Mun v. Midland Credit Management, Inc.

Background

Mindy Mun brought the case for herself and others similarly situated against Midland Credit Management, Inc. She alleged that Midland violated section 1692e of the Fair Debt Collection Practices Act, which prohibits false, deceptive, or misleading representations in debt collection.

On December 13, 2017, Midland sent Mun a collection letter about an outstanding credit-card debt. The letter stated that her “current balance” was $4,596.31 and offered three payment options: a lump-sum payment with a 40 percent discount, 12 monthly payments with a 20 percent discount, or payments as low as $50 per month after calling to discuss the options. Mun alleged that the third option could lead the least sophisticated consumer to believe that the total payments might exceed the current balance. She also alleged that the debt was not accruing interest, late charges, or other charges.

Midland moved to dismiss the complaint under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court had federal-question jurisdiction under 28 U.S.C. § 1331.

Legal Standard

The court applied the “least sophisticated consumer” standard used for claims under section 1692e. Under that standard, a collection notice may be misleading if it has more than one reasonable interpretation and at least one interpretation is inaccurate. The standard protects an inexperienced or credulous consumer but does not protect unreasonable interpretations. The court also noted that a statement must be materially false or misleading—meaning capable of affecting the consumer’s decision-making—to support an FDCPA claim.

The court relied on Second Circuit precedent holding that a notice is not misleading when it correctly states a consumer’s balance, does not mention interest or fees, and no interest or fees are accruing. Because an FDCPA claim based only on the language of a collection letter presents a legal question, the court stated that it may be resolved at the pleading stage.

Court’s Analysis

The court agreed with Midland. Mun specifically alleged that her debt was static, and she acknowledged in her opposition brief that it was undisputed that the debt was not increasing. Given that allegation, the court held that referring to the amount as the “current balance” was not deceptive, misleading, or otherwise unlawful under the FDCPA.

The court rejected Mun’s reliance on a footnote discussing the phrase “balance due.” It followed other courts that had rejected the same or similar argument involving the collection letter. The court characterized the alleged defect as one that only a sophisticated lawyer would recognize, rather than one that would mislead the least sophisticated consumer. It also stated that any harm from mistakenly believing that interest or fees were accruing would be only the belief that earlier repayment provided a financial benefit, which was immaterial under the FDCPA.

Disposition

Judge Briccetti granted Midland’s motion to dismiss. The court stated that Mun’s FDCPA claims must be dismissed, instructed the clerk to terminate the motion, and closed the case. The opinion does not state that the dismissal was with or without prejudice.