Can a collection agency by sued for “mass-produced debt collection”?

, ,

A collection agency employed by a magazine subscription clearinghouse took a “mass production” approach to its task. Over a period of a few years it sent out millions of computer-generated collection notices. If a customer did not respond to the first notice with payment, he would receive another mass-produced dunning letter, but this time it would come from an attorney, with hints of a coming lawsuit.
An investigation by the Federal Trade Commission culminated in a suit against the agency and the attorney for violations of the Fair Debt Collection Practices Act. A judgment imposing substantial civil penalties on the defendants stood up on review by a federal appellate court. The collection notices violated three sections of the Act by (1) threatening consumers with legal action that the debt collector did not intend to take, (2) using false representations or deceptive means to collect a debt, and (3) sending notices with contradictory information about how long a consumer had to dispute a debt.
The sheer number of accounts and letters laid a foundation for the lawsuit because the collection agency admitted the impracticality and unlikelihood of suing any one debtor. The attorney whose name appeared on the second notice not only never exercised judgment as to the accounts, he never even saw the letters, signed them, or knew the identities of the recipients.
The defendants argued that the notices did not threaten suit, and instead merely informed the debtor that a lawsuit would be considered. The court was not inclined to adopt this “hyper-literal” interpretation of the language in the notices. To protect the gullible as well as the shrewd, most courts have applied a “least sophisticated debtor” standard in evaluating alleged violations of the Act.