Late December, the Fourth Circuit Court of Appeals (Fourth Circuit), in Lovegrove v. Ocwen Home Loans Srvs., upheld summary judgment in favor of a mortgage servicer against allegations under the Fair Debt Collection Practices Act (FDCPA), under which courts generally apply a “least sophisticated consumer” standard. The plaintiff in Lovegrove alleged that monthly mortgage statements he received from the servicer violated the FDCPA because they attempted to collect a debt which had been discharged in a recent bankruptcy. The notices, however, contained the familiar and—here, exposure limiting—disclosures that “if the debt is in active bankruptcy or has been discharged through bankruptcy, this communication is not intended as and does not constitute an attempt to collect a debt.” In following its own recent case law, the Fourth Circuit applied a “commonsense inquiry” into whether these notices, in light of the quoted disclaimer, attempted to collect debt, ultimately deciding that they did not. Of further note is the passing comment by the Fourth Circuit that “there is an argument that sophisticated and high-dollar loan arrangements should not be analyzed under the least sophisticated consumer standard. Perhaps, sophisticated consumers should not get the benefit of the lenient standard when they are part of a complex relationship or situation that may be confusing to less sophisticated individuals.”
The clear take away is that disclaimers that can be easily disregarded as boilerplate still have significant meaning, and, as in this case, may form the basis for escaping liability altogether. Further, while debt collectors still have to strictly comply with all requirements under the FDCPA, the wildly lenient “least sophisticated consumer standard” may give way under certain circumstances.