Opinion ID: 2999408
Heading Depth: 2
Heading Rank: 1

Heading: FDCPA Section 1692e

Text: Section 1692e states that a debt collector cannot use “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. The statute also enumerates a non-exhaustive list of specific practices that are per se “false or misleading.”8 Id. One action that is specifically barred under this section is “[t]he false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.” Id. § 1692e(7).
Ms. McMillan submits that CPI’s letter questioning her honesty was false or misleading, in violation of the general 8 In addition to the specific prohibitions found in §§ 1692e and 1692f, the legislative history states that the FDCPA “prohibits in general terms any harassing, unfair, or deceptive collection practice. This will enable the courts, where appropriate, to proscribe other improper conduct which is not specifically addressed.” S. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1698. 12 No. 05-2745 prohibition found in § 1692e, because the non-payment of a debt does not mean necessarily that the debtor is “dishonest.” R.1 at 3. She specifically claims that the language stating that “YOU ARE EITHER HONEST OR DISHONEST YOU CANNOT BE BOTH,” that the “creditor believed you to be honest when credit was extended,” and that CPI “would like to give you this final opportunity to prove your honesty and good intentions” is false or misleading. See R.1 at 3 (emphasis omitted). Ms. McMillan contends there are many reasons why a check might be dishonored that does not involve a lack of honesty, including mathematical error, bank error, or the unexpected delay in the clearing of funds to cover the check. See Appellant’s Br. at 18. Further, she argues that the record does not contain any evidence that she actually wrote a check that did not clear or that she did not cure the defect. See id. at 17 n.2. Ms. McMillan’s complaint may be read as implying that she had written a check that did not clear, although on appeal she argues that the record contains no evidence of whether or not she wrote the check or whether or not it was honored. See R.1 at 3 (stating that CPI’s statements are “intended to disgrace [her] because she did not pay the debt at issue” (emphasis added)). Nevertheless, we agree with Ms. McMillan that on the face of the complaint, there is no evidence in the record as to why her check did not clear, or that CPI had any prior communications asking for payment that Ms. McMillan ignored. Therefore, the language stating that she committed the “injustice of permitting the account to become past due” and then “ignor[ed] all request for payment” may be false.9 9 CPI stated at oral argument that this letter was not the first (continued...) No. 05-2745 13 CPI submits, however, that the statements at issue are “true statements that a person is either dishonest or honest, and that creditors, when extending credit, believe, in good faith, that consumers are honest.” Appellee’s Br. at 9. CPI is correct in its assertion that the letter, read literally, does not state that Ms. McMillan is dishonest, but rather that she is “either honest or dishonest.” Although this statement may be literally true, in some cases “the literal truth may convey a misleading impression” that violates § 1692e. Gammon, 27 F.3d at 1258 (Easterbrook, J., concurring); see also Avila v. Rubin, 84 F.3d 222, 227 (7th Cir. 1996). Many individuals who write a dishonored check are not necessarily dishonest; there are a variety of reasons that a check may be dishonored that do not necessarily indicate that an individual did not have every intention of paying the underlying debt when the check was issued.10 9 (...continued) communication between Ms. McMillan and CPI. However, this was the first time this court was advised that this was not the first communication between CPI and Ms. McMillan; CPI does not state such a fact in either its motion to dismiss or its appellate brief. Since the record is silent on this issue, it is not clear what communications, if any, transpired between CPI and Ms. McMillan prior to the letter at issue. Drawing all inferences in favor of Ms. McMillan, as we must at this stage of the litigation, we cannot assume that previous communications disclosed to Ms. McMillan in a clear way that she owed a debt to CPI and that she ignored those communications. 10 In any event, “[a] basic tenet of the [FDCPA] is that all consumers, even those who have mismanaged their financial affairs resulting in default on their debt, deserve ‘the right to be treated in a reasonable and civil manner.’ ” Bass v. Stolper, Koritzinsky, (continued...) 14 No. 05-2745 Indeed, the legislative history of the FDCPA indicates that Congress was aware that not all debtors actually intend to become delinquent on their debts when they take out credit: One of the most frequent fallacies concerning debt collection legislation is the contention that the primary beneficiaries are ‘deadbeats.’ In fact, however, there is universal agreement among scholars, law enforcement officials, and even debt collectors that the number of persons who willfully refuse to pay just debts is minuscule. . . . [T]he vast majority of consumers who obtain credit fully intend to repay their debts. When default occurs, it is nearly always due to an unforseen event such as unemployment, overextension, serious illness, or marital difficulties or divorce. S. Rep. No. 95-382, at 2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1697. While CPI’s letter to Ms. McMillan literally says “you can either be honest or dishonest,” the underlying implication, at least arguably, is that the debtor is being dishonest by allowing the check to be dishonored. By calling into question a debtor’s honesty and good intentions simply because a check was dishonored, a collection letter may be making a statement that is false or misleading to the unsophisticated consumer. Therefore, Ms. McMillan has stated a § 1692e claim sufficient to survive a Rule 12(b)(6) motion. 10 (...continued) Brewster & Neider, S.C., 111 F.3d 1322, 1324 (7th Cir. 1997) (citing Baker v. G.C. Servs. Corp., 677 F.2d 775, 777 (9th Cir. 1982) (citing 123 Cong. Rec. 10241 (1977))). No. 05-2745 15
Ms. McMillan also contends that the language in the letter stating “YOU ARE EITHER HONEST OR DISHONEST YOU CANNOT BE BOTH,” that the “creditor believed you to be honest when credit was extended,” and that CPI “would like to give you this final opportunity to prove your honesty and good intentions” violated § 1692e(7), the prohibition on statements intended to disgrace. 15 U.S.C. § 1692e(7) (prohibiting “[t]he false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer”). CPI replies that, because it did not imply that Ms. McMillan committed a crime or that she committed fraud, its statements did not violate § 1692e(7). In support of its argument, CPI cites the Federal Trade Commission commentary, which only lists a “[f]alse allegation of fraud” or a “[m]isrepresentation of criminal law” as violations of § 1692e(7). See Statements of General Policy or Interpretation Staff Commentary On the Fair Debt Collection Practices Act, 53 Fed. Reg. 50,097, 50,106 (Fed. Trade Comm’n Dec. 13, 1988) (hereinafter “FTC Statements”). We begin our analysis with the text of the statute itself, which, as we have stated, “is the most reliable indicator of congressional intent.” Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 1324-25 (7th Cir. 1997); see also Mace v. Van Ru Credit Corp., 109 F.3d 338, 343 (7th Cir. 1997) (“[C]onstruing the FDCPA in accordance with its plain language may best honor its drafters’ intent.”). The statutory language of § 1692e(7) states that a debt collector cannot make “[t]he false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.” (emphasis added). We believe that this language makes clear that Congress intended to 16 No. 05-2745 proscribe conduct beyond falsely implying that a debtor committed a crime. When the statutory term “disgrace” is given its normal meaning, it is clear that Congress intended that the statute also proscribe conduct that shames or humiliates a debtor. Calling into question another’s honesty, and implying that the individual has dishonest intentions arguably rises to the level of language that could shame or humiliate the reader of the letter.11 Therefore, we decline to give § 1692e(7) the restrictive meaning advocated by CPI. When the term “disgrace” is given its natural meaning, we believe that Ms. McMillan may be able to establish a factual basis that would permit her relief under § 1692e(7). Ms. McMillan therefore has stated a claim under § 1692e(7), and it is possible that the facts will demonstrate that a significant fraction of the population would find the language in the letter to be disgraceful. 11 Extrinsic sources are of little interpretative assistance on this point. The legislative history does not mention the phrase “in order to disgrace the consumer.” See S. Rep. No. 95-382, at 8. The Federal Trade Commission commentary is also equally unavailing; as CPI points out, it only lists a “[f]alse allegation of fraud” or a “[m]isrepresentation of criminal law” as violations of § 1692e(7). Statements of General Policy or Interpretation Staff Commentary On the Fair Debt Collection Practices Act, 53 Fed. Reg. 50,097, 50,106 (Fed. Trade Comm’n Dec. 13, 1988). Notably, the FTC commentary does not state that these are the exclusive means by which a debt collector can violate § 1692e(7), nor does it even address the language in the statute regarding disgrace. No. 05-2745 17