Pantoja v. Portfolio Recovery Associates, LLC
2017 U.S. App. LEXIS 5432
| 7th Cir. | 2017Background
- In 1993 Pantoja opened a Capital One card he never used; fees accrued and he made no payments. Portfolio Recovery later purchased the account.
- Portfolio attempted collection by phone in 1998 and then sent a dunning letter in April 2013 demanding $1,903.15 and offering settlement plans.
- The letter stated: “Because of the age of your debt, we will not sue you for it and we will not report it to any credit reporting agency,” and described settlement payment schedules.
- Pantoja sued under the FDCPA § 1692e alleging the letter was deceptive because it failed to warn that (a) the debt was legally time-barred and (b) a partial payment or promise could restart the statute of limitations.
- The district court granted summary judgment for Pantoja, awarding statutory damages; the Seventh Circuit affirmed, adopting two independent grounds for liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether collection letter violated FDCPA §1692e by failing to warn that a partial payment or promise could restart the statute of limitations | Pantoja: Letter was deceptive because it omitted that making or promising a partial payment would revive a time‑barred claim | Portfolio: Letter offered a full settlement and extinguishment if fully paid; ambiguity does not establish deception | Held: Omission was deceptive as a matter of law — unsophisticated consumers would not be warned that a partial payment or promise risks restarting the limitations period |
| Whether the letter was misleading by stating the collector “will not sue” without saying the law bars suit | Pantoja: Statement implied defendant merely chose not to sue rather than being legally barred, misleading consumers about enforceability | Portfolio: Language was not a threat and mirrors consent-decree phrasing; any ambiguity defeats summary judgment | Held: The omission of the legal limitation made the statement deliberately ambiguous and misleading; summary judgment for plaintiff affirmed |
| Whether attempts to collect time-barred debts are per se unlawful absent a threat to sue | Pantoja: Emphasizes risk of deception even without explicit threats because consumers may be lured into reviving claims | Portfolio: Collection of time-barred debt is not automatically unlawful where no suit threatened | Held: Court did not adopt a per se rule; focused on deception/unfairness of the specific letter and affirmed liability on narrower grounds |
| Whether summary judgment was appropriate without extrinsic consumer-survey evidence | Pantoja: Letter is plainly deceptive so no extrinsic evidence required | Portfolio: Ambiguity requires factual proof (e.g., surveys) that consumers are misled | Held: The letter’s deliberate ambiguity and omission were plainly misleading to the unsophisticated consumer, so summary judgment was appropriate |
Key Cases Cited
- Phillips v. Asset Acceptance, LLC, 736 F.3d 1076 (7th Cir.) (suing on time‑barred debt violates FDCPA)
- McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir.) (threats to take actions a collector cannot take violate FDCPA; dunning letters may mislead)
- Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir.) (distinguishing permissible collection of time‑barred debts from actionable threats of litigation)
- Buchanan v. Northland Group, Inc., 776 F.3d 393 (6th Cir.) (offer to settle a time‑barred debt can be deceptive if it fails to disclose time‑barred status or effect of partial payment)
- Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769 (7th Cir.) (context and wording of settlement offers can affect consumer impressions)
- Lox v. CDA, Ltd., 689 F.3d 818 (7th Cir.) (three‑category framework for §1692e: plainly not misleading; potentially misleading requiring extrinsic evidence; plainly misleading not requiring extrinsic evidence)