5th Circuit Holds Mere Statutory Violation of FDCPA Does Not Establish Standing

A three-judge panel from the U.S. Court of Appeals for the Fifth Circuit recently held that Article III standing cannot be established for a claim brought under the Fair Debt Collection Practices Act (FDCPA) unless the plaintiff can show they suffered the type of injury that bears a “close relationship” to a harm traditionally recognized at common law, and that such an injury cannot be shown by a mere statutory violation of the FDCPA.

The case arose when a consumer received a collections letter one day after the statute of limitations had run on the debt, but the letter failed to say so.  The consumer did not pay the time-barred debt and instead filed an FDCPA class action for statutory damages.  The debt collector raised the issue of standing before the district court, arguing that a recent Supreme Court ruling, TransUnion, LLC v. Ramirez, concerning a similar issue in the FCRA context, also barred the consumer in this case.  The district court rejected the debt collector’s standing argument, holding that, among other things, the alleged FDCPA violation resulted in a concrete injury-in-fact because the rights allegedly violated were substantive rather than procedural. 

On appeal, the Fifth Circuit raised the question of standing sua sponte.  The Fifth Circuit considered each of the five theories advanced by the consumer to establish that she suffered a concrete injury-in-fact.  The Fifth Circuit quickly dismissed the consumer’s primary theory that she satisfied the injury requirement because a statutory right was violated, because that theory was explicitly rejected by TransUnion.  The consumer’s second theory that she suffered “a significant risk of harm” because she might have paid the time-barred debt was rejected because an injury based in monetary damages cannot be concrete if it has not yet occurred.  Two other theories, the consumer’s confusion and lost time, were rejected as not similar to any traditional common law injury.  The Fifth Circuit acknowledged that the consumer’s final theory of injury, intrusion upon seclusion, is traditionally recognized at common law, but rejected its applicability in this context because Congress’ concern in enacting the FDCPA provision at issue was economic harm, not consumer privacy. 

After finding that the named plaintiff did not suffer a concrete injury and therefore did not have standing to bring a claim under the FDCPA, the Fifth Circuit vacated the class certification and remanded the case for dismissal.