The line of cases known as "Hunstein Copycats" continues to develop through the court systems. Unlike the last case to make headlines, the most recent result is positive for the ARM industry.
In Tukin v. Halsted Financial Services, No. 21-cv-00025 (N.D. Ill July 12, 2022), the consumer alleged that the debt collector (Halsted) violated the Fair Debt Collection Practices Act (FDCPA) when it used a letter vendor to print and mail the consumer a letter. The consumer also alleged that Halsted's demand letter violated the FDCPA because it improperly listed the current owner of the debt, failed to contain required disclosures, and had a code on the outside of the envelope. Though the consumer alleged that Halsted's letter was confusing, he admitted during his deposition that he benefitted from Halsted's letter because he could pay off his debt for less than the amount owed.
Halsted filed a motion for summary judgment alleging that the consumer did not suffer an injury sufficient to allow him to maintain the action in federal court. The judge agreed with Halsted and ruled in its favor.
First, regarding the alleged deficiencies with the letter, the judge noted that confusion caused by a letter is not an injury sufficient enough to maintain a lawsuit. Because the consumer testified at deposition that he benefited from Halsted's communication, the court found the consumer could not demonstrate he suffered any injury at all.
The judge also rejected the consumer's allegation that Halsted violated the FDCPA by using a letter vendor. Specifically, the court held that the consumer could not establish that he suffered an injury because (a) the letter vendor did not analyze, modify, or manipulate the data and letters transmitted to it for printing; (b)the data used to print and mail the letters was secure and encrypted at all times; and (c) no individual had access to unencrypted data. According to the court, "Put simply, [the consumer] has not provided any evidence that his information was disclosed, not can he show a resulting injury from that disclosure."
After the decision, Halsted's General Counsel, Brian Glass, remarked, "Halsted is very pleased with the outcome and is thankful to Manny Newburger and Nabil Foster for their expert representation. In this case, the Plaintiff testified that he actually benefited from our letter, which was the subject of the litigation and contained a discount offer, because he was able to pay off his debt for less than the amount owed. Without concrete injury, cases like this cannot persist in Federal Court. We are committed to defending frivolous matters and Judge Wood's decision to dismiss the pending litigation solidifies our decision to defend this case."
The full order granting summary judgment in Halsted's favor can be read here.
The notable difference in this case that distinguishes it from other Hunstein copycat cases is that the debt collector was able to introduce evidence. Note that Halsted won on a motion for summary judgment, after gathering evidence, not a motion to dismiss where the court is limited by what has been alleged in the complaint. This distinction is significant because by waiting until the summary judgment phase to file its motion, Halstead was able to gather and introduce evidence that the consumer's information was not actually disclosed to anyone.
Since the CFPB has apparently decided not to comment on the Hunstein issue, the ARM industry is now forced to rely upon the courts to bring some common sense to the table. Though success on a Hunstein copycat defense still may be luck-of-the-draw, the ruling in Tukin may provide a road map for defense for those who are willing to reach the evidentiary stage of litigation.