Is it misleading if a debt collector says it ‘may’ report you?

Debt collectors do not have carte blanche. U.S. law prohibits the use of threats, harassment and falsities when dealing with debtors. These regulations shield regular consumers from untoward tactics and general unpleasantness.

A recent ruling from the federal court of appeals has provided some clarity on an interesting question: If a creditor says it “may” report someone to national credit bureaus, does that constitute a misleading statement?

The debtor’s account ‘may be reported’

The ruling in question comes from the Seventh Circuit Court of Appeals, which covers Wisconsin, Illinois and Indiana. The case was brought by a woman who had past-due cellphone bills, and revolved around communications from a debt collector.

The debt collector sent three letters to the plaintiff regarding the debt. In the second such letter, the collector wrote the debtor’s account “may be reported to the national credit bureaus.” The debt collector did then report the account before sending a third letter, which once again included the “may be reported” language.

The debtor took issue with the use of “may,” arguing it violated the Fair Debt Collection Practices Act. Specifically, she said, the debt collector’s language amounted to a misleading or deceptive act.

The court’s ruling

The Seventh Circuit Court of Appeals affirmed a previous ruling from a district court, which granted a summary judgment in favor of the debt collector. While the Seventh Circuit acknowledged it was “plausible” consumers could be confused by the use of “may” in the debt collector’s letters, the statement itself was not plainly false or clearly misleading.

Because of this, the plaintiff shouldered the burden of demonstrating the language was misleading or confusing. But she “failed to present any evidence beyond her own opinion,” and her “speculation” was simply not enough. In summary, the use of “may” in this case was not inherently misleading and did not violate the Fair Debt Collection Practices Act.

Still, there remains a thin line between lawful and unlawful. This case highlights the importance of every single word a debt collector uses to communicate with a debtor. If a debt collector threatens an action they do not intend to take, that can be enough to result in a Fair Debt Collection Practices Act violation.

As this case demonstrates, the inclusion of a three-letter word can prove to be quite important.

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