The United States District Court for the Eastern District of New York recently denied a defendant debt collector’s motion to dismiss plaintiff’s putative class action alleging violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”), finding that plaintiff sufficiently alleged a substantive violation of the FDCPA that demonstrates a concrete and particularized injury-in-fact, or, alternatively, a procedural violation of the FDCPA that poses a risk of real harm to plaintiff’s statutory interests. See Bautz v. ARS Nat’l Servs., Inc., 2016 WL 7422301 (E.D.N.Y. 2016). Plaintiff’s claim was based on a letter that defendant mailed to plaintiff in an attempt to collect on a credit card debt. The letter stated that plaintiff had an outstanding debt and offered to settle the debt for a reduced amount, but added that defendant “will report forgiveness of debt as required by IRS regulations.” Plaintiff alleged that the language in the Letter is deceptive and misleading. Plaintiff argued that the latter statement “could reasonably be understood by the least sophisticated consumer to mean that IRS regulations require that [defendant] report all forgiveness of debt” and that it “suggests to the least sophisticated consumer that failure to pay will get the customer in trouble with the IRS[.]” While defendant’s motion to dismiss was pending, the Second Circuit issued, and defendant relied on, Strubel v. Comenity Bank, 842 F.2d 181 (2d Cir. 2016) (finding plaintiff had standing to assert some of her Truth in Lending Act claims pursuant to the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016)).
In denying defendant’s motion to dismiss, the District Court determined that Spokeo and Strubel addressed standing for procedural violation of statutes, not substantive violations. It further found that adequately alleging a “false, deceptive, or misleading representation” that is materially misleading to the least sophisticated consumer was a substantive violation, which satisfies the concrete injury component of Article III. With regard to particularity, the Court found that the letter affected plaintiff “in a personal and individual way, and her suit is not a vehicle for the vindication of the value interests of concerned bystanders or the public at large.” Finally, assuming arguendo that the language in the Letter constitutes a procedural violation of the FDCPA, the Court held that plaintiff still had standing because plaintiff “demonstrate[d] a sufficient ‘risk of real harm’ to the underlying interest to establish concrete injury without ‘need [to] allege any additional harm beyond the one Congress has identified.’” Specifically, plaintiff’s claims paralleled the TILA claims in Strubel for which the Second Circuit found standing because the requirement that debt collectors “may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt” is a “core object of the [FDCPA]” whose purpose is to eliminate abusive debt collection practices by debt collectors. Therefore, plaintiff satisfied the injury-in-fact requirement of Article III.