The progeny of Avila v. Riexinger & Associates continues to spawn, even though debt collectors are routinely winning these cases. Two of the most-recent decisions on these claims came from some of the most problematic jurisdictions for debt collectors: the Third Circuit and the Eastern District of New York. Both courts ruled in favor of the debt collector.
Third Circuit Doubles Down in Dotson v. Nationwide Credit, Inc.
In this decision, the Third Circuit affirmed the district court's dismissal of the case. The case revolved around a collection letter sent by the defendant while attempting to collect a debt on behalf of Chase Bank USA, N.A. The letter stated that "[t]he Account Balance as of the date of this letter is shown above."
Plaintiff sued, alleging a claim we've all seen before: that stating the balance due "as of the date of this letter" could confuse a consumer into thinking the debt will change in the future when the debt is, in fact, static. The claim was dismissed by the district court, which found that:
[The letter] actually guards against potential confusion about the amount owed by clearly specifying the date on which the debt was calculated, preventing any misunderstanding that could arise if, for example, a payment crossed in the mail with the collection letter.”
The Third Circuit agreed with the district court and echoed the Second Circuit's reasoning in Taylor v. Fin. Recovery Servs. when it found that the letter accurately stated the balance owed.
Pre- and Post-Charge-Off Collection Letters in Sharon v. CAC Fin. Corp.
In this case, the Eastern District of New York granted the defendant's motion for summary judgment on an interest disclosure claim. The facts of this case are best portrayed in a timeline:
- 2016: The plaintiff falls behind on her credit card payments.
- April 2016: The creditor places the account with a collection agency (not defendant) listing the outstanding balance as $1,751.
- August 2016: The creditor charges off the account and placed it with defendant for collections.
- Sept 2016: Defendant sends its collection letter listing the outstanding balance as $2,018.79. Per the DFS regulation, the defendant also listed as follows: “POST C/O INTEREST” and “POST C/O FEES” as zero and “POST C/O AMOUNT” as $2,018.79.
Plaintiff, represented by attorney Adam Fishbein, filed an FDCPA claim alleging that defendant's letter is misleading and that it confused the defendant about whether or not the balance was increasing. The primary argument is that the letter sent by the defendant contained a higher outstanding balance than the letter she received earlier in the year from the previous debt collector. The defendant argued that, since the account was charged off, the balance was static throughout the period in which it tried to collect the debt. (This follows the Second Circuit's guidance as outlined in De Rosa, which was against this same defendant.)
In her decision on the motion for summary judgment, Judge Donnelly relies on Taylor v. Fin. Recovery Servs., finding that the prior Second Circuit decision "resolves this case decisively against the plaintiff." The decision states:
The parties agree that Synchrony charged-off the plaintiff’s account on August 16, 2016, and that the defendant sent its first collection notice to the plaintiff two weeks later. Even if the plaintiff’s account might have been collecting interest before Synchrony charged-off the account, or when another collection agency was trying to collect the debt, the debt stopped collecting interest and fees on August 16, 2016. At that time, the balance due was $2,018.79—the amount the defendant listed in its September and October collection letters. That amount did not change while the defendant attempted to collect the debt, and the defendant’s letters accurately stated the balance, interest and fees the plaintiff owed.
There you have it, folks. Two more cases to add to your war chest in case you continue seeing interest disclosure cases come across your desk. The iA Case Law Tracker—which gives you data on court decision trends in seconds—lists 112 court decisions that discuss the interest disclosure issue. In 78 of those decisions, the court ruled in favor of the debt collector. In New York and Illinois—two jurisdictions that were flooded with these claims—debt collectors are overwhelmingly winning these claims.