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Posted: June 20, 2014

“Least Sophisticated Consumer” Rule of FDCPA Does Not Necessarily Help Sophisticated Consumer

On June 19, 2014, the Second Circuit issued a decision in Nicholson v. Forster & Garbus LLP, Docket No. 13-2394, interpreting the “least sophisticated consumer” rule of the FDCPA.

In Nicholson, the Second Circuit affirmed the EDNY’s grant of summary judgment to the defendant law firm–Forster & Garbus–on the plaintiff class’s Fair Debt Collection Practices Act (“FDCPA”) claims. One issue on summary judgment was whether the defendant had violated § 1692e of the FDCPA by using a “false, deceptive, or misleading representation or means in connection with the collection of any debt.” As the Second Circuit explained:

To determine whether a communication violates § 1692e, this Court applies an objective standard based on the “least sophisticated consumer.” Under this standard, collection notices can be deceptive if they are open to more than one reasonable interpretation, at least one of which is inaccurate.

(Internal quotations and citations omitted). The Second Circuit rejected the argument that the even though an unsophisticaed investor might not have known that the calls were being made on behalf of a law firm, the plaintiff in this action did:

Nor was the statement misleading or deceptive under the least-sophisticated-consumer test. The least sophisticated consumer, if the standard is to be taken literally, would not even know what “Forster & Garbus” is. The terms “law,” “lawyer,” “attorney,” “legal,” etc., were never used, and the phrase “settle this account,” in context, did not suggest that the caller was a lawyer. Moreover, not every sequence of names with an ampersand is a law firm.

Nicholson likely knew that Forster & Garbus was a law firm because his lawyer was in negotiations with that firm. But the least sophisticated consumer test pays no attention
to the circumstances of the particular debtor in question
.

(Internal quotations and citations omitted) (emphasis added).

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