to give consumers the discount at any
time, not just for a period of 30 days,
and the collector was also authorized to
settle the debt at a deeper discount ( 50
percent). The Fifth Circuit concluded
the offer was false and misleading in
violation of the FDCPA in both the
discount it offered and the timeframe
presented. The court noted the “
take-it-or-leave-it” language gave the false
impression the settlement was a one-time offer when, in fact, such a
settlement could be given to the
consumer at any time.
SERIES OF OFFERS
One court in Indiana specifically
disagreed with the aforementioned
reasoning, stating such a legal theory
would require a settlement offer to either
be the collector’s best and final offer or
the offer would have to be held open
indefinitely. The court held reliance on
such a theory could effectively discourage
collectors from offering to settle accounts
for less than full payment in detriment to
consumers and collectors alike, while
creating unreasonable results contrary to
the purposes of the FDCPA. In this case,
the collector sent a series of settlement
offers which each contained an end date,
after which a new offer was presented at
a deeper discount.
The court held the collection letters
were not false because none of the
letters expressly stated the opportunity
to settle the debt at a discount would be
lost after the settlement date.
Specifically, the court noted the letter
did not state the collector was
authorized to settle “only” until the
specified date. The court held “[a] debt
collector is free to make offers of
limited duration, to terminate them at
the given date, and then to make a new
offer of similar or even identical terms
effective immediately.”
Another district court in Illinois
came to a similar conclusion when it
held successive settlement offers that
included end dates were not false or
misleading under the FDCPA. The
court noted the fact the collector did
not disclose the full extent of its
settlement authority does not directly
render the collection letter false and
misleading. Thus, the court concluded
“a settlement offer that states the
proposed discount and the length of the
offer, but does not expressly nor
implicitly indicate no other offer will be
made” does not violate the Act even
though more favorable terms in the
future are likely.
The court noted the advantage of
settlement offers to consumers and
stated a collector is permitted to
negotiate with consumers within the
parameters of its client, “provided that it
does not untruthfully state or suggest
that the offer was of the one-time-only,
take-it-or-leave-it variety.”
Several other courts in Illinois and
California addressing a series of
settlement offers, which offered slightly
better terms each time and included an
expiration date of each offer, have
reached similar results. In these cases,
the consumer argued the settlement
letters were deceptive because it was
evident by the subsequent settlement
offers the creditor had authorized the
collector to settle the debt at a lesser
rate and past the initial settlement offer
expiration date.
One court in Illinois stated, “[T]he
fact that [the collection agency] was
willing to settle for less after the
deadline expired or made a second,
better offer during the first period does
not indicate that there was not a
deadline attached to the first offer…it
simply indicated that [the collection
agency] decided to make a new offer.”
