Opinion ID: 2999408
Heading Depth: 2
Heading Rank: 2

Heading: FDCPA Section 1692f

Text: Ms. McMillan also alleges that the letter is unfair or unconscionable in violation of § 1692f. Section 1692f, like § 1692e, states a general prohibition on using “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. The provision then lists eight specific violations “without limiting the general application” of the statute.12 Id. CPI submits that its 12 The text of 15 U.S.C. § 1692f states: A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the forgoing, the following conduct is a violation of this section: (1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law. (2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit. (3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution. (4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument. (5) Causing charges to be made to any person for communications by concealment of the true purpose of the (continued...) 18 No. 05-2745 conduct was not “unfair or unconscionable” because it did not utilize any of the eight specifically barred practices in § 1692f, nor did it “do anything remotely similar to any of these practices.” Appellee’s Br. at 10.13 However, as the 12 (...continued) communication. Such charges include, but are not limited to, collect telephone calls and telegram fees. (6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if— (A) there is no present right to possession of the property claims as collateral through an enforceable security interest; (B) there is no present intention to take possession of the property; (C) the property is exempt by law from such dispos- session or disablement. (7) Communicating with a consumer regarding a debt by postcard. (8) Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business. 13 CPI also urges us to follow the test that it claims that the Supreme Court of the United States has set out for establishing unfair conduct: (1) whether the practice offends public policy; (2) whether the conduct is oppressive, and (3) whether it causes substantial injury to consumers. Appellee’s Br. at 10-11 (citing Federal Trade Comm’n v. Sperry & Hutchinson Co., 405 U.S. 233, 24445 n.5 (1972)). However, Sperry was interpreting a portion of the Federal Trade Commission Act, 15 U.S.C. § 45, not the FDCPA. (continued...) No. 05-2745 19 statute states explicitly, the listing of eight specific violations was not intended to limit the applicability of the general prohibition of “unfair or unconscionable” behavior. See 15 U.S.C. § 1692f. To determine whether or not any set of facts might allow relief to be granted, we first must determine the meaning of “unfair or unconscionable” in the context of the FDCPA. The legislative history is not helpful in this task. It simply states that “[a] debt collector is prohibited from using any unfair or unconscionable means to collect debts.” S. Rep. 95-382, at 8. The FTC Commentary states that “[a] debt collector’s act in collecting a debt may be ‘unfair’ if it causes injury to the consumer that is (1) substantial, (2) not outweighed by countervailing benefits to consumers or competition, and (3) not reasonably avoidable by the consumer.” “FTC Commentary,” 53 Fed. Reg. 50,097, 50,106 (Fed. Trade Comm’n Dec. 13, 1988). The FTC Commentary does not provide any definition for the term “unconscionable.” The FTC Commentary is not binding on the courts because it is not a formal regulation and did not undergo full agency consideration. See Bass, 111 F.3d at 1327 n.8.14 13 (...continued) See Sperry, 405 U.S. at 234. Moreover, Sperry did not adopt such a test, but rather was merely quoting, in a footnote, the test that the FTC uses to determine whether a practice that is neither in violation of the antitrust laws nor deceptive could still be unfair. See id. at 244 n.5. Because the Sperry Court is interpreting a different statute, and because it does not set forth such a test, Sperry is of marginal, if of any, assistance in our present inquiry. 14 See also Christensen v. Harris County, 529 U.S. 576, 587 (2000); (continued...) 20 No. 05-2745 Indeed, the Commentary itself states that it “is not a formal trade regulation rule or advisory opinion of the Commission, and thus is not binding on the Commission or the public.” “FTC Commentary,” 53 Fed. Reg. 50,097, 50,101 (Fed. Trade Comm’n Dec. 13, 1988). A federal court therefore can decline to adopt the FTC position. See Scott v. Jones, 964 F.2d 314, 317 (4th Cir. 1992). In the accomplishment of our present task, we do not find the FTC commentary particularly helpful. Nor do we find it persuasive as a comprehensive statement of the meaning of the statutory terms before us. The test articulated by the FTC appears to preclude recovery for some of the very conduct explicitly prohibited as “unfair or unconscionable” by the statute. For example, § 1692f(8) explicitly bars the use of symbols on a debt collection letter’s envelope, although it is difficult to say that such activity necessarily would create a substantial injury to the debtor. Similarly, the Eighth Circuit has found a violation of § 1692f(1) when a collection letter overstated interest calculations by less than two dollars, which hardly could be characterized as a substantial injury. See Duffy v. Landberg, 215 F.3d 871, 875 (8th Cir. 2000). Because we find that the FTC Commentary fails to address comprehensively the statutory scheme and therefore “falls outside the range of reasonable interpretation of the [FDCPA]’s express language,” we cannot give it conclusive weight. Heintz v. Jenkins, 514 U.S. 291, 298 (1995); see also Thomas v. Law Firm of Simpson & Cyback, 392 F.3d 914, 920 14 (...continued) Goswami v. American Collections Enter., Inc., 377 F.3d 488, 493 n.1 (5th Cir. 2004) (stating that the court “consider[s] the FTC staff commentary . . . only insofar as it is persuasive”); Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1372 n.2 (11th Cir. 1998). No. 05-2745 21 (7th Cir. 2004) (en banc). Indeed, other federal courts, when determining if conduct is unfair or unconscionable, have not used the FTC’s test; indeed, they do not mention it.15 We believe that plain language of the general provision, when read in the context of the entire text of the statutory provision, including the specific examples of unfair and unconscionable conduct, might afford a basis for relief for Ms. McMillan. At this early stage of the litigation, we cannot say that Ms. McMillan will not be able to produce evidence to show that an unsophisticated consumer would view the collection letter, calling into question Ms. McMillan’s honesty and good intentions, to be unfair or unconscionable. See Fields v. Wilber Law Firm, P.C., 383 F.3d 562, 565-66 (7th Cir. 2004) (holding that a plaintiff stated a claim under § 1692e and § 1692f sufficient to survive a Rule 12(b)(6) motion when the letter at issue “could conceivably mislead an unsophisticated consumer”). We therefore hold that Ms. McMillan has stated a § 1692f claim sufficient to withstand a Rule 12(b)(6) motion. 15 See Wade v. Reg’l Credit Ass’n, 87 F.3d 1098, 1100 (9th Cir. 1996) (holding that a letter did not violate § 1692f because it was “relatively innocuous, and not ‘unconscionable’ in either a legal or lay sense”); Adams v. Law Offices of Stuckert & Yates, 926 F. Supp. 521, 528 (E.D. Pa. 1996) (stating that a letter did not violate § 1692f’s general prohibition because it did not “manifest[ ] patent unfairness,” nor did it “reflect an abuse of Defendants’ superior economic position and level of sophistication, the hallmark of unconscionability”). 22 No. 05-2745