Debt collection firm can be sued for "studied ambiguity" in suggesting default has occurred

The Sixth Circuit noted that even the truth can be misleading, citing the notorious example of entering "Captain sober today" in a ship's log, where the officer has no history of inebriation. Taking that principle into account, the Court upheld Valentine Grden's right to sue the Leikin Ingber & Winters, PC, debt collection firm for violating the Fair Debt Collections Practices Act. The Court noted that the motion for entry of default judgment mailed to Grden by the debt collectors could be viewed as an indication that Grden had already defaulted in making payments and that it was too late for him to remedy the situation.

Grden incurred a little under $3,000.00 in medical expenses through Oakwood Healthcare to treat an infection. He had paid the balance down to approximately $500 dollars when Leikin, et al., sued him. He called for an updated balance and was told it was more than $1,000.00. Grden sued alleging that Leikin's false statements about default and the current balance constituted a violation of the FDCPA. The trial court dismissed his claim.

On appeal, the Sixth Circuit upheld the dismissal with regard to giving an erroneous balance amount on inquiry, but reversed the lower court with regard to the "motion for default." The court noted that the standard for compliance with the FDCPA is not simply "truth" but rather whether the least sophisticated consumer, attempting to decipher his or her rights, could reasonably misunderstand the Defendant's debt-collection effort.