On August 2, a Federal Court in Oregon entered summary judgment in favor of a collection agency, ruling that a debt collector must disclose to the consumer that interest accrues on an account only when such interest actually does accrue.
In Powers v. Capital Management Services, LP, plaintiff Diane Powers incurred a debt for $565.90, which subsequently was placed by the original creditor with Capital Management Services for collection. At that time, Capital Management was not applying any interest charges to the account. Capital Management sent a collection letter to Powers referencing that $595.90 was owed, but did not disclose whether interest and fees were accruing on the balance. Capital Management also included information about the original creditor’s account in the letter, and the letter identified only the last four digits of the account number.
Powers sued Capital Management for violation of the Fair Debt Collection Practices Act, claiming the letter was false and misleading in violation of section 1692e(10) because Capital Management failed to disclose whether interest and fees would accrue on the balance and that it used only four digits to identify Powers’ account.
In rejecting Powers’ allegations, the Court reaffirmed its previous decision in Santibanez v. Nat’l Credit Systems, Inc., 2017 WL 126111 (D. Ore. Jan. 12, 2017). In Santibanez, the court relied on the Seventh Circuit’s decision in Miller v. McCalla, Rayner, Patrick, Cobb, Nichols & Clark LLC to hold there is no duty to disclose where interest was not accruing on a debt. Rather, a debt collector must so disclose only if interest and fees actually accrue.
Powers argued that even though Capital Management did not reveal that interest and fees may accumulate on the balance, the creditor could still be applying interest and fees to the account. Therefore, the creditor had a duty to disclose. In rejecting this argument, the Court determined that regardless of whether it was adding interest and fees to the account, Capital Management was “the holder” of the debt at the time the letter was received by Powers. The Court also stated that a debt collector is not required to inform the consumer that interest is not accruing when such is the case. Since Capital Management was not adding interest and fees while servicing Powers’ account on behalf of the original creditor, the Court held that Capital Management “fulfilled its obligations under the FDCPA by sending a letter to Plaintiff clearly stating the amount of the delinquent debt to be $565.91.”
Powers also alleged that Capital Management violated the FDCPA by misrepresenting her account number on the collection letter. Here, Capital Management referenced only the last four numbers of Powers’ account number with the original creditor, while Powers claimed the account number should have been included in its entirety with all but the last four digits redacted. The Court disagreed, holding there was no evidence that Capital Management made a false, deceptive, or misleading misrepresentation. While the Court observed that Capital Management could perhaps have found better ways to identify the account more clearly, its use of the last four digits by itself did not demonstrate any ill will or intent to deceive.
We will continue to monitor and report on current account balance cases as they move their way through the courts.