In a concise opinion, the U.S. District Court for the Northern District of Illinois recently held that a dunning letter did not violate the Fair Debt Collection Practices Act requirement to state “the amount of the debt,” despite omitting safe harbor language recommended by the Seventh Circuit.
In Tena v. Transworld Systems, Inc., plaintiff Rocio Tena alleged an FDCPA claim against defendant Transworld Systems, Inc. based on a debt-collection letter that Transworld sent to Tena regarding student loan debt. In the letter, Transworld stated the total balance due ($13,597.15) and informed Tena that “[t]he account balance will be periodically increased due to the addition of accrued interest, as permitted by applicable law.” The letter cited to 34 C.F.R. § 682.404(f) and 682.410(b)(2) regarding collection costs.
Tena argued that the letter violated the FDCPA requirement in 15 U.S.C. § 1692g(a)(1) to state “the amount of the debt” because it was unclear whether the $13,597.15 was the principal balance or something more. According to Tena, this violated the Seventh Circuit’s admonition in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols & Clark, LLC, 214 F.3d 872, 875 (7th Cir. 2000), that the debt collector include “safe harbor” language disclosing whether the debts were accruing interest or other fees after the date of the initial dunning letter.
The Court rejected Tena’s claim, dismissing the case with prejudice. According to the Court, the “letter satisfies the unsophisticated consumer standard and fulfills the requirements of § 1692g(a)(1)” because “[i]t states the balance due and illustrates the breakdown of principal, interest, and collection fees for each loan.” The Court reasoned that any “unsophisticated consumer would understand that the balance owed encompassed all those charges and included all charges in effect as of the date the letter was sent.” The Court reiterated that “[t]he FDCPA requires that Transworld state the amount due as of the date of the communication. It does not require that Transworld disclose whether additional costs may accrue in the future if the debt goes unpaid.” In conclusion, the Court found that “[n]othing about the letter suggested that additional collection fees had already accrued. The unsophisticated consumer would not be left wondering if the list of charges was incomplete.”
This is a solid win for defendants based on the Court’s finding that the precise “safe harbor” language of Miller is not necessary to prevail on an FDCPA § 1692g claim. Instead, it is sufficient if the overall communication would not leave an “unsophisticated consumer . . . wondering if the list of charges was incomplete.”