A District Court judge in New York has granted a defendant’s motion for judgment on the pleadings after it was sued for violating the Fair Debt Collection Practices Act because it attempted to collect on a time-barred debt without making the proper disclosures in a statement letter.
A copy of the ruling in the case of Solis v. Commonwealth Financial System, Inc., and Pendrick Capital Partners can be accessed by clicking here.
The plaintiff received a letter from the defendant, which was attempting to collect on a debt that had been incurred seven years prior. The letter included the plaintiff’s account number, the name of the original creditor, the current balance, the date of service, and the name of the current creditor. The body of the letter read:
Attached is an itemized statement that you requested regarding the above identified debt that has been placed in our office for collection by the current creditor.
This statement may not reflect payments made either by you or any insurance company after the service date. Please, contact me once you receive this information to discuss further.
At the bottom of the letter was the following disclosure: “[t]his is an attempt to collect a debt and any information obtained will be used for that purpose. This is a communication from a debt collector.”
The plaintiff sued, alleging the letter violated Section 1692e the FDCPA because New York has a six-year statute of limitations to sue in attempt to collect on unpaid debts and the letter did not inform her that no legal action could be taken to collect and that a partial payment would restart the statute of limitations.
The defendant argued that the letter was not an attempt to collect on a debt and since it did not make any reference to taking legal action to collect, a time-barred disclosure was not required.
The Second Circuit Court of Appeals, in Hart v. FCI Lender Servs., Inc. established a four-part test to determine whether a letter qualifies as an attempt to collect on a debt: (1) it referenced the plaintiff’s particular debt; (2) it directed him to mail payments to defendant at a specified address; (3) it referred to the FDCPA by name; and (4) “most importantly,” the letter “emphatically announce[d] itself as an attempt at debt collection” by stating “THIS IS AN ATTEMPT TO COLLECT UPON A DEBT, AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.”
The Second Circuit, noted Judge Sandra Feuerstein of the District Court for the Eastern District of New York, has not had to rule on a case yet that determines whether the lack of a time-barred debt disclosure qualifies as an FDCPA violation. Other courts have looked at whether letters have included offers to settle or threats to litigate when determining the lack of a time-barred debt disclosure, neither of which were included in this letter.
“The Letter includes no language that the least sophisticated consumer could plausibly interpret as a settlement offer, demand for payment, or a threat of litigation,” Judge Feuerstein wrote. “The mere mention of the ‘Current Balance’ alone does not suffice, particularly in the absence of any method to effectuate any payment such as a payment coupon, direction indicating how and where to submit payment, or reference to a payment website. Even the least sophisticated consumer would not view the Letter’s invitation to call and ‘discuss further’ to be a settlement offer.”
