Debt Collection Letter Too Confusing for Unsophisticated Consumer

By Mark Wilson, Esq. on September 10, 2014 | Last updated on March 21, 2019

Last month, we wondered whether lawyers should get involved in the debt collection business. It's fraught with regulations, and this case from the First Circuit demonstrates what can happen to a law firm that doesn't follow those regulations.

Robbie Pollard had a debt of about $612. The Law Office of Mandy L. Spaulding sent Pollard a letter saying that it was collecting on the debt and that, you know what, she was just going to sue her to get this all over with. Efficient? Yes. Legal? No. The Fair Debt Collection Practices Act (FDCPA) doesn't allow for this. Spaulding claimed that the law didn't contradict the collection notice, which contained some teeny-tiny print advising Pollard of her rights under the FDCPA.

The Unsophisticated Consumer

The major premise here was whose point of view should be the reference for determining whether the letter contradicted the FDCPA.

The First Circuit, in accord with the Eighth and Seventh Circuits, concluded that a collection letter should be looked at from the point of view of the "hypothetical unsophisticated consumer." This is an objective test, and the unsophisticated consumer is not trained in the law, but is still a reasonable person who can't maintain a "farfetched reading of a collection letter."


Now the question becomes whether Spaulding's "we're gonna sue you now" letter "overshadowed" the FDCPA boilerplate such that an unsophisticated consumer wouldn't understand that she couldn't be sued right off the bat or would otherwise be confused. This analysis takes into account the visual appearance of the letter, and whether the content of the letter conflicts with the law.

Yes, the court said, the letter was confusing. It "seems to threaten immediate litigation" and "implicit in this threat, is the idea that litigation can be avoided only if payment is made forthwith. That idea is reinforced by the fact that the letter appears on law firm letterhead and bears the signature of an attorney." Not cool, Mandy.

While the letter does contain the FDCPA disclosures, they're written in a way that's difficult to understand and don't adequately explain that the law firm can't proceed with a lawsuit if the consumer asks for validation of the debt. (Of course, part of the problem is that the FDCPA itself is confusing: It allows creditors to demand payment in 30 days, but it also allows consumers to demand a validation of the debt in that same 30 days. These time periods are co-extensive, not exclusive, but an unsophisticated consumer probably wouldn't know that.)

Judge Bobby Ray Baldock (of the Tenth Circuit, sitting by designation) dissented, finding the letter didn't violate the FDCPA. He seemed to believe the letter wasn't "confusing" -- which is what the statute prohibits -- solely because it contained truthful statements about the FDCPA, even if it's questionable that an unsophisticated consumer would understand what her rights were after reading the letter.

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