Middle District of Florida Defines Settlement Communications Allowed Under the FDCPA

On November 18, 2016, the United States District Court for the Middle District of Florida held that the communication of an unequivocal and non-coercive settlement offer does not violate the Fair Debt Collection Practices Act (the "FDCPA"). Vazquez v. Prof'l Bureau of Collections of Maryland, Inc., -- F. Supp. 3d --, 2016 WL 6822480, at *2 (M.D. Fla. Nov. 18, 2016). In Vazquez, the plaintiff alleged that a debt collector violated section 1692c(c) of the FDCPA by sending a communication offering to settle a debt (the "Settlement Offer") after the plaintiff disputed the debt. Id. at *1. The Settlement Offer offered to fully and finally resolve the disputed debt for 40% of the balance due and explained that the plaintiff could accept the offer by mailing her payment to the debt collector within a specified period of time. Id. Under the FDCPA, a debt collector is prohibited from communicating with a consumer after the consumer disputes the debt, except "to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor." 15 U.S.C. § 1692c(c)(2). Dismissing the complaint, the Vazquez court held that "[a]n unequivocal and non-coercive offer to settle a disputed debt for a definite reduced amount is a 'specified' remedy 'ordinarily invoked' by a debt collector." 2016 WL 6822480, at *2 (citing Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 395 (6th Cir. 1998)).

In Lewis v. ACB Business Services, Inc., the Sixth Circuit similarly concluded that a communication offering to resolve a debt through a payment arrangement fell within the statutory exception of § 1692c(c)(2). 135 F.3d 389, 396, 398 (6th Cir. 1998). Lewis was decided at the trial court level on a motion for judgment as a matter of law after a jury trial and a fully developed factual record. Id. at 396, 399. Since Lewis, federal courts have been reluctant to decide whether a settlement communication is permitted under § 1692c(c) at the pleadings stage. In two previous § 1692c(c) cases, the Middle District of Florida denied a motion to dismiss, concluding that further factual analysis was required to determine whether the settlement communications at issue fell within an exception to § 1692c(c). Smith v. ARS Nat'l Sevs Inc., 102 F. Supp. 3d 1276 (M.D. Fla. 2015) (concluding that a passing reference to a payment arrangement or reduction of debt in a letter did not warrant dismissal of a complaint under § 1692c(c)); Schwarz v. Portfolio Recovery Associates, LLC, 2016 WL 1169249 (M.D. Fla. March 24, 2016) (distinguishing Lewis as a case decided after the development of the factual record and concluding that Lewis is not persuasive authority for dismissing a complaint).

Acknowledging that "the question whether a particular communication is a permissible settlement offer is normally resolved at the summary judgment stage," the court in Vazquez concluded that "the issue may be resolved at the pleading stage where--read from the perspective of 'least sophisticated consumer'--no plausible inference of wrongdoing can be drawn from the face of the correspondence at issue and the well-pled allegations of the complaint." 2016 WL 6822480, at *2. The court held that the Settlement Offer was "facially compliant with the FDCPA" and reasoned that the plaintiff "is invited to accept the offer by simply paying the specified amount-no further communication or negotiation is invited." Id. at *3. Thus, as the court explained, the least sophisticated consumer would understand that the Settlement Offer was "an actual invocation of a specified remedy." Id.

Vazquez is significant because it demonstrates the elements of a facially compliant settlement communication that a debt collector may make after a consumer disputes the debt, without violating the FDCPA. Although the FDCPA is designed to prohibit abusive collection practices, "[t]o hold that a debt collector cannot offer payment options as part of an effort to resolve an outstanding debt, possibly without litigation, would force honest debt collectors seeking a peaceful resolution of the debt to file suit in order to advance efforts to resolve the debt-something that is clearly at odds with the language and purpose of the FDCPA." Lewis v. ACB Bus. Services, Inc., 135 F.3d 389, 399 (6th Cir. 1998). Despite the pragmatic approach of Lewis in authorizing post-dispute settlement communications, federal courts have still wrestled with, and allowed protracted litigation over, what sort of settlement communication might comply with or violate the FDCPA, defeating the litigation-avoidance intent of the Lewis decision. Vazquez provides clear direction for honest debt collectors who wish to avoid litigation by resolving, through settlement, disputes over a debt. Accordingly, when a communication contains a definite, specific, and unequivocal settlement offer, such as the one at issue in Vazquez, that communication, on its face, does not violate the FDCPA.

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