Court Finds Letter to Debtor is Not a Debt-Collection Communication Under the FDCPA

Recently, in Velez v. Absolute Resolutions Investments., LLC, the district court for the Northern District of Illinois confirmed the long-standing principle that not all communications sent from a debt collector to a debtor are governed by the Fair Debt Collection Practices Act (FDCPA). Instead, the communications must be in connection with the collection of a debt to fall within the statute’s purview.

As background, the defendants, Absolute Resolutions Investments, LLC (ARI) and Absolute Resolutions Corporation (ARC), were debt collectors who regularly worked together to collect consumer debts. ARI acquired a debt owed by the plaintiff. In February of 2021, the plaintiff’s attorney informed the defendants that the plaintiff was represented by counsel. Counsel sent a second letter in May of 2021 asking ARI to stop collection and reporting of the debt because the plaintiff had been affected by the COVID-19 crisis. In response, ARI suspended collection of the account and opened an investigation.

On June 17, 2021, ARC, acting as records custodian for ARI, sent a letter directly to the plaintiff rather than his attorney. The letter indicated that the defendants needed additional time to investigate the plaintiff’s dispute of the credit reporting of his account and that they would request the consumer reporting agencies to delete the reporting while the investigation was in progress. Based on this letter, the plaintiff filed suit alleging the defendants violated FDCPA § 1692c(a)(2), which prohibits debt collectors from communicating with a consumer in connection with the collection of any debt “if the debt collector knows the consumer is represented by an attorney with respect to such debt.”

The defendants moved for summary judgment, arguing that the plaintiff had not suffered an injury-in-fact sufficient to confer standing under Article III of the Constitution. The court noted that stress and annoyance alone do not amount to “concrete harm for standing purposes.” But the plaintiff alleged that the stress caused him financial harm because it prompted him to refuse freelance work that he ordinarily would have performed. The court held that was evidence of a tangible harm sufficient to confer standing.

However, the court also noted that the FDCPA does not apply to every communication between a debtor and a debt collector. Based on a “common sense inquiry” as to its purpose, the court found that the June 2021 letter did not amount to a communication in connection with the collection of a debt. Rather, the letter merely acknowledged the plaintiff’s dispute, stated that ARC would investigate, and told the plaintiff that ARC had asked the consumer reporting agencies to delete the credit reporting of the account. Because it found that the FDCPA did not apply to the letter, the Court granted summary judgment in favor of the defendants.