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District Court’s Opinion Expands Standing and Liability under Section 1692e of the FDCPA

On April 5, 2017, a District Court, in the case of Koval vs. Harris & Harris (2016-CV-8449 – ND IL), held that a legal guardian of a consumer that owes a debt has standing to file a complaint in the guardian’s own name alleging violation of section 1692e of the FDCPA based on a collection letter sent to the consumer under the guardianship.

In Koval, the daughter of a consumer, who was the consumer’s legal guardian, filed a complaint in her own name alleging a letter sent to the consumer under guardianship by the defendant, the law firm Harris & Harris, Ltd., violated section 1692e of the FDCPA because it contained false and misleading representations.

The defendant moved to dismiss the complaint, among other things, on the basis that the guardian lacked standing to file the complaint in her own name, rather than in a representative capacity. In its motion, the defendant pointed out to the court that in another case brought by the same guardian under section 1692g of the FDCPA, the guardian’s case was dismissed with leave to amend and allege the suit in representative capacity.

In finding the guardian had standing to bring the case in her own name (as opposed to her representative capacity), the District Court observed that unlike section 1692g of the FDCPA that “is expressly limited to communication with consumers”, section 1692e “contains no similar limitation.” The District Court found that under Seventh Circuit precedent, in Todd v. Collecto, Inc., 731 F.3d 734, 738 (7th Cir. 2013), not all FDCPA claims bought by parties other than consumers or their proxies are foreclosed; and that protecting “close associates” is consistent with the FDCPA’s expanded definition of “consumer”, in section 1692c(d), which “includes the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.” Based on these findings the District Court held that whether “[f]ormal guardian, or not, a daughter who provides daily care for a disabled parent fits comfortably within” the FDCPA zone of protection. Accordingly, “[a] close family member who receives a misleading communication attempting to collect a debt may sue in her individual capacity under section 1692e” of the FDCPA.

Comments and Observations

In an apparent attempt to achieve an efficient result, i.e., avoid dismissing the case and having the guardian amend the complaint and bring her case as a representative of the consumer, the Koval opinion unnecessarily broadened standing under section 1692e of the FDCPA to parties other than the consumer, who is the person obligated or allegedly obligated to pay the debt.

This expansion was unnecessary because, as the District Court acknowledged, as a guardian of a disabled parent the plaintiff would undoubtedly be able to file the section 1692e claim in a representative capacity.

The opinion in Koval, opens the door to claims of damages by so called “close associates” in their own right (as opposed to in their representative capacity) for being exposed to communications made to consumers. This may expand and increase the type of FDCPA claims filed in Illinois and the scope of parties to whom a debt collector may be liable for damages.