Ascendant Equity

The Least Sophisticated Consumer???

The Least Sophisticated Consumer

(Debt Collectors deceptive practices)

Debt collection companies sometimes use questionable practices when attempting to collect a debt.  For example, they sometimes send “official” looking letters to consumers that appear to be of a legal nature. They send these types of documents in order to employ a measure of intimidation.  For most consumers, receiving a letter that appears to be from a law firm can be quite intimidating because, as whole, most people don’t know what legal documents look like.  One collection agency even went so far as to use their subcontracted law firm’s letterhead without their permission to send debt collection letters to coerce a potential target to pay a debt.  This practice is illegal.  See article: Collection Attorneys – Do NOT pimp out your letterhead to your collection agency clients

How do you know when you have received a dunning letter that might fall under the deception standard of the FDCPA?  “When considering whether there is deception in debt collection communications, the courts apply an objective standard of deception.  It is known as the “least sophisticated” or “unsophisticated” consumer or debtor standard.  There is no requirement of proof of actual deception of the consumer who files a FDCPA claim to establish debt collector liability.  The courts have rejected a “reasonable consumer” standard in favor of the “least sophisticated consumer.”  Although the standard is objective, the “least sophisticated consumer” standard is lower than examining whether a debt collection communication would deceive or mislead a reasonable debtor.  The question is not whether the plaintiff consumer was deceived or misled but rather whether an unsophisticated consumer would have been misled.  Courts have reasoned that the purpose for the lower standard is to ensure that the FDCPA protects all consumers…from the gullible to the shrewd” says Michigan Lawyer Gary Nitzkin.

Deceptive Statements or Threats are Common FDCPA Violations

The federal Fair Debt Collection Practices Act (FDCPA) provides that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. .”. 15 U.S.C. 1692e. Yet deceptive threats are among the most common violations of the FDCPA.

The Fair Debt Collections Practices Act:

Gary D. Nitzkin, an attorney in Southfield, Michigan says this about the least sophisticated consumer rule:

The FDCPA uses the “least sophisticated consumer” standard to determine whether something is confusing or misleading. This is a very low standard and hence, it’s very easy to violate.  I am amazed at collection agencies that try to get creative with the collection letters. After all, the FDCPA provides safe harbor language to include in a demand letter. When collection agencies avoid this safe harbor, they usually get Pearl Harbored. Take, for instance,

the case of McMillan v Collection Professionals recently decided by the 7th Circuit Court of appeals. Collection Professionals was hired to collect on a bounced check. Instead of using the safe harbor language of the FDCPA, they stated in their demand letter “You are either honest or dishonest you cannot be both,” and that the “injustice of permitting this account to become past due and then ignoring all requests for payment, casts a doubt of good intention.” Ms. McMillian sued the collection agency for breach of the Fair Debt Collection Practices Act, claiming that the letter used false or deceptive means to collect a debt. The Illinois District Court dismissed her claim while the Court of Appeals reinstated it. The Court of Appeals reminds us that the standard used to determine whether a letter is false or misleading is whether the least sophisticated consumer would be misled. In law, we usually look to the “prudent person” standard. That is, what would a reasonably prudent person do and/or believe. In the context of the Fair Debt Collection Practices Act, the law looks to the “lease sophisticated consumer.”

According to some who share their experiences on popular credit repair blogs, a consumer should “dumb down” all of their written correspondence with a collection agency or credit bureau to ensure inclusion under the least sophisticated consumer standard in the FDCPA should their complaint ever go before a judge.  In one popular blog, I read that one credit repair agency went so far as to write their dispute letters in colored crayon!!  There are hundreds of decisions under the FDCPA considering the deceptiveness of statements in dunning letters, and nearly all of the decisions are favorable to the consumer advancing the claim. See National Consumer Law Center, Fair Debt Collection Appx.H.2.4. (Boston: NCLC 1991 and Supp.)  Under this standard, it is apparently not necessary to actually intend to deceive, only that the capacity to deceive is apparent.  Thus, it also appears that the more unsophisticated a consumer, the better chance they have of successfully litigating their claim under this provision. 

For an exhaustive and comprehensive look at this provision, please reference A Primer on Debt Collection Deception Law on Lectlaw.com.