A wave of lawsuits filed under the Fair Debt Collection Practices Act, especially in the Second Circuit, continues regarding disclosures of interest and fees in collection letters.  Consumers have complained about failure to warn of interest and fees continuing to accrue, as well as failure to disclose that interest and fees did not accrue.  The Second Circuit addressed these issues three times in the past two years in Avila, Taylor, and Derosa.  However, this has not deterred the consumer bar from bringing new claims over even the most careful disclosures.

In this most recent unsuccessful putative class action, consumer plaintiff Andrew Gissendaner sued Enhanced Recovery Company over a letter that listed interest and fees as “N/A.”  The letter also explained that “upon receipt of [Gissendaner’s] payment and clearance of funds in the amount of $2,562, [his] account will be considered paid in full.”

Gissendaner posited that “N/A” for interest and fees was misleading because “every debt accrues interest” and listing “N/A” for interest could lead a least sophisticated consumer to think that interest never accrued on his debt.  Enhanced Recovery argued in response that the statements were true because no interest or fees accrued since the debt was placed with Enhanced Recovery for collection.  Enhanced Recovery also emphasized that Gissendaner was ignoring the part of the letter which stated that if he paid a specific amount by a certain date, his debt would be satisfied.

In its opinion granting Enhanced Recovery’s cross-motion for judgment on the pleadings, the Western District of New York did not have any difficulty concluding that the Second Circuit’s decision in Taylor governed.  To be sure, Gissendaner admitted that no interest or fees were accruing and “supplied no convincing reason why the Court should find Taylor distinguishable.”  Accordingly, the Court held that the letter was not confusing and that Gissendaner’s claim lacked merit.

Continued development of favorable precedent, such as this case, is vital in helping to deter meritless “current balance” or “reverse-Avila” claims.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Timothy DeBeer Timothy DeBeer

Timothy is an attorney in the firm’s Financial Services Litigation section. Timothy focuses his practice on representing financial institutions in government investigations conducted by the Consumer Financial Protection Bureau, the Department of Justice, and the Department of Housing and Urban Development, and private…

Timothy is an attorney in the firm’s Financial Services Litigation section. Timothy focuses his practice on representing financial institutions in government investigations conducted by the Consumer Financial Protection Bureau, the Department of Justice, and the Department of Housing and Urban Development, and private litigation involving RESPA, FHA, TILA, ECOA, and various state banking and consumer protection laws.

Photo of Alan D. Wingfield Alan D. Wingfield

Alan Wingfield helps consumer-facing clients navigate compliance, litigation and regulatory risks posed by the complex web of state and federal consumer protection laws. He is a trusted advisor and tireless advocate, helping clients develop practical compliance and dispute-resolution strategies.

Photo of Andrew Buxbaum Andrew Buxbaum

Andrew Buxbaum is Counsel in the firm’s Consumer Financial Services practice. Andrew provides clients with valuable strategy and analysis based on his vast experience in both private practice and in-house counsel positions. Andrew specializes in representing clients in the financial services industry (including…

Andrew Buxbaum is Counsel in the firm’s Consumer Financial Services practice. Andrew provides clients with valuable strategy and analysis based on his vast experience in both private practice and in-house counsel positions. Andrew specializes in representing clients in the financial services industry (including banks, lenders, mortgage companies, debt collection firms and loan servicers) in consumer litigation, bankruptcy, and regulatory compliance matters.

Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and state laws.

Photo of Jim Trefil Jim Trefil

James K. Trefil is counsel in Troutman Pepper’s Consumer Financial Services practice, with a primary focus on Financial Services Litigation. His practice includes the representation of clients in federal and state court, both at the trial and appellate level, with a focus on…

James K. Trefil is counsel in Troutman Pepper’s Consumer Financial Services practice, with a primary focus on Financial Services Litigation. His practice includes the representation of clients in federal and state court, both at the trial and appellate level, with a focus on areas of complex litigation, financial services litigation and consumer litigation. James has represented clients within these areas in a wide variety of litigation matters involving class actions, contracts, torts, and federal and state consumer protection laws.

Photo of David N. Anthony David N. Anthony

David Anthony handles litigation against consumer financial services businesses and other highly regulated companies across the United States. He is a strategic thinker who balances his extensive litigation experience with practical business advice to solve companies’ hardest problems.