A District Court judge in New York has denied a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act by sending a letter that confused the plaintiff because it contained a line item in a table detailing the amount that was owed but did not offer an explanation of the source of the line item.
A copy of the ruling in the case of Leitner v. Client Services, Inc., can be accessed by clicking here.
The plaintiff received a collection letter that included a breakdown of the total amount that was owed. The table included the following items:
The total amount of the debt due as of charge-off: $5,266.06
The total amount of interest accrued since charge-off: $0.00
The total amount of non-interest charges or fees accrued since the charge-off: $263.50
The total amount of payments and credits made on the debt since the charge-off: $263.50
Current Balance: $5,266.06
The plaintiff filed suit, alleging the line item “[t]he total amount of non-interest charges or fees accrued since charge-off: $263.50” was confusing because it was not explained how the source of that amount was calculated and whether more would be added in the future.
While acknowledging that the letter clearly states the total amount of the debt that is owed and “even a least sophisticated consumer” would be able to notice the offsetting charges for $263.50 and notice “they cancel each other out,” wrote Judge Brian Cogan of the District Court for the Eastern District of New York. But the letter does not indicate whether that amount would change in the future, and that is where the defendant’s problems start, Judge Cogan ruled.
“Because of the lack of any information foreclosing this possibility, plaintiff argues that he does not know if the amount of his obligation is static or dynamic,” Judge Cogan said. “He has therefore been misled, he claims, as to whether paying $5,266.06 will close the account, or whether another charge might be added, so that more than $5,266.06 would be needed to close this account.”
At least within the Second Circuit, collection letters do not have to include the level of specificity of a filing with the Securities and Exchange Commission, Judge Cogan wrote, saying that collectors do “not have to set forth chapter and verse the default terms of the original credit card or chattel purchase agreement, or even the creditor’s internal policies with regard to post-charge-off additions.” But what they do have to do, he ruled, is not imply or suggest that there may be additional charges in the future when there will not be.
“I do not know why that amount was debited, nor why it was credited, nor, most importantly, whether it might be debited again after some period of time if the debt remained unpaid,” Judge Cogan wrote. “And if I don’t know, I cannot expect the least sophisticated consumer to know either. The fact that, whatever it is, it is not an interest element does not change the unaddressed possibility of a recurring charge.”
