Seventh Circuit holds that debtor who spent $3.95 to send a second validation request had standing to sue in FDCPA case

After more than a dozen rulings over the last four years where the Seventh Circuit has tossed FDCPA suits for the debtors’ failures to establish Article III standing, the Seventh Circuit recently found that a debtor had standing to sue for violations of the FDCPA due to the time and the few dollars it cost her to request a second debt validation.

In Mack v. Resurgent Cap. Servs., L.P., No. 21-2792 (7th Cir. June 7, 2023) the plaintiff-debtor’s defaulted credit card debt was sold to LVNV Funding, LLC (“LVNV”) who retained a debt collector, defendant Resurgent Capital Services, L.P. (“Resurgent”), a related entity, to collect the debt. The debt collector in turn engaged another debt collector, Frontline Asset Strategies, LLC (“Frontline”) to collect the debt. Frontline sent the debtor a dunning letter which contained the requisite disclosures and the validation notice. The notice said unless the debtor disputes the debt and if the dispute is in writing the debt collector will obtain verification of the debt and the name and address of the original creditor, if different from the current creditor.

The debtor disputed the debt. She drafted a validation request by hand, traveled to the library to type and print the letter on the library’s computer (she did not have access to a computer or a printer at home), and then went to the post office where she paid $6.70 in postage and $3.45 for a certified mail fee to send the letter to Frontline. The debtor did not receive the validation that she requested. Instead, she received a second letter, this one from Resurgent containing basically the same information and the same validation notice as the Frontline letter.

The debtor was confused and alarmed by the Resurgent Letter. Thirty days had passed since the Frontline letter and the debtor alleged she was confused as to why she had to request validation from a different company. She concluded she had to send a second validation request, this time to Resurgent, so that the creditor would not assume the debt was valid. She once again took the steps necessary to write up her draft letter by hand. She returned to the library to type it into the library computer, printed it, and returned to the post office where she once again paid for postage and a certified letter fee (this time totaling $3.95) to send the validation request to Resurgent.

The debtor never received a validation of the debt from anyone leading to her to sue on behalf of herself and others for violations of the FDCPA. She alleged the Resurgent letter “would cause any consumer, let alone the unsophisticated consumer, to believe that she must yet again dispute the Debt despite the fact that such consumer had already submitted a valid dispute of the Debt.” The Resurgent letter was therefore a false, deceptive, misleading and unfair or unconscionable means to collect a debt in violation of the FDCPA.

The defendants moved to dismiss under Rule 12(b)(1) for lack of standing asserting that the debtor failed to allege an injury in fact. While the Resurgent letter may have confused and alarmed her she failed to establish a concrete harm as there were no allegation that it caused her to take any action to her detriment on account of her confusion. The district court agreed with the characterization that her second validation request was an attempt to clear up her confusion. As confusion alone is insufficient to establish a concrete harm, she lacked standing. The debtor appealed.

The Seventh Circuit concluded that dismissal was improper and reversed. It noted that “Congress clearly anticipated that preserving the right to validation would have some cost to the consumer: the provision requires that the consumer notify the debt collector of the request for validation ‘in writing.’” Thus, the initial $10.35 that the debtor spent sending the first validation request was an expected cost of the consumer preserving her rights. But with the second postage fee of $3.95, the debtor pled harm to an underlying concrete interest that Congress sought to protect.

The defendants argued that because the debtor spent the money to clear up her confusion, the cost was inadequate to establish standing. The Court said that mischaracterized the debtor’s claim. The debtor spent extra money not to clear up her confusion but to preserve her right to seek validation, which she had been misled to believe she failed to do the first time. This distinguishes her situation from cases where plaintiffs caused themselves injury or were literally trying to clear up their own confusion, for example, by seeking advice from a lawyer. Nor did the Court accept the defendant’s argument that sending the second letter did not harm the debtor because it helped her preserve her rights. The debtor had already preserved her rights, and it was only because of the misleading Resurgent letter that she went to the trouble and expense of asserting her rights a second time. “That the dollar cost to fix the problem was modest is irrelevant; she was misled to her financial detriment.”


  • James Noonan

    Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.

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