Recently, the Consumer Financial Protection Bureau filed an Amicus Curiae brief in the United States Court of Appeals for the Third Circuit addressing whether a debt collector violates the Fair Debt Collection Practices Act by accurately stating that it is seeking to collect $0.00 in interest and collection fees, including when interest and collection fees are not accruing. Brief for Consumer Financial Protection Bureau as Amicus Curiae In Support of Appellees and Affirmance, Randy Hopkins, Plaintiff-Appellant v. COLLECTO, INC. D/B/A EOS CCA; US ASSET MANAGEMENT, INC.; AND JOHN DOES 1 TO 10, Defendant – Appellees, Case No. 2:19-cv-18661 (2020)(Case No. 20- 1955, Document 36).
In Hopkins, Collecto, Inc. d/b/a EOS CCA (“Collecto”) sent a collection letter to Hopkins on behalf of the debt’s current creditor US Asset Management, Inc. (“USAM”). The letter contained a table that itemized the debt, including the principal amount, interest, collection fees and the balance. The amounts of interest and fees were $0.00 each. Id at 12-13.
Hopkins filed a putative class action complaint against Collecto and USAM alleging that the letter was deceptive in violation of 15 U.S.C.§ 1692e, and unfair or unconscionable in violation of 15 U.S.C. § 1692f, because the $0.00 itemized interest and collection fees implied that such interest and fees could begin to accrue, and thereby increase the amount of his debt over time. Collecto and USAM moved to dismiss for failure to state a claim. The district court granted defendants’ motion and dismissed Hopkins’ claims. Hopkins appealed to the United States Court of Appeals for the Third Circuit. Id at 13-14.
In finding that the letter did not violate the FDCPA, the district court relied on a Second Circuit decision holding that “… the inclusion of lines in a collection letter that reflect $0 in interest or fees and charges had accrued is not misleading.” Id at 14 (citing Dow v. Frontline Asset Strategies, LLC, 783 (2d Cir. 2019)). Arguing that the district court’s holding should be affirmed, the CFPB noted that itemization of a debt – just like an itemized receipt from a store – discloses what has already happened, not what will or may happen in the future. Id at 9 (citing DeGroot v. Client Servs, Inc., No. 20-1089, —F.3d —, 2020 WL 5951360, at *4 (7th Cir. Oct. 8, 2020) (holding that “an itemized breakdown … which makes no comment whatsoever about the future and does not make an explicit suggestion about future outcomes [ ] does not violate the FDCPA”)). Id at 16. Such an itemization “discloses the interest or other charges that have been assessed between a date in the past … and the date of the notice,” and therefore “cannot be construed as forward-looking: Id at 19 -20, citing DeGroot at *3. As a result, “any inference [the DeGroot plaintiff] made about the debt accruing interest or other charges in the future was entirely speculative.” Id at 22 (citing DeGroot at *3); see also Taylor v. Fin. Recovery Servs., 886 F.3d 212, 215 (2d Cir. 2018) (“[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 Section 1692e.”). Id at 16. A plaintiff cannot state a claim under the FDCPA by merely identifying a question that a collection letter does not expressly answer. Id at 16.
The CFPB warned that adopting Hopkins’ argument could result in discouraging debt collectors from providing accurate itemizations, adding that the Bureau has, in fact, proposed requiring collectors to itemize interest and fees applied to a debt; further, its proposal expressly permits collectors to use $0.00 for charges that have not been applied, just as Collecto did in the letter in question. The preamble to the Bureau’s notice of proposed rulemaking explains that itemizing fees and interest could help consumers in a variety of ways. 84 Fed. Reg. at 23341-42. “[C]onsumers may be better positioned to recognize whether they owe a debt and to evaluate whether the current amount alleged due is accurate if they understand how the amount changed over time due, for example, to interest, fees, payments and credits that have been assessed or applied to the debt.”Id at 23341. CFPB’s proposal is consistent with suggestions from the Federal Trade Commission, see Fed. Trade Comm’n Collecting Consumer Debts: The Challenges of Change, at v (Feb. 2009) (suggesting that Congress require itemization), state requirements and judicial decisions. Id at 27-28. Troutman Pepper is monitoring this case and will report on any new developments or decisions.