In McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014), the Court of Appeals for the Seventh Circuit found that a debt buyers’ collection letter purporting to collect on a time-barred debt that used the term “settle” falsely threatened litigation.
Relying in part on the district court opinion in Rice v. Midland Credit Mgmt., Inc., 933 F.Supp.2d 1040 (N.D.Ill.2013), defendants argue that there is nothing misleading about the use of the word “settle” in this context. The court there wrote that “[b]ecause an unsophisticated consumer is not a ‘dimwit’ and is capable of making ‘basic logical inferences,’ it is not misleading to truthfully state in a letter that a debt is owed and that paying it would settle the debtor’s account. That is, after all, true. If a debtor who receives such a letter jumps to the conclusion that he may be sued if he does not pay, that inference is not attributable to the letter.” Id. at 1048; see also Crawford v. Vision Fin. Corp., 2012 WL 5383280, at *3 (N.D.Ill. Nov. 1, 2012) (opining that “an unsophisticated debtor would likely interpret the term ‘settle’ in a debt-collection letter to mean only the ‘settlement’ of a debt, not the settlement of a lawsuit”). Neither the FTC nor the CFPB take such a sanguine view of the abilities of the typical recipient of dunning letters. They have found to the contrary that most consumers do not understand their legal rights with respect to time-barred debts. Fed. Trade Comm’n, Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration 26–27 (2010). ¶ We are inclined to defer to the agencies’ empirical research and expertise. If a consumer received an “offer for settlement” and searched on Google to see what is meant by “settlement,” she might find the Wikipedia entry for “settlement offer.” Settlement offer, Wikipedia, (Mar. 10, 2014 at 4:06 pm), http:// en. wikipedia. org/ wiki/ Settlement_ offer. There she would learn that the term “offer to settle” is “used in a civil lawsuit to describe a communication from one party to the other suggesting a settlement—an agreement to end the lawsuit before a judgment is rendered.” Our reasoning in Evory supports this understanding. There we considered whether a settlement offer contained in a dunning letter is per se unlawful under § 1692f. The concern was that unsophisticated*1022 consumers receiving letters with language like “Act now and receive a settlement of 25% off your current balance!” would believe that if they did not pay by the deadline, they would not have a later chance to settle for less than the full amount. Such a belief would often have been ill-founded, because “debt collectors, who naturally are averse to instituting actual collection proceedings for the typically modest sums involved in the consumer debt collection business, frequently renew their offers if the consumer fails to accept the initial offer.” Evory, 505 F.3d at 775. The recipients of the letters, however, would believe that if they did not immediately accept the offer, they would face legal proceedings where the full amount would be demanded. The risk here is similar: a settlement offer on a timebarred debt implies that the creditor could successfully sue on the debt. If unsophisticated consumers believe either that the settlement offer is their chance to avoid court proceedings where they would be defenseless, or if they believe that the debt is legally enforceable at all, they have been misled, and the debt collector has violated the FDCPA. ¶ In summary, we conclude that an unsophisticated consumer could be misled by a dunning letter for a time-barred debt, especially a letter that uses the term “settle” or “settlement.”