“Least sophisticated consumer” standard under the FDCPA

December 27, 2013

The Eleventh Circuit and the majority of federal circuit courts have adopted the “least-sophisticated consumer” standard in analyzing claims brought under the Fair Debt Collection Practices Act (FDCPA).   The least-sophisticated consumer standard is consistent with FDCPA’s goal of expanding the consumer protections originally provided by the Federal Trade Commission Act.   The purpose of the least-sophisticated-consumer standard, here as in other areas of consumer law, is to ensure that the FDCPA protects the gullible as well as the shrewd.   No requirement of proof of actual deception of the consumer is necessary. 

Courts apply this objective standard in order to implement the FDCPA’s dual purpose: to protect consumers against deceptive debt collection practices and to protect debt collectors from unreasonable constructions of their communications to consumer.    The least sophisticated consumer will be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care.    However the test also has an objective component in that while protecting naive consumers, the standard also prevents liability for bizarre or idiosyncratic interpretations of collection communications by preserving a quotient of reasonableness.  


Validation Notice Attached to Complaint Results in FDCPA Lawsuit

December 25, 2013

An attempted validation notice pursuant to 15 U.S.C. §1692(g) attached to a Complaint in a lawsuit may be considered as deceptive and misleading to the “least sophisticated consumer” under the Fair Debt Collection Practices Act. In Battle v. Gladstone Law Group, P.A., law firm, acting as counsel for Bank of America, N.A., filed a complaint in Florida State Court to foreclose on Gina Battle’s mortgage and to enforce a promissory note. Attached to the State Court complaint and summons was a document entitled “Notice Required by the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692g.” The Notice was presumably served to inform Gina Battle of her rights concerning validation of the debt and provide her with 30 days to request validation of the debt. The summons issued by the State Court along with the State Court complaint informed Battle that she had 20 days to file a response with the court. Battle sued the law firm, Gladstone Law Group, and attorney Ron Gladstone, under the Fair Debt Collection Practices Act alleging that they violated the FDCPA because the Notice attached to the state court Complaint was deceptive and misleading to the “least sophisticated consumer.” The federal lawsuit was converted into a Class Action alleging that that the class was so large that joinder of all members of the Class was impractical and that the class was in excess of 100. The District Judge ruled that an FDCPA notice incorporated into a mortgage foreclosure summons and complaint, such as the one used by the Gladstone Law Group, does not necessarily effectively convey notice of the rights to the “least sophisticated consumer.” The Court went on to say that the “least sophisticated consumer” could be deceived or confused when the summons sets out a 20-day deadline to respond to the lawsuit and the attached notice provides for a 30-day deadline to request validation of the debt.

Battle v. Gladstone Law Group, P.A., Case Number: 12-14458-Civ-Martinez-Lynch.


Florida Court Reverses Mortgage Foreclosure Judgment

December 16, 2013

Deborah E. Focht appealed the trial court’s entry of a final summary judgment of foreclosure in favor of Wells Fargo Bank, N.A. The Florida Second District Court of Appeal reversed the final judgment of foreclosure because there was a genuine issue of material fact regarding Wells Fargo’s standing to enforce the note and mortgage.

In October 2002, Ms. Focht executed an adjustable rate note and mortgage with BNC Mortgage, Inc. The loan was later transferred into a trust for which Wells Fargo is the trustee. Wells Fargo subsequently filed a motion for summary judgment, which Focht opposed based on numerous affirmative defenses including Wells Fargo’s lack of standing. Wells Fargo asserted that it had standing by virtue of an assignment of the note and mortgage dated September 2008, which was several months after the complaint was filed. Wells Fargo alternatively asserted that it had standing as the holder of the original note endorsed in blank. The trial court granted Wells Fargo’s motion for summary judgment and entered a final judgment of foreclosure. Focht appealed.
The appellate court reversed the final judgment based on the existence of a genuine issue of material fact regarding Wells Fargo’s standing to enforce the note and mortgage at the time it filed the complaint. In its opinion reversing the final judgment of foreclosure, the court stated that under Florida law, a plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). But standing must be established as of the time of filing the foreclosure complaint. Country Place Cmty. Ass’n v. J.P. Morgan Mortg. Acq. Corp., 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010); McLean, 79 So. 3d at 173. Thus, the court ruled that Wells Fargo’s submission of a postfiling assignment of the note and mortgage did not establish that it had standing when it filed the lawsuit. See Gonzalez v. Deutsche Bank Nat’l Trust Co., 95 So. 3d 251, 253 (Fla. 2d DCA 2012); McLean, 79 So. 3d at 173.