Have you ever received a letter threatening to sue to collect $388? Those fortunate souls who are unfamiliar with the court system might believe someone would actually sue to collect $388. But it is just not worth it and debt collectors know it. Here’s an interesting article from Time regarding debt collectors who threatened to sue even when they knew suit was unlikely.
A class action was brought against the debt collectors alleging violation of the Fair Debt Collection Practices Act (“FDCPA”). The FDCPA prohibits debt collectors from making false or misleading statements in attempting to collect a debt. The debt collectors’ letter stated that failure to pay the debt “could” result in a lawsuit. Thus, they claimed, the letters did not speak of an imminent lawsuit and did not violate the FDCPA. The District Court agreed with this reasoning and dismissed the claims. The Third Circuit Court of Appeals, however, did not agree and reversed the District Court, holding that the District Court must use a “least sophisticated debtor” standard of review in determining whether the statements were misleading.