The Court of Appeals for the Second Circuit today upheld a lower court ruling in Taylor v. Financial Recovery Services related to the disclosures made in collection letters.
A copy of the ruling is available here.
The issue within the collection letters was whether including a disclosure in the letter about the accrual of interest and fees was a violation of the Fair Debt Collection Practices Act. The plaintiffs alleged that the letter was misleading a violated the FDCPA.
The collection letters sent by the defendant in this case referenced a “balance due” that did not change, but did not reference whether interest or fees were accruing on the debts. The plaintiffs used the ruling in Avila v. Riexinger & Associates, in which a plaintiff sued because a collection letter referenced the “current balance” of an unpaid debt, but did not mention that interest and fees were accruing on the account.
The Appeals Court did not buy the argument.
The collection notices FRS sent to Taylor and Klein, which stated their respective balances due without discussing interest or fees, could likewise have been read to mean that prompt payment of the amounts stated would satisfy the debts in question. The difference is that, while that message was prejudicially misleading on the facts of Avila, on the facts of this case it was accurate: prompt payment of the amounts stated in Taylor’s and Klein’s notices would have satisfied their debts.
The FDCPA does not require debt collectors reference the accrual of interest or fees in a collection letter if interest and fees are not part of the debt.
It is hard to see how or where the FDCPA imposes a duty on debt collectors to encourage consumers to delay repayment of their debts. And requiring debt collectors to draw attention to the fact that a previously dynamic debt is now static might even create a perverse incentive for them to continue accruing interest or fees on debts when they might not otherwise do so. Construing the FDCPA in light of its consumer protection purpose, we hold that a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading within the meaning of Section 1692e.
