The United States Court of Appeals for the Second Circuit affirmed a district court’s dismissal of a Fair Debt Collection Practices Act (“FDCPA”) lawsuit over disclosure of the amount of debt owed.
Plaintiff Yuri Kolbasyuk sued debt collector Capital Management Services, LP (“CMS”) over a dunning letter that CMS sent him. CMS had been hired to collect a debt that Kolbasyuk owed to Barclays Bank Delaware. The letter stated the present amount of debt (about $6,000) as well as the identity of the creditor. The letter identified that it was from a debt collector and provided the following disclosure:
As of the date of this letter, you owe $5918.69. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For more information, write the undersigned or call 1‐877‐335‐6949.
Kolbasyuk claimed that the letter violated sections 1692e and 1692g of the FDCPA because it failed to state “what portion of the amount listed is principal,” “what ‘other charges’ might apply,” “if there is ‘interest,’” “when such interest will be applied,” and “what the interest rate is.” Kolbasyuk further claimed “that the letter conveyed the mistaken impression ‘that the debt could be satisfied by remitting the listed amount as of the date of the letter, at any time after receipt of the letter.’”
The Second Circuit affirmed dismissal on both grounds.
First, the Court held that “a debt collection letter that informs the consumer of the total, present quantity of his or her debt satisfies 15 U.S.C. § 1692g notwithstanding its failure to inform the consumer of the debt’s constituent components or the precise rates by which it might later increase.” The Court noted that the FDCPA required a debt collector to disclose “the amount of the debt.” 15 U.S.C. § 1692g(a). Based on dictionary definitions, these words meant the “total, present quantity of money” that the debtor was obligated to pay as of the date of the letter. The letter at issue met that definition. It stated the “total, present quantity of money” that Kolbasyuk was obligated to pay on the date that the letter was sent. Consequently, it satisfied the FDCPA.
Second, the Court held that the letter was neither deceptive nor misleading. Kolbasyuk argued that the letter violated Section 1692e because “[t]he least sophisticated consumer could reasonably believe that the debt could be satisfied by remitting the listed amount as of the date of the letter, at any time after receipt.” The Court rejected this argument outright. Looking at the text of the letter, the Court observed that the letter specifically warned the debtor that “the amount due on the day you pay may be greater.” Because of the disclaimer language, the ruling in Avila v. Riexinger Associates, LLC, 817 F.3d 72 (2d Cir. 2016), was inapplicable. Further, the Court reiterated its approval of the safe harbor language that the Seventh Circuit articulated in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000). Accordingly, the letter was not considered to be deceptive or misleading.
This is a victory for debt collectors as it also provides clear guidance on the FDCPA “amount” of debt owed disclosure requirement—it is the “total, present quantity of money” owed on the date the letter was sent. This case also is significant for again affirming the safe harbor language provided by the Seventh Circuit.
Troutman Sanders will continue to monitor developing trends in this area of the law.