Debt Collector's Removal Backfires: Confusion Alone Fails Standing, and Fee-Shifting Follows

Cheryl Czachorski, a Milwaukee County resident, sued Full Circle Financial Services LLC after receiving a form debt collection letter on or about January 28, 2025, claiming she owed a debt to "AXIOM ACQUISTION VENTURES, LLC" and that she had an account with "KMD PARTNERS DBA CREDITNINJA." According to her complaint, Czachorski did not recognize either entity and had never interacted with them, leaving her confused and misled. She brought the putative class action in Milwaukee County Circuit Court on July 25, 2025, under the FDCPA and the Wisconsin Consumer Act, alleging the letter contained false, deceptive, and misleading representations. Full Circle removed the case to the Eastern District of Wisconsin on August 28, 2025.

Judge Brett H. Ludwig held that Czachorski's complaint alleged nothing beyond confusion and being misled — and under binding Seventh Circuit precedent, that is not enough. Citing Markakos v. Medicredit, Inc., the court explained that a technical FDCPA violation does not necessarily produce an injury in fact; the violation must have presented an appreciable risk of harm, such as causing the plaintiff to pay extra money, affecting her credit, or otherwise altering her response to the debt. Mere stress or confusion from generally misleading statements falls short.

Full Circle argued that Czachorski's allegation that confusing creditor-name representations create the potential for fraud or double-payments, combined with her request for injunctive relief, satisfied the concrete-injury requirement. Judge Ludwig rejected both arguments. The fraud-and-double-payment language, the court held, was a general proposition of law explaining why the letter could be a material misrepresentation — not a factual allegation that Czachorski herself faced such a risk. And the injunctive-relief request was tied exclusively to the state-law Wisconsin Consumer Act claim under Wis. Stat. §426.109, not to the FDCPA claim that was the sole basis for federal jurisdiction.

With the FDCPA claim lacking standing and the WCA claim dependent on supplemental jurisdiction, the court had no subject matter jurisdiction and remanded the case to Milwaukee County Circuit Court.

On fees, Judge Ludwig held that Full Circle lacked an objectively reasonable basis for removal under 28 U.S.C. §1447(c). The court pointed to the volume of Seventh Circuit precedent — Markakos, Smith v. GC Servs. Ltd. Partnership, Pennell v. Glob. Tr. Mgmt., LLC, and Larkin v. Fin. Sys. of Green Bay, Inc. — foreclosing Full Circle's position. The court also rejected Full Circle's argument that post-removal negotiations barred the fee request. Full Circle had agreed to stipulate to remand only if Czachorski would agree that she had not acted on any misinformation in the letter and had not suffered any injury in fact fairly traceable to the letter — conditions the court characterized as an improper attempt to strong arm Czachorski into giving up potential future claims. Negotiations after removal, the court noted, have no bearing on whether the basis for removal was objectively reasonable at the time it was made.

Czachorski has until April 23, 2026 to submit her fee and cost request; Full Circle has seven days after that submission to respond.