I am amazed at collection agencies that try to get creative with the collection letters. After all, the FDCPA provides safe harbor language to include in a demand letter. When collection agencies avoid this safe harbor, they usually get Pearl Harbored. Take, for instance,

the case of McMillan v Collection Professionals recently decided by the 7th Circuit Court of appeals. Collection Professionals was hired to collect on a bounced check. Instead of using the safe harbor language of the FDCPA, they stated in their demand letter “You are either honest or dishonest you cannot be both,” and that the “injustice of permitting this account to become past due and then ignoring all requests for payment, casts a doubt of good intention.” Ms. McMillian sued the collection agency for breach of the Fair Debt Collection Practices Act, claiming that the letter used false or deceptive means to collect a debt. The Illinois District Court dismissed her claim while the Court of Appeals reinstated it. The Court of Appeals reminds us that the standard used to determine whether a letter is false or misleading is whether the least sophisticated consumer would be misled. In law, we usually look to the “prudent person” standard. That is, what would a reasonably prudent person do and/or believe. In the context of the Fair Debt Collection Practices Act, the law looks to the “lease sophisticated consumer.” The lesser standard necessarily translates into an easier violation. The Court of Appeals held that because a least sophisticated consumer could imagine a situation where a check might not be honored for a good reason, that the case should not have been dismissed.
If collection agencies were to truly examine what percentage of time that a debtor is truly motivated to pay off a creatively worded demand letter and compare it to when a debtor simply pays off of a demand letter that contains only the safe harbor language of the FDCPA, they might reconsider using the additional verbiage. More money is collected off of a telephone call than off of a demand letter. The collection letter is an effective, if not a required tool under the FDCPA. But when it contains words that are not authorized under the very pro-consumer FDCPA, the letter becomes the debtor’s weapon. Consider the McMillan case. She bounced a check for $84.43. Right now, her attorneys will probably not even consider settling this case for less than $2,000. After all, if she prevails under the FDCPA, she will get damages of at least $1,000 plus attorneys fees. Moreover, the collection agencies attorneys fees have to be about $3,000 at a minimum at this point. Now that they have to march back into the District Court, it is obvious that Collection Professional’s demand letter has become a fund raiser for Ms. McMillan. This could have been simply avoided if Collection Professionals had simply used the safe harbor language of the FDCPA.