Debt Collector's Inclusion of Principal and Interest Owed to Original Card Issuer As "Principal Balance" In Letter To Debtor Is Neither False Nor Confusing
WAHL v. MIDLAND CREDIT MANAGEMENT, INC. (February 23, 2009)
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Barbara Wahl accumulated a small balance on her credit card. When she stopped using it, the balance was less than $100. Unfortunately, Wahl incurred some huge medical bills and never paid off the credit card. By the time the card issuer turned it over to Midland Credit Management, Inc. (“Midland”) in 2005 for collection, the balance (with interest and late fees) had risen to $1149.09. In February 2005, Midland sent a letter to Wahl and offered to settle for a 25% discount. When Wahl did not accept the offer, Midland sent letters again in April and August. In each of those letters, Midland included an itemization of the amount owed. In each, it referred to the $1149.09 as the “principal balance” and the rest as “accrued interest.” Wahl filed a class action under the Fair Debt Collection Practices Act (“FDCPA”). She alleged that Midland’s inclusion of interest charged by the card issuer before the debt was purchased by Midland as part of the stated “principal balance” was false and a violation of the FDCPA. The district court certified the class and granted summary judgment to Midland. Wahl appeals.
In their opinion, Judges Bauer, Evans and Williams affirmed. The Court first took issue with Wahl’s assertion of law that a collection letter which is false, even if not deceptive, is a FDCPA violation. The Court stated that a collection letter does not violate the FDCPA unless it would confuse the unsophisticated consumer – even if is false. The Court went further, though. It determined that the letters were not false. Since Midland had acquired the debt from the issuer, the Court decided that the $1140.09 was all “principal” from Midland’s perspective. Finally, the Court applied the unsophisticated consumer test and found that there was “no way” that the language of the letter could be confusing.
