Distinguishing some recent cases, the U.S. District Court for the Eastern District of New York clarified that a debt collector who discloses the current amount due in an initial communication has fewer obligations under the Fair Debt Collection Practices Act than a debt collector that provides the amount due as of a future date.
Generally, Section 1692g(a)(1) of the FDCPA requires a debt collector to disclose “the amount of the debt” in its initial communication with a consumer. As a result of litigation on this topic, multiple federal courts have adopted “safe harbor” language that a debt collector can use to comply with this requirement even when the amount of the debt is constantly changing due to accrual of interest, fees, or other charges.
In Shevchuk v. Advanced Call Center Technologies, LLC, the defendant’s debt collection letter listed a current “total account balance” figure and language plainly intended to invoke the “safe harbor” previously established by the Second Circuit in Avila v. Riexinger & Assocs., LLC, 817 F.3d 72 (2d Cir. 2016): “If you pay the balance shown above, an additional payment may be necessary to pay your account balance in full. Because of interest, late charges, or charges that may vary from day to day, the amount due on the day you pay may differ.”
Despite the defendant’s attempt to avoid liability, this did not stop a consumer from arguing that this language violated the FDCPA because it failed to accurately state the amount of the debt and/or was false, deceptive, or misleading. Specifically, the plaintiff contended that in addition to the current amount of the debt, the letter also had to disclose the applicable interest rate, all charges that could cause the balance to increase, and some way for the consumer to determine what would be needed to pay the debt balance at any given moment in the future.
The consumer plaintiff’s argument relied on a broad reading of Carlin v. Davidson Fink, LLP, 852 F.3d 207 (2d Cir. 2017), in which the Second Circuit held that a debt collector’s initial communication may violate the FDCPA if it “omits information allowing the least sophisticated consumer to determine the minimum amount she owes at the time of the notice, what she will need to pay to resolve the debt at any given moment in the future, and an explanation of any fees and interest that will cause the balance to increase.” The communication at issue in Carlin was a typical mortgage payoff statement that included the amount due as of a future date, in anticipation that it would not be paid the same day it was given. No information about the current amount due, or how to calculate it, was provided.
Following other courts, in Shevchuk, the Eastern District of New York distinguished Carlin and dismissed the plaintiff’s complaint with prejudice. Recognizing that the Carlin finding is problematic when taken out of context, the Court held that its “exhaustive” disclosure requirements are only applicable if the consumer is not otherwise informed of the minimum amount currently owed. That is, if a communication discloses the minimum amount owed as of the current date, then Carlin’s far more comprehensive disclosure requirements are not triggered.
In Shevchuk, because the plaintiff had been informed of a “total account balance” as of the date of the letter, Carlin did not apply and the plaintiff’s FDCPA lawsuit was dismissed with prejudice.
In light of this decision, debt collectors in the Second Circuit and elsewhere would be wise to recognize that a payoff quote – intended for a situation where someone might be tendering funds as of a future date – is not necessarily the same as providing current amount of the debt for FDCPA informational purposes. Instead, debt collectors should ensure that their initial communications with a consumer include a current amount due as of the date of the letter in order to limit exposure to FDCPA claims and avoid Carlin’s extensive additional disclosure requirements.