (1980).  

Symczyk was a case brought by an individual plaintiff

under the Fair Labor Standards Act. She asserted that her

employer had not counted her work hours properly, and

that this had led to a violation of the Act’s overtime provi‐

sions. She sought to bring the case as a collective action un‐

der the FLSA, which provides for a specialized opt‐in type of

aggregate litigation. At a time when no other employee of

the company had joined the case, the employer presented an

offer of settlement for full statutory damages in the amount

of $7500, plus “such reasonable attorneys’ fees, costs and ex‐

penses as the Court may determine.” The offer said that it

would be withdrawn if it was not accepted within ten days.

Plaintiff did not accept the offer, but the district court

concluded that her claim was moot nevertheless, because the

employer had offered her everything she could possibly re‐

ceive as an individual. The Third Circuit reversed, but the

Supreme Court held that the district court had been correct.

A number of considerations led to this conclusion. First, the

Court stressed that all agreed that the employer’s offer was

complete. 133 S. Ct. at 1528. In addition, everyone proceeded

on the assumption that Symczyk’s individual claim was

moot. Id. at 1529. The Court held that, in the absence of a
12 Nos. 12‐3504 & 13‐2030

cross‐appeal, plaintiff had waived any chance to revisit that

pivotal question. Furthermore, the Court rejected Symczyk’s

effort to rely on precedents from Federal Rule of Civil Pro‐

cedure 23, which it described as “fundamentally different

from collective actions under the FLSA.” Id.  

The Symczyk Court distinguished Geraghty, which had

held that a Rule 23 class has a status separate from that of

the named plaintiff, and that a live controversy sometimes

continues to exist even after the named plaintiff’s claim be‐

comes moot (as there), and even if class certification has

been denied. The Court attached importance to the fact that

the named plaintiff’s claim remained live at the time the dis‐

trict court denied class certification. See Symczyk, 133 S. Ct. at

1530 (discussing Geraghty, 445 U.S. at 404, 407 & n.11).  

The grounds on which the Symczyk Court distinguished

Roper are even more pertinent to our case. In Roper, the puta‐

tive class representatives’ claims became moot after the dis‐

trict court denied class certification. As here, the defendant

had offered judgment for “the maximum recoverable

amount of damages, in addition to interest and court costs.”

Symczyk, 133 S. Ct. at 1531–32 (discussing Roper, 445 U.S. at

329–30). Nonetheless, “under the particular circumstances of

that case, the named plaintiffs possessed an ongoing, per‐

sonal economic stake in the substantive controversy—

namely, to shift a portion of attorney’s fees and expenses to

successful class litigants.” Id. at 1532. Against that backdrop,

Roper “observe[d] that allowing defendants to pick off party

plaintiffs before an affirmative ruling was achieved would

frustrate the objectives of class actions.” Id. (quoting Roper,

445 U.S. at 339) (internal quotation marks omitted). Thus,

Roper turned on the plaintiffs’ continuing personal economic
Nos. 12‐3504 & 13‐2030 13

stake in the litigation even after the offer of judgment, and

the unique significance of certification decisions in Rule 23

class actions.

Although Symczyk lay in the future at the time this court

decided Rand v. Monsanto, supra, our decision anticipated the

lines the Court was later to draw. In Rand, after the district

court denied class certification, the defendant offered a full

settlement to Rand (his full alleged damages plus costs of

suit). 926 F.2d at 597. We recognized that this rendered

Rand’s individual claim moot, but that under Roper “the dis‐

pute about class certification survives.” Id. at 598. The dis‐

trict court had thought Rand was an inadequate representa‐

tive for the class not because of the offer of settlement, but

because Rand had not expressed a willingness to bear the

full costs of the litigation. That, we said, demanded too

much of Rand, and so we remanded for the district court to

take another look at Rand’s suitability to act as class repre‐

sentative.  

Espenscheid was an FLSA case in which the district court

ultimately denied class certification (for some supplemental

state claims) and the defendants then settled with the named

plaintiffs. Later, the plaintiffs appealed the denial of class

certification, and the defendant fired back that the appeal

had to be dismissed because plaintiffs no longer had any live

interest in the case. We rejected that argument, however, be‐

cause a provision of the settlement agreement stated that

plaintiffs were seeking an incentive award for their services

as class representatives. 688 F.3d at 874. We pointed out also

that a class representative assumes a risk of liability for the

defendants’ costs or even, in some instances, attorneys’ fees.

Id. at 877. Finally, we saw no reason not to extend these
14 Nos. 12‐3504 & 13‐2030

holdings to the FLSA collective action part of the case. We

therefore denied the motion to dismiss the appeal for want

of jurisdiction.

In Damasco, we clarified an important point about the

timing of class‐certification motions and efforts to pick off a

putative class representative. Damasco reconfirmed our cir‐

cuit’s rule under which a defendant can render moot a pos‐

sible class action by offering to settle for the full amount of

the plaintiff’s demands before the plaintiff files a motion for

class certification. 662 F.3d at 896; see Holstein v. City of Chi‐

cago, 29 F.3d 1145, 1147 (7th Cir. 1994). (Other circuits use a

more flexible rule, under which the would‐be representative

need only file for class certification without undue delay af‐

ter receiving an offer to settle. See Pitts v. Terrible Herbst, Inc.,

653 F.3d 1081, 1091–92 (9th Cir. 2011); Lucero v. Bureau of Col‐

lection Recovery, Inc., 639 F.3d 1239, 1250–51 (10th Cir. 2011);

Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 920–21 (5th Cir.

2008); Weiss v. Regal Collections, 385 F.3d 337, 348 (3d Cir.

2004). We do not need to resolve this difference of opinion in

the present case.) We noted in Damasco that there is a simple

solution for a putative class representative who wishes to

avoid mootness or buy‐off: move to certify the class at the

same time that the complaint is filed. 662 F.3d at 896.  

These threads came together recently in Scott, a case in

which the plaintiff filed suit on behalf of herself and others

similarly situated over alleged violations of the Telephone

Consumer Protection Act, 47 U.S.C. § 227. Before Scott

moved to certify a plaintiff class, the defendant offered to

pay her the full statutory damages for any calls that violated

the statute. She declined the offer, but the district court held

that the case had become moot, and so it dismissed, just as
Nos. 12‐3504 & 13‐2030 15

the district court did in McMahon’s case. We noted (consist‐

ently with Symczyk) that Damasco holds that an unaccepted

settlement offer “can render the plaintiff’s case moot if it

gives the plaintiff everything she requested.” 2014 WL 250251 at

*2 (emphasis added). The problem with the offer in Scott was

that it did not meet the condition in the language we have

italicized. The defendant there, rather than offering to satisfy

Scott’s entire demand, reserved the right to challenge which

unwanted telephone calls gave rise to penalties. The district

court was engaged in an odd form of post‐judgment discov‐

ery to determine how many qualifying calls existed. That

was not enough, we held, to constitute a full settlement of‐

fer, and thus Scott’s individual case was not moot.

Applying these principles to McMahon’s case is straight‐

forward. McMahon’s original complaint asserted both indi‐

vidual and class claims. The district court’s order of July 5,

2012, dismissed the class claims under Federal Rule of Civil

Procedure 12(b)(6), not because of any problem with

McMahon’s ability to represent the class, but for substantive

reasons. Indeed, McMahon’s individual claims survived that

ruling. McMahon sought reconsideration of the class ruling,

but on August 13, 2012, the court denied that motion; at the

same time, it expressly granted McMahon permission to

amend and to allege narrower class claims. Two hours later

on August 13, LVNV tried to pick off McMahon’s individual

claim with an offer of settlement. The offer, however, was no

more a full resolution of the matter than was the offer in

Scott or Espenscheid. It required McMahon to accept $1,000

for all damages and individual claims against all the defend‐

ants; it offered costs and attorneys’ fees related to his indi‐

vidual claims; it insisted that he dismiss the class claims

without prejudice; it demanded that he refrain from appeal‐
16 Nos. 12‐3504 & 13‐2030

ing the denial of class certification; and, most importantly, it

promised only to give any other “reasonable” relief that the

court thought necessary. (This indicates that LVNV was re‐

serving the right to object to any additional relief that it

deemed unreasonable.) McMahon did not accept the offer.

Instead, he filed an amended complaint and an amended

motion for class certification (in accordance with Damasco)

on August 15, 2012.  

The district court took the position that the offer of set‐

tlement squeaked in under the wire, just before McMahon

moved for class certification. But the motion on August 15

was an amended motion. McMahon already had brought his

class claims before the district court, which had stated in so

many words that the litigation was still ongoing when it

gave him permission to amend. McMahon was diligent in

pursuing his class claims: he filed his amended complaint

and his new motion to certify the class just two days after

the court gave him leave to do so. Had McMahon tried to

appeal from the original denial of class certification, even

assuming that LVNV’s offer was comprehensive enough to

moot his case, he would have been in exactly the same posi‐

tion as the Roper plaintiff. We conclude, therefore, that

McMahon’s decision to reject LVNV’s settlement offer did

not moot his interest in the case for purposes of his ability to

serve as a class representative.

IV. FDCPA Issues

Turning to the merits, we must consider how the FDCPA

applies to the dunning letters that both McMahon and Del‐

gado received. The Act prohibits the use of “any false, de‐

ceptive, or misleading representation or means in connection

with the collection of any debt.” 15 U.S.C. § 1692e. Section
Nos. 12‐3504 & 13‐2030 17

1692e furnishes a nonexclusive list of prohibited practices,

including the following: false representation of the character,

amount, or legal status of any debt, § 1692e(2)(A); threat to

take any action that cannot legally be taken, § 1692e(5); and

use of any false representation or deceptive means to collect

or attempt to collect any debt, § 1692e(10). Section 1692f pro‐

hibits debt collectors from using “unfair or unconscionable

means to collect or attempt to collect any debt.” “[I]n decid‐

ing whether ... a representation made in a dunning letter is

misleading the court asks whether a person of modest edu‐

cation and limited commercial savvy would be likely to be

deceived.” Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d

769, 774 (7th Cir. 2007). The court views the letter through

the perspective of an “unsophisticated consumer.” Lox v.

CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012). This standard

applies to claims under both § 1692e and § 1692f. Turner v.

J.V.D.B. & Assoc., Inc., 330 F.3d 991, 997 (7th Cir. 2003).  

Whether a dunning letter is confusing is a question of

fact. Evory, 505 F.3d at 776. Dismissal is appropriate only

when “it is ‘apparent from a reading of the letter that not

even a significant fraction of the population would be misled

by it.’” Zemeckis v. Global Credit & Collection Corp., 679 F.3d

632, 636 (7th Cir. 2012) (quoting Taylor v. Cavalry Inv., L.L.C.,

365 F.3d 572, 574 (7th Cir. 2004)). “[A] letter may confuse

even though it is not internally contradictory. Unsophisticat‐

ed readers may require more explanation than do federal

judges; what seems pellucid to a judge, a legally sophisticat‐

ed reader, may be opaque to someone whose formal educa‐

tion ended after sixth grade.” Johnson v. Revenue Mgmt. Corp.,

169 F.3d 1057, 1060 (7th Cir. 1999). Recognizing the distinc‐

tion between what may confuse a federal judge and an un‐

sophisticated consumer is important because the intended
18 Nos. 12‐3504 & 13‐2030

recipients of dunning letters span the entire range of abili‐

ties. We have therefore cautioned against reliance “on our

intuitions.” Evory, 505 F.3d at 776.  

Given this standard and the well‐reasoned position put

forth by the FTC and CFPB, we find that the district court in

Delgado was correct in denying defendants’ motion to dis‐

miss. The McMahon court will need to take a fresh look at the

class allegations in that case, even if it concludes that

McMahon himself (apart from his interest as class repre‐

sentative) cannot go forward. We do not hold that it is auto‐

matically improper for a debt collector to seek repayment of

time‐barred debts; some people might consider full debt re‐

payment a moral obligation, even though the legal remedy

for the debt has been extinguished. But, as we held in Phil‐

lips, supra, if the debt collector uses language in its dunning

letter that would mislead an unsophisticated consumer into

believing that the debt is legally enforceable, regardless of

whether the letter actually threatens litigation (the require‐

ment the Third and Eighth Circuits added to the mix), the

collector has violated the FDCPA. Because it is plausible that

an unsophisticated consumer would believe a letter that of‐

fers to “settle” a debt implies that the debt is legally enforce‐

able, it was correct in Delgado to decline to dismiss the action

at this stage, and incorrect to dismiss the class allegations in

McMahon.

The proposition that a debt collector violates the FDCPA

when it misleads an unsophisticated consumer to believe a

time‐barred debt is legally enforceable, regardless of wheth‐

er litigation is threatened, is straightforward under the stat‐

ute. Section 1692e(2)(A) specifically prohibits the false repre‐

sentation of the character or legal status of any debt. Wheth‐
Nos. 12‐3504 & 13‐2030 19

er a debt is legally enforceable is a central fact about the

character and legal status of that debt. A misrepresentation

about that fact thus violates the FDCPA. Matters may be

even worse if the debt collector adds a threat of litigation,

see 15 U.S.C. § 1692e(5), but such a threat is not a necessary

element of a claim.

We recognize that this interpretation conflicts with that of

the Eighth and Third Circuits. See Huertas v. Galaxy Asset

Mgmt., 641 F.3d 28, 33 (3d Cir. 2011); Freyermuth v. Credit Bu‐

reau Servs., Inc., 248 F.3d 767, 771 (8th Cir. 2001). With re‐

spect, however, we have concluded that the statute cannot

bear the reading that those courts have given it.1 In their

view, if a dunning letter on a time‐barred debt states that the

collector could sue but promised not to, that letter would not

violate the FDCPA, since no litigation was actually threat‐

ened (and indeed was expressly rejected). On its face, that

may seem reasonable, but closer examination reveals why it

is not. The plain language of the FDCPA prohibits not only

threatening to take actions that the collector cannot take, but

also the use of any false, deceptive, or misleading represen‐

tation, including those about the character or legal status of

any debt. If a debt collector stated that it could sue on a time‐

barred debt but was promising to forbear, that statement

would be a false representation about the legal status of that

debt.  

                                                 

1 Because this opinion creates a conflict in the circuits by adopting the

position of the responsible agencies, we have circulated it to the full

court under Circuit Rule 40(e). No judge in regular active service wishes

to hear the case en banc.
20 Nos. 12‐3504 & 13‐2030

In any event, the case before us is nowhere near that line.

Neither LVNV nor CMS gave a hint that the debts that they

were trying to collect were vulnerable to an ironclad limita‐

tions defense. An unsophisticated consumer who read the

dunning letter Delgado or McMahon received could have

been led to believe that her debt was legally enforceable. In

other words, the letters misrepresented the legal status of the

debts, in violation of the FDCPA. The courts in Huertas and

Freyermuth do not explain why such a misrepresentation

about the legal status of the debt, wholly apart from a threat

of litigation, does not violate the Act. The fact that both Del‐

gado and McMahon’s letters contained an offer of settlement

makes things worse, not better, since a gullible consumer

who made a partial payment would inadvertently have reset

the limitations period and made herself vulnerable to a suit

on the full amount. That is why those offers only reinforced

the misleading impression that the debt was legally enforce‐

able.  

Relying in part on the district court opinion in Rice v.

Midland Credit Mgmt., Inc., 933 F. Supp. 2d 1040 (N.D. Ill.

2013), defendants argue that there is nothing misleading

about the use of the word “settle” in this context. The court

there wrote that “[b]ecause an unsophisticated consumer is

not a ‘dimwit’ and is capable of making ‘basic logical infer‐

ences,’ it is not misleading to truthfully state in a letter that a

debt is owed and that paying it would settle the debtorʹs ac‐

count. That is, after all, true. If a debtor who receives such a

letter jumps to the conclusion that he may be sued if he does

not pay, that inference is not attributable to the letter.” Id. At

1048; see also Crawford v. Vision Fin. Corp., 2012 WL 5383280,

at *3 (N.D. Ill. Nov. 1, 2012) (opining that “an unsophisticat‐

ed debtor would likely interpret the term ‘settle’ in a debt‐
Nos. 12‐3504 & 13‐2030 21

collection letter to mean only the ‘settlement’ of a debt, not

the settlement of a lawsuit”). Neither the FTC nor the CFPB

take such a sanguine view of the abilities of the typical recip‐

ient of dunning letters. They have found to the contrary that

most consumers do not understand their legal rights with

respect to time‐barred debts. FED. TRADE COMM’N, REPAIRING

A BROKEN SYSTEM: PROTECTING CONSUMERS IN DEBT

COLLECTION LITIGATION AND ARBITRATION 26–27 (2010).  

We are inclined to defer to the agencies’ empirical re‐

search and expertise. If a consumer received an “offer for

settlement” and searched on Google to see what is meant by

“settlement,” she might find the Wikipedia entry for “set‐

tlement offer.” Settlement offer, WIKIPEDIA, (Mar. 10, 2014 at

4:06 pm), http://en.wikipedia.org/wiki/Settlement_offer.

There she would learn that the term “offer to settle” is “used

in a civil lawsuit to describe a communication from one par‐

ty to the other suggesting a settlement—an agreement to end

the lawsuit before a judgment is rendered.”  

Our reasoning in Evory supports this understanding.

There we considered whether a settlement offer contained in

a dunning letter is per se unlawful under § 1692f. The con‐

cern was that unsophisticated consumers receiving letters

with language like “Act now and receive a settlement of 25%

off your current balance!” would believe that if they did not

pay by the deadline, they would not have a later chance to

settle for less than the full amount. Such a belief would often

have been ill‐founded, because “debt collectors, who natu‐

rally are averse to instituting actual collection proceedings

for the typically modest sums involved in the consumer debt

collection business, frequently renew their offers if the con‐

sumer fails to accept the initial offer.” Evory, 505 F.3d at 775.
22 Nos. 12‐3504 & 13‐2030

The recipients of the letters, however, would believe that if

they did not immediately accept the offer, they would face

legal proceedings where the full amount would be demand‐

ed. The risk here is similar: a settlement offer on a time‐

barred debt implies that the creditor could successfully sue

on the debt. If unsophisticated consumers believe either that

the settlement offer is their chance to avoid court proceed‐

ings where they would be defenseless, or if they believe that

the debt is legally enforceable at all, they have been misled,

and the debt collector has violated the FDCPA.  

Our decision today does not require debt collectors to

conduct additional research. If a debt collector does not

know whether the debt submitted for collection is time‐

barred, it would be easy to include general language about

that possibility. That said, we find it unlikely that debt own‐

ers lack knowledge about the age of the debts they are at‐

tempting to collect. If the debt collector is the original credi‐

tor, it will know the relevant dates. If the collector is a third‐

party collecting on behalf of the original creditor, it should

easily be able to get that information at the time the file is

assigned by the original creditor on whose behalf it is acting.

If the collector has purchased the debt from the original

creditor, we know from the FTC that such buyers pay differ‐

ent amounts for debts depending on the age of the debt and

the number of previous attempts to collect it, in which case

whether the debt is time‐barred should be known. See FTC

Report 2013 at 21. The FTC’s study found that “debt buyers

paid on average 3.1 cents per dollar of debt for debts that

were 3 to 6 years old and 2.2 cents per dollar of debt for

debts that were 6 to 15 years old compared to 7.9 cents per

dollar for debts less than 3 years old. Finally, debt buyers

paid effectively nothing for accounts that were older than
Nos. 12‐3504 & 13‐2030 23

fifteen years.” Id. at 23–24. Finally, if the collector is a third

party acting on behalf of a debt buyer, it should be able to

get the relevant information from the party on whose behalf

it is acting.

V. Conclusion

In summary, we conclude that an unsophisticated con‐

sumer could be misled by a dunning letter for a time‐barred

debt, especially a letter that uses the term “settle” or “settle‐

ment.” We thus AFFIRM the district court’s denial of defend‐

ant’s motion to dismiss in Delgado. In McMahon, we REVERSE

and REMAND for further proceedings consistent with this

opinion.