On May 18, the Southern District of New York rendered a long–awaited opinion on “current account balance” cases, holding that current balances referenced in collection letters, with no mention of accruing interest or fees, do not violate Section 1692e of the Fair Debt Collection Practices Act where no such interest or fees actually accrue.  The case is Christine Taylor, et al. v. Financial Recovery Services, Inc. (Case No. 1:16-cv-04685-LGS (S.D.N.Y., May 18, 2017)) and can be found here.

In Taylor, the plaintiffs received multiple collection letters from a debt collector offering settlements on each claim, but providing the current balance in multiple locations within each letter.  The letters did not reference whether interest or fees would accrue.  Furthermore, each settlement letter reflected a statement that “This settlement may have tax consequences. Please consult your tax advisor.”  Due to the lack of disclosure regarding whether interest and fees were accruing, the plaintiffs claimed that the letters could be interpreted to have more than one meaning, and they filed suit claiming violations of Section 1692e, et seq. of the FDCPA.

The Court granted summary judgment to Financial Recovery Services, holding that its letters did not violate Section 1692 and noting that the collection notices were not false, misleading, or deceptive as a matter of law.  The Court further found that the Plaintiffs failed to present evidence that the balances on the face of the notices were inaccurate.  Since the balances were accurate, the Court found it “irrelevant” whether or not the balances in fact accrued interest or fees after being referred to Financial Recovery Services.  Furthermore, the Court pointed out that the statements were not misleading because the balances owed were stated numerous times within each letter and the balances remained the same in successive letters.

In analyzing the “least sophisticated consumer” standard, the Court stated that “[t]he letters are not misleading to the least sophisticated consumer, who (i) might not understand or even consider the concept of interest and when it accrues; (ii) could reasonably take the language at face value as the amount owed; or (iii) might infer from the unchanging amount in each of the coupons and successive letters that interest was not accruing.”  Importantly, the Court noted that “[o]nly a consumer in search of an ambiguity and not the least sophisticated consumer relevant here, would interpret the letters to mean that interest was accruing.” (emphasis added).

In distinguishing this case from the holding in Avila v. Riexinger & Assocs. LLC (817 F.3d 72 (2d Cir. 2016)), the Court recognized that that the plaintiffs provided no evidence that paying the balance on their respective letters would not satisfy their debts.  The Court instead followed the holding in Dick v. Enhanced Recovery Co. (No. 15 Civ. 2631 WL 5678556 at *5 (E.D.N.Y. Sept. 28, 2016)), which stated that Avila did not stand for the proposition that it is misleading to include the amount owed in a letter without affirmatively noting the amount is not increasing.

We previously reported on this issue here and here, and will continue to monitor this issue as it evolves.