United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
for the Fifth Circuit July 28, 2004
Charles R. Fulbruge III
Clerk
No. 03-20834
POOJA GOSWAMI, individually and on behalf of all others similarly
situated,
Plaintiffs-Appellants,
VERSUS
AMERICAN COLLECTIONS ENTERPRISE, INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Texas
Before DAVIS, PRADO and PICKERING, Circuit Judges,
W. EUGENE DAVIS, Circuit Judge:
Plaintiff Pooja Goswami (“Goswami”) challenges the district
court’s order granting defendant American Collections Enterprise,
Inc.’s (“ACEI”) motion for summary judgment. Plaintiff alleged
that ACEI’s collection practices violated the Fair Debt Collections
Practices Act (“FDCPA”), in particular 15 U.S.C. §§ 1692f(8)
because it placed a “priority letter” marking on the collection
letter envelope; and under § 1692e(10) because it misled plaintiff
about the terms of a settlement offer in the body of the letter
itself. We agree with the district court’s judgment denying relief
for the markings on the envelope. We disagree, however, with the
district court’s finding that the statement in the body of the
letter is not deceptive and in violation of § 1692e(10); the letter
leads an unsophisticated consumer to falsely believe that the
settlement offer is a one time, take-it-or-leave-it offer.
Therefore, we AFFIRM in part, REVERSE in part, and REMAND.
I.
Defendant ACEI, a debt collector, contracted with Capital One
in 2001 to provide debt collection services. Under the terms of
the collection agreement, Capital One assigned delinquent accounts
to ACEI for collection, and ACEI collected these debts on a
contingent fee basis. Under the collection agreement Capital One
gave ACEI the authority to settle any of its accounts at a discount
according to the following formula:
Account Balance Days Since Charge-off
0-90 91-180 181-730 >730
$0-$1,500 70% 70% 50% 50%
$1,501-$3,000 70% 50% 50% 40%
>$3,000 70% 50% 40% 40%
Plaintiff Goswami owed approximately $900 on her Capital One
credit card and failed to pay. Capital One referred that debt to
ACEI for collection on March 20, 2001, and ACEI pursued Goswami’s
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delinquent account. It sent a collection notice letter to Goswami
on December 7, 2001. A second form letter was sent on January 25,
2002, more than 180 days after the debt had been referred to ACEI.
The second letter was sent to Goswami in an envelope which bore a
half inch thick blue bar across the entire envelope which contained
the words “Priority Letter” in white. ACEI admitted that the
markings on the envelope had been developed to entice debtors to
open the letter. The letter itself contained a second blue bar and
“Priority Letter” marking as a header. The debt collection letter
read, in relevant part:
***** Settlement Offer & Amnesty Period *****
We are sending this letter in an attempt to clear your
long and overdue account. Effective immediately, and
only during the next thirty days, will our client agree
to settle your outstanding balance due with a thirty
percent (30%) discount off your above balance owed.
This settlement must be in one payment and must be
received in our office no later than 30 business days
from the date of this letter unless you contact our
office to make other arrangements.
After receiving the letter Goswami filed a complaint alleging
violation of the FDCPA, in particular 15 U.S.C. §§ 1692f(8) and
1692e(10). Goswami complains that the markings on the envelope
violate § 1692f(8), which prohibits any markings on debt collection
letter envelopes besides the name and address of the sender and the
addressee. She further complains that the contents of the letter
were deceptive in violation of § 1692e(10).
ACEI moved for summary judgment arguing that neutral or benign
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expressions on an envelope, like “priority letter,” that in no way
indicate that it is a collection letter are not banned by the
FDCPA. It further argued that the letter itself was not deceitful
and thus did not violate the Act. The district court agreed,
granted the defendant’s summary judgment motion, and dismissed the
case. Goswami appeals that judgment.
II.
We review the grant of summary judgment de novo, applying the
same standards as the district court in determining whether summary
judgment is appropriate. Walker v. Thompson, 214 F.3d 615, 624
(5th Cir. 2000). We must, therefore, find any disputed facts in
favor of the non-moving party and determine whether there exists a
genuine issue of material fact in the case. Id. All questions of
law are reviewed de novo. Id. Given the lack of any real dispute
of the facts in this case, we need only review de novo the district
court's interpretation of the FDCPA.
A.
Goswami asserts that the “priority letter” markings on the
outside of the envelope violate the FDCPA which, plaintiff asserts,
bars any markings on the outside of the envelope besides addresses.
Goswami relies on 15 U.S.C. § 1692(f), which provides in relevant
part:
A debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt. Without
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limiting the general application of the foregoing, the
following conduct is a violation of this section:
* * *
(8) Using any language or symbol, other than the debt
collector’s address, on any envelope when communicating
with a consumer by use of the mails or by telegram,
except that a debt collector may use his business name if
such name does not indicate that he is in the debt
collection business.
ACEI counters that the legislative history of the FDCPA, FTC
interpretations of § 1692(f), and case law allow for harmless words
or symbols on the outside of the envelope so long as they do not
indicate that the correspondence is a debt collection letter.
In interpreting statutes we do not look beyond the plain
meaning of the statute unless the statute is absurd or ambiguous.
Without ambiguity we are not permitted to look to the legislative
history or agency interpretations. See Hightower v. Tex. Hosp.
Ass'n, 65 F.3d 443, 448 (5th Cir. 1995) (“Only if the language is
unclear do we turn to the legislative history.”); see also Tex.
Sav. & Cmty. Bankers Ass'n v. Fed. Housing Fin. Bd., 201 F.3d 551,
554 (5th Cir. 2000) (“When a court reviews an agency's construction
of the statute it administers, it is confronted with two questions.
First, always, is the question of whether Congress has directly
spoken to the precise question at issue. If the intent of Congress
is clear, that is the end of the matter; for the court, as well as
the agency, must give effect to the unambiguously expressed intent
of Congress.”).
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In this case, however, the statutory provision in question is
ambiguous, i.e., it is open to more than one reasonable
interpretation. If we read § 1692f(8) in isolation it is
reasonable to understand it as barring any markings on the outside
of a debt collection letter envelope other than the names and
addresses of the parties.
If, on the other hand, we read § 1692f(8) together with the
opening paragraph or preface of § 1692f, then the provision takes
on another reasonable meaning. Section 1692f begins by
establishing its objective as prohibiting unfair and unconscionable
conduct by debt collectors. The section then lists specific unfair
or unconscionable conduct that is prohibited. Under this reading
of the statute, subsection eight only prohibits markings on the
outside of envelopes that are unfair or unconscionable, such as
markings that would signal that it is a debt collection letter and
tend to humiliate, threaten, or manipulate debtors.
Either interpretation of this statute is reasonable and thus
the statute is ambiguous. See Comm’r v. Engle, 464 U.S. 206, 217
(1984) (“Each of these possible interpretations of [the statute]
can be reconciled with the language of the statute itself. . . .
Our duty then is to find that interpretation which can most fairly
be said to be imbedded in the statute, in the sense of being most
harmonious with its scheme and with the general purposes that
Congress manifested.” (internal quotation marks omitted)). Given
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this ambiguity we are permitted to look to the statute’s
legislative history and any FTC interpretations of the provision.
Hightower, 65 F.3d at 448; Bolen v. Dengel, 340 F.3d 300, 310 (5th
Cir. 2003).
We are most persuaded by the FTC’s commentary on the statute:1
Harmless Words or Symbols. A debt collector does not
violate this section by using an envelope with words or
notations that do not suggest the purpose of the
communication. For example, a collector may communicate
via an actual telegram or similar service, that uses a
Western Union (or other provider) logo and the word
“telegram” (or similar word) on the envelope, or a letter
with the word “Personal” or “Confidential” on the
envelope.
FTC Staff Commentary on the Fair Debt Collection Practices Act, 53
Fed. Reg. 50,097, 50,108 (Dec. 13, 1988). The FTC therefore
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“The Supreme Court has ruled that ‘[i]nterpretations such as those in opinion
letters--like interpretations contained in policy statements, agency manuals, and
enforcement guidelines, all of which lack the force of law--do not warrant
Chevron-style deference.’” Bolen v. Dengel, 340 F.3d 300, 310 (5th Cir. 2003)
(quoting Christensen v. Harris Cty., 529 U.S. 576, 587 (2000)). Although the FTC
staff commentary on § 1692f(8) was opened to public comment, it was not a formal
regulation, did not carry the force of law, and did not undergo full agency
consideration. In fact the FTC makes clear in the commentary itself that the
interpretations are advisory and are not binding on the public or the FTC:
[The commentary] is a guideline intended to clarify the staff
interpretations of the statute, but does not have the force or
effect of statutory provisions. It is not a formal trade regulation
rule or advisory opinion of the Commission, and thus is not binding
on the Commission or the public.
The Commentary is based primarily on issues discussed in informal
staff letters responding to public requests for interpretations and
on the Commission's enforcement program, subsequent to the FDCPA's
enactment.
FTC Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg.
50,097, 50,101 (Dec. 13, 1988). As such we do not give the commentary full
Chevron deference. “Instead, interpretations contained in formats such as
opinion letters are entitled to respect . . . but only to the extent that those
interpretations have the power to persuade.” Christensen, 529 U.S. at 587. We,
therefore, consider the FTC staff commentary in this case only insofar as it is
persuasive.
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interprets § 1692f(8) to allow benign or harmless language, like
“priority letter,” to appear on the outside of the envelope.
This interpretation by the FTC is fully supported by the
legislative history. The Senate report on the bill makes clear
that § 1692f(8) was intended merely to prevent debt collectors from
embarrassing debtors by announcing the delinquency on the outside
of a debt collection letter envelope:
A debt collector is prohibited from using any unfair or
unconscionable means to collect debts. The following
enumerated practices are violations: . . . .
communicating information about a debt by postcard; and
using symbols on envelopes indicating that the contents
pertain to debt collection.
S. Rep. No. 95-382, at 8 (1977), reprinted in 1977 U.S.C.C.A.N.
1695, 1702.
Finally, it appears that all courts that have considered this
issue have adopted a benign language exception to § 1692f(8) that
would allow for markings like “priority letter.” See Lindbergh v.
Transworld Sys., Inc., 846 F. Supp. 175, 180 (D. Conn. 1994);
Johnson v. NCB Collection Servs., 799 F. Supp. 1298, 1305 (D. Conn.
1992); Masuda v. Thomas Richards & Co., 759 F. Supp. 1456, 1466
(C.D. Cal. 1991).
Given this persuasive authority, we are convinced that the
FDCPA does not bar the innocuous “priority letter” markings in this
case. Nothing about the marking “priority letter” intimates that
the contents of the envelope relate to collection of delinquent
debts, and thus the language is neither threatening nor
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embarrassing. We therefore agree with the district court that the
FDCPA does not bar the benign markings on the envelope in this
case.
III.
Goswami further argues on appeal that the language of the debt
collection letter itself is deceptive in violation of § 1692e(10)
of the FDCPA because it gives a false sense of urgency, falsely
implies that criminal actions are pending, and leads debtors to
falsely believe that the settlement offered is the one and only
chance to settle the debt with Capital One. She therefore,
contends that the district court erred in granting defendant’s
motion for summary judgment on the deception claim. ACEI contends
that the letter, when read as a whole, is in no way misleading and
that therefore the district court correctly granted summary
judgment.
Section 1692e(10) was enacted to thwart abusive, false, or
misleading debt collection practices. It provides in relevant
part:
A debt collector may not use any false, deceptive, or
misleading representation or means in connection with the
collection of any debt. Without limiting the general
application of the foregoing, the following conduct is a
violation of this section:
* * *
(10) The use of any false representation or deceptive
means to collect or attempt to collect any debt or to
obtain information concerning a consumer.
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We must evaluate any potential deception in the letter under
an unsophisticated or least sophisticated consumer standard.
Taylor v. Perrin, Landry deLaunay & Durand, 103 F.3d 1232, 1236
(5th Cir. 1997). That is, in determining whether the defendant’s
actions are deceptive under the FDCPA we must assume that the
plaintiff-debtor is neither shrewd nor experienced in dealing with
creditors. This standard serves the purpose of protecting all
consumers, "including the inexperienced, the untrained and the
credulous, from deceptive debt collection practices[.]” Id. At
the same time we do not consider the debtor as tied to the "very
last rung on the [intelligence or] sophistication ladder." Id.
(internal quotation marks omitted). We review the potential
deceptiveness of ACEI’s representations according to this standard.
Goswami first argues that the use of the “priority letter”
language on the top of the letter is deceptive because it creates
a false sense of urgency. She further argues that the use of the
term “amnesty” in the “Settlement Offer & Amnesty Period” heading
of the debt collection letter was deceptive because it suggested
that Goswami needed amnesty from criminal prosecution, amounting to
a veiled threat that criminal proceedings were possible.
Neither of these representations in the letter is false,
deceptive, or misleading to even the least sophisticated consumer.
The “amnesty” reference clearly refers to the debt forgiveness
offer in the body of the letter and consumers, even unsophisicated
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consumers, would not believe otherwise. The “priority letter”
language is also harmless. It appropriately expresses the
importance of correspondence concerning long overdue accounts and
would not serve to intimidate or threaten even the most gullible
debtor. We therefore agree with the district court that such
language does not serve as the basis for a FDCPA claim.
The body of the debt collection letter, however, triggers
greater concern. The letter states, falsely, that “only during the
next thirty days, will our client agree to settle your outstanding
balance due with a thirty (30%) percent discount off your above
balance owed.” (Emphasis added). In actual fact, Capital One had
authorized ACEI to give debtors such as Goswami a 30% discount at
any time, not just for a period of thirty days. In fact, ACEI was
authorized to offer a 50% discount at the time Goswami received the
collection letter in question. The statement in the collection
letter is untrue and makes it appear that Capital One’s offer of a
30% discount was a one-time, take-it-or-leave-it offer that would
expire in thirty days. The obvious purpose of the statement was to
push Goswami to make a rapid payment to take advantage of the
purported limited time offer.
Defendant argues that courts have been eager to allow debt
collection agencies to offer settlement discounts to debtors and
that the settlement offer in this case should therefore be
permitted. Courts favor such settlement offers because they
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“result in the resolution of the debt without resorting to
litigation, saving all parties involved the needless cost and delay
of litigation[.]” Lewis v. ACB Business Servs., Inc., 135 F.3d
389, 399 (6th Cir. 1998).
While we agree that it is important to permit collection
agencies to offer settlements, that policy consideration does not
remove collection agencies’ obligation under the FDCPA to deal in
a nondeceitful manner. A collection agency may offer a settlement;
however, it may not be deceitful in the presentation of that
settlement offer, as ACEI was in this case. ACEI made false or
misleading statements about the settlement authority it held from
Capital One both in the discount it was authorized to offer and the
time within which Goswami was allowed to accept the offer. ACEI’s
deception is actionable under the FDCPA and is not excused because
it is part of a debt collector’s settlement offer.
We therefore agree with the district court’s order insofar as
it grants summary judgment on the “priority letter” and “amnesty”
language. But we disagree with the district court’s determination
that the substance of the settlement offer is not deceptive under
the FDCPA.
IV.
For the above reasons we affirm the district court’s order
granting summary judgment with respect to the § 1692f(8) claims
regarding the language on the debt collection letter envelope; we
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also affirm the district court’s order with respect to the
dismissal of the § 1692e(10) claims regarding the “priority letter”
and “amnesty” language in the debt collection letter. However, we
reverse the district court’s order granting summary judgment on the
claims for representations made in the body of the debt collection
letter.
AFFIRMED in part, REVERSED in part, and REMANDED.
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