Seventh Circuit determines time, effort and cost support FDCPA standing

Fair Debt Collection Practices Act
Yvonne Mack v. Resurgent Capital
Date: June 7, 2023

Issue: Whether time, effort, and out-of-pocket costs expended to dispute a credit card debt constitute an injury to give standing to sue.

Case Summary: In a 3-0 decision, a Seventh Circuit panel determined time, effort, and costs expended to dispute a credit card dispute is enough to confer Article III standing.

Yvonne Mack sued Resurgent Capital Services, L.P. and LVNV Funding LLC (LVNV) alleging the companies violated the Fair Debt Collection Practices Act (FDCPA). Mack had a U.S. Bank credit card. After she allegedly defaulted on her account, LVNV purchased the debt. Debts purchased by LVNV are serviced by Resurgent. Resurgent engaged Frontline Asset Strategies LLC to collect on the debt. Frontline sent Mack a letter in April 2018 informing her she owed $7,179.87 and had 30 days to file a dispute. The letter listed U.S. Bank as the “Original Creditor” and LVNV as the “Current Creditor.” Mack was aware of the debt to U.S. Bank, but thought the amount claimed in the letter was too high, and she was not familiar with LVNV. Mack drafted a validation request by hand, traveled to her local library to type and print the letter, and paid $10.15 to send the letter.

Mack did not receive the validation she requested. Instead, she received a letter from Resurgent informing her of the $7,179.87 debt and that she had 30 days to send a dispute. Mack was alarmed and confused because she did not receive validation and the initial 30-day deadline passed. She went to the library again, typed the document, and spent $3.95 to mail the second validation letter. Mack did not receive a response to her second validation request and was confused about whether the debt letters were legal. Mack claimed the process took up her time and impacted her financially as she was unemployed while sending requests which were never answered. Mack filed a proposed class action against Resurgent and LVNV.

The district court concluded Mack failed to show how she suffered an injury-in-fact to support her standing to sue. The court determined the time and money Mack spent to send the second validation request did not rise to the level of harm required for standing in FDCPA cases.

On appeal, a unanimous Seventh Circuit panel reversed. The panel reasoned Mack re-disputed the debt and thus suffered a concrete injury by spending time, effort, and fees to send the second validation request. The panel explained the Resurgent letter caused her to suffer a concrete detriment to her debt-management choices because she paid more money to preserve her rights. The $10.35 Mack spent sending the first validation request was an expected cost of the consumer preserving her rights. But with the second postage fee of $3.95, Mack pled harm to an underlying concrete interest Congress sought to protect, which includes money damages caused by misleading communications from the debt collector.

The panel also rejected defendants’ argument that Mack spent money to clear up confusion, which is not a cognizable FDCPA injury to confer standing. The panel reasoned Mack spent money to preserve her right to validation after Resurgent misled her the first time. Even though Resurgent sent a second letter, the panel determined the time, effort, and cost to fix the problem is a financial detriment.

After finding Mack suffered an injury in fact, the panel determined Mack satisfied the other elements of the standing test:  the injury was particular to her; the injury was fairly traceable to the conduct of the defendants; the injury was likely to be redressed by a favorable judicial decision. The panel declined to address Mack’s additional argument claiming the Resurgent letter intruded upon her seclusion, invaded her privacy, and resembled common-law fraud.

Bottom Line: As of July 5, 2023, Resurgent has not filed an en banc (full panel) petition for a rehearing.

Documents: Opinion