In Summers v. Merchants & Medical Credit Corp., a consumer filed suit against a collection agency who accused the consumer of being untruthful. More specifically, the consumer alleged that during a phone conversation, the debt collector accused the consumer of “not [being] honest” and specifically accused the consumer of “lying” about not working as a massage therapist. The collection agency then pressed the consumer to borrow money from family members to pay off the $1,600 debt, and told the consumer to “go to the bank and get a credit card.” After the consumer responded that she did not have any credit cards, the collection agency replied that the consumer had until 3:00 p.m. to get a credit card and threatened to turn the matter over to an attorney. Subsequently, the collection agency called the consumer again asked the consumer whether “[y]ou have a credit card number for me?” The consumer responded that she did not but informed the collection agency that she had made a payment arrangement with the original creditor. After the collection agency suggested that the payment plan was unacceptable, the consumer offered a confirmation number from the original creditor to which the collection agency responded “[y]ou have not been honest with me” and proceeded to inquire about the consumer’s new employment and the amount of her compensation.
The consumer brought suit against the collection agency under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. and the Michigan Occupational Code, MCL § 339.901 et seq claiming that the collection agency engaged in unfair debt collection practices when communicating with her to collect a debt. The collection agency moved to dismiss the complaint for failure to state a claim under Fed. R. Civ. Proc. 12(b)(6). In denying the motion to dismiss in part, the Court stated that the FDCPA was enacted to “eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent state action to protect consumers against debt collection abuses.” In determining whether conduct violates the FDCPA, courts employ an objective test based on the least sophisticated consumer; the least sophisticated consumer test requires the court to consider “whether there is a reasonable likelihood that an unsophisticated consumer who is willing to consider carefully the contents of a communication might yet be misled by them.” Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 172 (6th Cir. 2011). Under this test, the truth of a statement is not always a defense because a statement may be misleading despite the truth of it.
Furthermore, the trial court noted that the FDCPA prohibits “conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15 U.S.C. § 1692d. The trial court also looked to other circuits for guidance and noted that the Federal District Courts appear split on whether merely calling someone a “liar” gives rise to a valid claim under § 1692d. See Chiverton v. Fed. Fin. Group, Inc., 399 F. Supp. 2d 96, 101 (D. Conn. 2005) (the “defendant violated § 1692d(2) by calling [the plaintiff] a ‘liar.’”); Moore v. Firstsource Advantage, LLC, 07-CV-770, 2011 WL 4345703 (W.D.N.Y. Sept. 15, 2011) (“The use of abusive language by a debt collector, including calling a debtor a ‘liar,’ can constitute harassment in violation of the FDCPA”); but see, Smith v. Accounts Research, Inc., 3:10-CV-213, 2012 WL 289835 *5-6 (E.D. Tenn. Jan. 31, 2012) (merely calling a debtor a “liar” does not demonstrate harassing, abusive, or oppressive conduct in connection with a debt).
However, since some courts have found that calling a debtor a “liar” could make out a claim for harassment under § 1692d, the trial court in Summers found that the complaint sufficiently plausible, at this preliminary stage of the litigation, to state a valid claim for relief under that provision.
As a result, collection agencies should be wary in suggesting that a consumer is being less than forthcoming (even if it is apparent that the consumer is not telling the truth). If a consumer files a lawsuit alleging she was called a “liar”, the Court must accept that allegation as true when ruling on a motion to dismiss the complaint for failure to state a claim under Fed. R. Civ. Proc. 12(b)(6). Furthermore, under the least sophisticated consumer test, the truth of a statement is not always a defense because a statement may be misleading despite the truth of it. As evidenced by this decision from the United States District Court in Michigan, a simple allegation that a consumer was called a “liar” may be sufficient to state a claim under the FDCPA.