District Court (Cal.) Says Debt Buyer’s Failure to Identify Original Creditor in Buyers’ State Court Form Debt Collection Complaint was Misleading and Deceptive

In Heathman v. Portfolio Recovery Associates, LLC, 2013 WL 3746111 (S.D.Cal. 2013), Judge Gonzalez stated that a debt purchaser’s failure to identify the original creditor by name in the debt purchaser’s form debt collection complaint in state court violated the Rosenthal Act because it render the complaint deceptive and misleading to the least sophisticated consumer.

“To preserve the protections and policies of the FDCPA, it is important to know the proper identity of the creditor. Knowing a creditor’s identity allows the ‘least sophisticated consumer’ to make more informed decisions on how to communicate with the creditor and avoid being misled.” Isham v. Gurstel, Staloch & Chargo, P.A ., 738 F.Supp.2d 986, 996 (D.Ariz.2010). Accordingly, misstating or failing to identify “the original creditor unquestionably could ‘frustrate a consumer’s ability to intelligently choose his or her response.’ “ Tourgeman v. Collins Fin. Services, Inc., 2011 WL 3176453, at *5 (S.D.Cal. July 26, 2011) (“The Court cannot hold, as a matter of law, that the hypothetical least sophisticated debtor would not be misled by a letter misstating the name of the original creditor.”); see also Gutierrez v. AT & T Broadband, LLC, 382 F .3d 725, 740 (7th Cir.2004) (one of “the FDCPA’s focus [es] is … whether the name used [in collection materials] results in the debtor’s deception in terms of what entity is trying to collect his debt.”); Schneider v. TSYS Total Debt Management, Inc., 2006 WL 1982499, at *3 (E.D.Wisc. July 13, 2006) (acknowledging that “without the full and complete name of the creditor … the unsophisticated debtor would be confused by the collection letter.”). ¶  Here, Defendant’s form complaint omits any reference to Chase, the original creditor. [ See Doc. No. 18–4, Ex. A.] And it compounds that omission by repeatedly referencing the purported debt as owed to “Plaintiff,” yet ambiguously identifying both PRA and an unspecified “predecessor” as “Plaintiff.” [ Id.] Because this language can “be reasonably read to have two or more different meanings,” i.e., the original debt could be owed to either PRA or the unspecified predecessor, it is “deceptive” for purposes of the FDCPA. Gonzalez, 660 F.3d at 1062.  ¶  This deceptive language is also material because, in myriad respects, it could frustrate the least sophisticated consumer’s ability to choose a response to Defendant’s complaint. See Donohue, 592 F.3d at 1034 (in “applying the materiality requirement … [to] assess[ ] FDCPA liability, we are [ ] concerned with … misleading statements that may frustrate a consumer’s ability to intelligently choose his or her response.”). For example, without the true identity of the original creditor, the least sophisticated consumer is left unable to verify the debt purportedly owed, much less attempt to resolve that debt directly and extrajudicially. See Wallace v. Washington Mut. Bank, F.A., 683 F.3d 323, 327 (6th Cir.2012) (“District courts have decided, and we agree, that a[ ] false representation of the creditor’s name may constitute a false representation … under Section 1692e” because failing to accurately identify the creditor may “cause[ ][ ] confusion and delay in trying to contact the proper party concerning payment … and resolution of the problem.”) (internal quotation omitted). So too, the least sophisticated consumer could assume the lone party identified, PRA, to be the original creditor, yet knowing she in fact owes no debt to PRA, choose to ignore the case entirely as an obvious mistake likely to sort itself out. See Tourgeman, 2011 WL 3176453, at *6 (S.D.Cal. July 26, 2011) (“the Court can conceive of nary a situation more confusing than receiving a dunning letter identifying an original creditor to whom the consumer never was indebted.”); Suquilanda v.. Co hen & Slamowitz, LLP, 2011 WL 4344044, at *6 (S.D.N.Y. Sept. 8, 2011) (where “a collection letter [ ] falsely listed the creditor … the least sophisticated creditor could be confused as to which entity was the creditor”). Or, again given apparent mistake, the least sophisticated consumer could misapprehend the complexity of and risks posed by the claims alleged, reason that no attorney is necessary, and to her detriment opt to proceed pro se. See Donohue, 592 F.3d at 1034 (materiality turns on “the likely effect … on the minds of unsophisticated debtor … [and their] ability to make intelligent decisions.”). Given such easy to conceive potential frustration to the least sophisticated consumer, the Court finds Defendant’s failure to identify the original creditor material under the FDCPA. Cf. Donohue, 592 F.3d at 1034 (finding conflation of interest and finance charges immaterial where the Court could conceive of no way in which that conflation could frustrate the least sophisticated consumer’s ability to choose a response). ¶  Thus, because Defendant’s failure to identify Chase, the original creditor, is both deceptive and material under the least sophisticated consumer standard, it constitutes a violation of § 1692e. Gonzalez, 660 F.3d at 1061–62; see also Hepsen v. J.C. Christensen and Associates, Inc., 2009 WL 3064865, at *5 (M.D.Fla. Sept. 22, 2009) (“Imposing liability based on a statement incorrectly identifying the name of a creditor comports with the purposes of the FDCPA.”). Accordingly, the Court GRANTS Plaintiff’s motion and DENIES Defendant’s motion as to PRA’s liability under § 1692e of the FDCPA.