On October 29, the Second Circuit Court of Appeals issued a long-awaited ruling in a Fair Debt Collection Practices Act case involving the disclosure of the amount due in a collection letter. In Derosa v. CAC Financial, the Court affirmed summary judgment in favor of the debt collector and held that, if a debt is not accruing interest or fees, no obligation exists to affirmatively disclose this fact. This decision follows the Court’s previous ruling in Taylor v. Financial Recovery Services, Inc. where the Court reached the same conclusion in a closely analogous case.
In Derosa, CAC Financial Corporation sent a collection letter to consumer Darian Derosa, listing an amount due. Derosa sued CAC, alleging that the letter was deceptive in violation of the FDCPA because it did not disclose whether interest and fees were accruing. To rebut Derosa’s allegations, CAC submitted a declaration stating that interest and fees were not accruing at the time the letter was sent. In response, Derosa submitted her own declaration asserting that her account had previously accrued interest and fees and that the credit card agreement allowed for their accrual. The Eastern District of New York granted summary judgment in favor of CAC and Derosa appealed.
The Second Circuit referred straight back to Taylor in which it had already held that if a debt is not accruing interest and fees, a collection letter does not need to disclose this fact:
In Taylor v. Financial Recovery Services, Inc., 886 F.3d 212 (2d Cir. 2018), this Court was faced with the same question that we are faced with today: are collection notices that do not identify whether interest and fees are accruing a “per se violation” of the FDCPA? Id. at 214. Taylor answered that question in the negative: if a debt is not accruing interest and fees, “a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading within the meaning” of the FDCPA. Id. at 215.
Thus, the only remaining issue was whether Derosa created a genuine dispute of material fact as to whether interest and fees continued to accrue when the letters were sent.
The Court noted that just because an account accrues interest and fees under ownership of the original creditor does not necessarily mean that the same would be true when ownership transfers to a third party. CAC adduced evidence that the amount due was static, and the two collection letters sent to Derosa listed the same amount. Derosa’s assertions to the contrary, which were solely based on the past accrual of interest and fees, were merely speculative and insufficient to create a genuine dispute of fact.
We have previously reported about multiple decisions by district courts within the Second Circuit involving similar “reverse-Avila” or current balance claims. As each decision comes out, the plaintiffs’ bar tries a different tack with a new iteration of this type of letter claim. Taylor and Derosa will hopefully put an end to such filings and be the death knell of still pending claims.