Robert Schultz, Jr. v. Midland Credit Management, 905 F.3d 159

Midland Credit Management sent form debt-collection letters in 2015 to Robert and Donna Schultz offering discounts to settle debts, each debt under $600.
Letters included: (1) that paying in full would be reported as "Paid in Full" and paying less would be reported as "Paid in Full for less than the full balance," and (2) the statement: "We will report forgiveness of debt as required by IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case."
Because IRS rules require reporting of discharged indebtedness only when the amount is $600 or more, the Schultzes alleged the IRS language was false, deceptive, and misleading under the FDCPA, 15 U.S.C. § 1692e.
The District Court dismissed the putative class action under Rule 12(b)(6), finding the language would not mislead the least sophisticated consumer.
The Third Circuit reversed, holding the statement could plausibly be deceptive under the FDCPA and remanded for further proceedings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether stating "We will report forgiveness of debt as required by IRS regulations" in letters about debts under $600 is false, deceptive, or misleading under §1692e	The language falsely implies forgiveness may be reported to the IRS and could frighten unsophisticated consumers into paying even though reporting cannot occur for debts under $600	The language is accurate and qualified; the phrase "might not be required in your case" prevents deception and must be read in context	Reversed dismissal: statement can be misleading to the least sophisticated debtor because it suggests reporting is possible when, for these debts, reporting is legally impossible; survives 12(b)(6) plausibly alleging FDCPA violation
Whether the District Court should resolve Midland's motion to compel arbitration on remand	N/A (Schultzes opposed dismissal)	Midland urged arbitration; District Court did not decide due to dismissal	Court remanded; arbitration issue left for District Court to address in the first instance

Brown v. Card Serv. Ctr., 464 F.3d 450 (3d Cir. 2006) (articulates the "least sophisticated debtor" standard and that truthful statements can still be deceptive if reasonably read to have an inaccurate meaning)
Campuzano-Burgos v. Midland Credit Mgmt., Inc., 550 F.3d 294 (3d Cir. 2008) (an accurate statement can be misleading in context under the FDCPA)
Gonzales v. Arrow Fin. Services, LLC, 660 F.3d 1055 (9th Cir. 2011) (debt collector liable when letter implies action it cannot legally or actually take; conditional language does not necessarily avoid liability)
Boucher v. Fin. Sys. of Green Bay, Inc., 880 F.3d 362 (7th Cir. 2018) (a dunning letter is misleading if it implies outcomes that cannot legally occur)
Lox v. CDA Ltd., 689 F.3d 818 (7th Cir. 2012) (similar principle on misleading implications in collection letters)
Jensen v. Pressler & Pressler, 791 F.3d 413 (3d Cir. 2015) (plaintiff need only show least sophisticated consumer could be misled)
Wilson v. Quadramed Corp., 225 F.3d 350 (3d Cir. 2000) (discusses reasonable interpretation limits under consumer-protection standards)
Black v. Montgomery Cty., 835 F.3d 358 (3d Cir. 2016) (standard of plenary review for motions to dismiss)
Altman v. J.C. Christensen & Assocs., Inc., 786 F.3d 191 (2d Cir. 2015) (held a debt collector need not warn of tax consequences to comply with the FDCPA; cited by parties though distinguished on facts)