CHICAGO — A recent decision by an Illinois federal judge, which acknowledged the struggle that many debt collectors face when determining the lengths they should go to or the methods they should use to collect on a debt, could give those collectors a slight legal boost.

“The ... decision does not change our advice to debt collectors, which is to comply with relevant statutes, regulations and precedent to the best of their ability,”said Ryan Holz, a partner at Locke Lord LLP in Chicago. “But the decision will provide debt collectors and their counsel with an additional tool in defending future debt collection litigation.”

Douglas Sargent
Douglas Sargent | Locke Lord

U.S. District Court Judge Sara Ellis recently granted a motion to dismiss the case of Jose Delgado v. Client Services Inc.

The case landed in court after Client Services sent Delgado a letter as part of an attempt to collect on purported defaulted credit card debt, prompting legal action from Delgado, who claimed the company's actions violated the Fair Debt Collection Practices Act.

More specifically, Delgado asserted, by including the amount of interest owed and other charges in the letter, Client Services gave the impression that those fees would begin accruing on the debt if he did not make any payments. He claimed that was a violation of the law, which stipulates that collectors are prohibited from making “any false, deceptive or misleading representation or means in connection with the collection of any debt.”

“Judge Ellis acknowledged the difficult position that debt collectors are often placed in when determining the right amount of information to convey to consumers,” said Douglas Sargent, a partner at Locke Lord. “She rejected the idea that debt collectors need to tailor their communications ‘just right,’ noting that debt collectors are not intended to be a modern-day version of Goldielocks.”

While Sargent said the decision itself is limited to the itemization of different charges, he predicted that its scope and impact will be far more reaching.

“The court’s recognition that debt collection communications do not need to be just right is a valuable precedent for debt collectors to rely on in similar situations,” he said.

The judge also rejected the plaintiff's argument that the items listed in the letter would be confusing to the least sophisticated consumer. She said debt collectors face a tall task in determining how much information to include in correspondence.

“Judge Ellis found that a debt collection communication that itemizes certain charges at $0.00 does not mislead an unsophisticated consumer into believing that these charges will begin to accrue if a payment is not made,” Holz added.

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