When Is a Threat to Litigate Not a Threat to Litigate? Sometimes in a Debt Collection Letter

by Jeff Sovern

Last week, I posted the abstract for our article, Are Validation Notices Valid? An Empirical Evaluation of Consumer Understanding of Debt Collection Validation Notices. In this post, I wanted to write about something that didn’t appear in the abstract: the extent to which respondents thought a collection letter said the collector would sue when the letter actually said the company had not yet decided whether to sue.

Collectors may not want to threaten litigation for fear of violating 15 U.S.C. § 1692e(5), which prohibits collectors from threatening to “take any action that cannot legally be taken or that is not intended to be taken.” On the other hand, collectors may want consumers to think that a failure to pay will result in litigation, because if consumers believe that, consumers may be quicker to pay the debt in question. In other words, collectors who don’t want to sue or can’t sue may want the benefits of threatening litigation without incurring the legal penalties for doing so. Would the letter that we tested, which the Seventh Circuit found did not violate the FDCPA in Zemeckis v. Global Credit & Collection Corp., 679 F.3d 632 (7th Cir.), cert. denied, 133 S.Ct. 584 (2012), enable collectors to have their cake and eat it too? The Zemeckis letter made three references of one sort or another to litigation. Thus, the collector alluded to a lawsuit (“XYZ Credit Card Company has not yet made a decision to file a lawsuit”) legal action (“If we cannot get this matter resolved soon and your account charges off, XYZ Credit Card Company may be forced to take legal action.”), and their outcome, a judgment (“This could result in a judgment against you”).

We asked our respondents this question:

What, if anything, did the letter say about XYZ’s intention to sue if you don’t pay the debt?       (If you wish to see the letter again, please click here for the first page and here for the second. If the letter is too small for comfortable reading, please use your browser control to zoom in. You also have the option of hitting the back button to review the earlier presentation of the letter.)     

The letter did not say anything about either XYZ suing. [Unfortunately, the word “either” was left over from an earlier version of the question and should have been omitted]

The letter said XYZ would sue if I don’t pay the debt.

The letter said XYZ has not yet made a decision to sue.

The letter said XYZ would not sue.

I don’t know.

Nearly a third of the respondents who saw the letter the Seventh Circuit approved (we called that Condition A) thought the letter said the company would sue. That seems like a lot of people who might feel pressure that Congress didn’t want them to feel, especially for a statute that courts, depending on the circuit, interpret as intended to protect the least sophisticated or unsophisticated consumer. When we showed the letter without the validation notice to another group of consumers (that was Condition C), half of them thought the letter said the company would sue. When we showed a third group of consumers a version of the letter with the validation notice but without the sentences about litigation quoted above (Condition D), only 11% of the respondents thought that the letter said the company would sue. The differences between A and D were not large enough to be statistically significant at the .05 level, but the differences between C and D were. Put another way, we can’t be certain that the references to litigation made a difference in a letter which included a validation notice, but we can be certain they did as to a letter that didn’t have a validation notice. Perhaps the key takeaway is that many respondents thought the letter said the company would sue even when it said the company hadn’t made a decision. Collectors who want to have the benefits of consumers thinking they will get sued if they don’t pay, but who don’t want to be liable under the FDCPA, will probably call that a victory.


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