In Nyanhongo v. Credit Collections Servs., the Eastern District of Pennsylvania held that the display of “data symbols similar to a” quick response code (QR Code), without more, was insufficient to establish Article III standing.

In March 2020, Credit Collections Services mailed Tatenda Nyanhongo a collection letter. The outside of the envelope displayed the phrase “PERSONAL & CONFIDENTIAL” and data symbols, similar to a QR Code, on the letter were visible through a glassine window. Nyanhongo filed a class action alleging that hundreds of similar envelopes were mailed statewide in violation of Section 1692f(8) of the Fair Debt Collection Practices Act (FDCPA).

Article III of the Constitution limits the exercise of judicial power to cases and controversies. To establish Article III standing, a plaintiff must establish (1) she suffered injury-in-fact; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to speculative, that favorable decision will redress the injury.

In turn, Section1692f(8) of the FDCPA prohibits debt collectors from using “any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails.”

The Third Circuit has previously analyzed whether a consumer alleging a violation of Section 1692f(8) pled a concrete injury sufficient for Article III standing. In St. Pierre v. Retrieval-Masters Creditors Bureau, the court found that displaying a debtor’s account number on an envelope “implicates a core concern animating the FDCPA — the invasion of privacy,” which “is closely related to harm that has traditionally been regarded as providing a basis for a lawsuit in English and American courts.” In DiNaples v. MRS BPO, LLC, the Third Circuit in 2019 extended its rationale in St. Pierre by holding that QR Codes on the face of an envelope, that display account numbers when scanned, violate the FDCPA.

Fatally, Nyanhongo did not allege what, if anything, would be revealed if the data symbols on the envelope she received were scanned. In relying on DiNaples, the court stated that she “fail[ed] to establish standing because she does not clearly allege facts explaining how the information on the envelope conveyed ‘private information,’ ‘implicated core privacy concerns,’ or otherwise caused a concrete injury.”

The court dismissed Nyanhongo’s lawsuit without prejudice. It is unclear whether Nyanhongo will try to file an amended complaint or try to pursue these claims in state court. Watch this space for further developments.

In a new decision slated for publication, the Sixth Circuit weighed in on an issue under the Fair Debt Collection Practices Act (FDCPA): whether a “benign language” exception exists to a flat prohibition of substantive information appearing on an envelope containing a letter from a debt collector. The Sixth Circuit took a strict reading of the FDCPA, rejected the existence of an exception to the prohibition, and cleared a class action to proceed.

In Donovan v. FirstCredit, the defendant debt collector mailed the plaintiff a collection letter in an envelope with two glassine windows, one on top of the other. The bottom window contained the plaintiff’s name and mailing address, which did not pose a problem. However, because the letter when folded was smaller than the envelope containing it, the letter would shift in the envelope, altering the amount of text visible through the top window, leading to the issue in the case. Always visible in the top window were an empty checkbox and the phrase, “Payment in full is enclosed.” Depending on the position of the letter, there could also appear a second empty checkbox and the phrase, “I need to discuss this further. My phone number is _________.”

The plaintiff sued the debt collector on behalf of herself and a putative class of others who received the letter, alleging that the letter violated Section 1692f(8) of the FDCPA, which prohibits the use of “any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.” Specifically, the plaintiff claimed that the visibility of the checkboxes and the accompanying language through the glassine window “created the risk that anyone who caught a glimpse of the plaintiff’s mail would recognize that she was receiving mail from a debt collector, causing her embarrassment and emotional distress.”

The defendant moved for judgment on the pleadings, arguing that Section 1692f(8) included an implied “benign language” exception which applied to the checkboxes and messages that appeared in the top glassine window. The district court agreed and dismissed the case.

In appealing the dismissal, the plaintiff argued that, because the statute did not expressly permit the letter’s contents that were visible through the top window to be used on the envelope itself, they were unambiguously forbidden by the statute’s plain language. The defendant argued that this literal reading leads to absurd results and that a “benign language” exception is needed. For example, Congress did not explicitly exempt the consumer’s address and postage when it issued its blanket prohibition on “any language or symbol” other than the debt collector’s address. Thus, the defendant argued, the statute’s scope “is so sweeping that it inadvertently forbids language and symbols required of mail communication, even though Congress plainly intended to endorse debt collectors’ ability to communicate with consumers by mail.”

Acknowledging a circuit split on the existence of a “benign language” exception, the Sixth Circuit reasoned that because “a literal reading of the unambiguous text” of Section 1692f(8) “does not lead to an absurd result, we have no cause to reach beyond the text and rely on legislative history or administrative guidance to read a ‘benign language’ exception into 1692f(8).”

Specifically, the Court reasoned that the blanket prohibition on “any language or symbol” is triggered only “when communicating with a consumer by use of the mails,” and thus operates under the presupposition that the envelope used by the debt collector will employ those features necessary to facilitate its delivery. In this context, the provision’s blanket prohibition is best understood as forbidding “any language or symbol” on the envelope other than “language or symbols to ensure the successful delivery of the communication,” with a statutory carve-out for the debt collector’s return address and its name (where the name does not indicate that the sender is a debt collector).

Thus, in the Court’s analysis, the checkboxes and messages viewable in the envelope’s top glassine window “played no role in ensuring the successful delivery of the letter, nor were they the defendant’s address or an allowable business name.” Therefore, the plaintiff had properly stated a claim for violation of Section 1692f(8), and the class-action lawsuit was cleared to proceed.

A copy of the ruling is available here.

Debt collectors beware: On August 12, the U.S. Court of Appeals for the Third Circuit held that a debt collector violates section 1692f(8) of the Fair Debt Collection Practices Act by displaying an unencrypted “quick response” (or “QR”) code on the face of an envelope containing a debt collection letter that, when scanned, reveals the debtor’s internal account number with the collection agency. 

Section 1692f(8) of the FDCPA prohibits a debt collector from “[u]sing any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails.” Five years ago, in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3rd Cir. 2014), the Third Circuit held that a debt collector violates this section by displaying the debtor’s account number on an envelope. 

This week, in DiNaples v. MRS BPO, LLC, the Third Circuit extended its rationale in Douglass by holding that QR codes on the face of an envelope, that display account numbers when scanned, violate the FDCPA. 

Donna DiNaples filed a class action lawsuit against MRS BPO, LLC, a debt collector, alleging violations of the FDCPA for sending letters in envelopes bearing a QR code that contained the debtor’s internal account number. While the QR code did not display the debtor’s account number on its face, it could be scanned by a reader downloadable as an application on many devices, including smartphones. Following Douglass, the United States District Court for the Western District of Pennsylvania certified DiNaples’s proposed class and granted summary judgment in her favor, finding there is no meaningful distinction between displaying an account number on an envelope or a QR code that reveals the same information when scanned by a reader. The Third Circuit affirmed this decision for three reasons. 

First, the Third Circuit held that DiNaples has standing to sue, finding that the disclosure of account information in itself is a concrete harm under Spokeo v. Robins, 136 S.Ct. 1540 (2016), because it implicates core privacy concerns of the FDCPA. For this reason, DiNaples did not have to show actual or imminent harm – MRS made her account information available to the public, which is contrary to the purpose of the FDCPA and satisfies Spokeo’s concrete injury requirement. 

Second, recognizing the FDCPA’s remedial purpose, the Third Circuit held that including the QR code on envelopes – like the account number – is “susceptible to privacy intrusions,” particularly in the age of smartphones where a reader app is a quick download away. The Court declined to rule on whether the Third Circuit recognizes a “benign language exception” that many courts, as well as the Federal Trade Commission, have read into Section 1692f(8), finding that exception clearly does not apply here because the QR code is not “benign.”  

Finally, the Court rejected MRS’s bona fide error defense, reiterating that it does not apply to an incorrect interpretation of the FDCPA but instead only to clerical or factual mistakes. MRS’s argument that it committed a mistake of fact by “using industry standards for processing return mail” was rejected because, in the Court’s view, this was a misunderstanding of its obligations under the FDCPA. Acknowledging that MRS “may not have intended to disclose that the contents of the envelope pertain to debt collection,” the Court repeated that “the bona fide error defense does not protect every well-intentioned act.”

On October 23, Judge Katherine Polk Failla of the Southern District of New York held that a fifty-character internal tracking number visible through the glassine window of the plaintiff’s collection letter envelope fell within the benign language exception and did not violate the Fair Debt Collection Practices Act.

In Gardner v. Credit Management LP, the plaintiff alleged that the number visible through the envelope window violated 15 U.S.C. 1692f(8), which prohibits a debt collector from using “any language or symbol other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails.”  The plaintiff relied on the Third Circuit’s decision in Douglass v. Convergent Outsourcing, which held that the display of an account number through an envelope window violates § 1692f(8).  The defendant moved for judgment on the pleadings.

The court began its analysis by citing to various cases that have held that a literal interpretation of this provision yields absurd results, such as prohibiting a debtor’s address and pre-printed postage.  The court looked to legislative history and Federal Trade Commission Commentary to support the conclusion that any purported violation must be related to the harm which the statute was intended to prevent.

On the envelope received by the plaintiff, the string of fifty alphanumeric characters included a subset of nine that represented her “internal tracking number” with the defendant.  The tracking number “does not convey to a casual or interested observer … that Gardner is in debt.”  Because the tracking number does not “signify to anyone outside of CMI that it pertains to a debt,” it does not violate the FDCPA.

The court noted that two recent district court decisions in the Second Circuit reached similar conclusions.  Perez v. Global Credit & Collection Corp. and Gelinas v. Retrieval-Masters Creditors Bureau, Inc. both rejected claims that mere account numbers visible through glassine envelope windows violated the FDCPA.

On September 30, Judge Joan B. Gottschall of the Northern District of Illinois issued a decision stating that the display of a debtor’s account number through an envelope window violated the Fair Debt Collection Practices Act.  

In Adkins v. Financial Recovery Services, Inc., the plaintiff filed a class action suit in Illinois on behalf of a class of Illinois consumers who received debt collection letters from Financial Recovery Services, among other defendants, that contained personally identifying information that could be seen through the glassine window of an envelope.  Financial Recovery Services moved to dismiss the suit as frivolous.  

The District Court rejected Financial Recovery Services motion, ruling that “the disclosure of an account number is a disclosure of a debtor’s private information” and a violation of section 1692f(8) of the FDCPA.  Judge Gottschall’s decision relied heavily on the Third Circuit’s 2014 decision in Douglass v. Convergent Outsourcing, 765 F.3d 299, where it held that a debt collector’s disclosure of a debtor’s reference number through the transparent window of an envelope containing a collection letter violated section 1692f(8).  

Interestingly, Judge Gottschall’s ruling is directly contrary to the recent rulings of three Judges in the Northern District of Illinois.  In Sampson v. MRS BPO, LLC, Civil Action No. 15-cv-2258, 2015 U.S. Dist. LEXIS 32422, 2015 WL 4613067 (N.D. Ill. March 17, 2015) (Shadur, J.); Gonzalez v. FMS, Inc., Civil Action No.14-cv-9424, 2015 WL 4100292, at *6 (N.D. Ill. July 6, 2015) (Castillo, J.); and Schmid v. Transworld Systems, Inc., Civil Action No. 15-cv-2212, 2015 WL 5181922 (N.D. Ill. Sept. 4, 2015) at *5 (Chang, J.), three Illinois District Court Judges issued separate opinions stating that the display of a debtor’s account number on a collection envelope did not violate the FDCPA because the disclosures were “benign.”  Those courts reasoned that if §1692f(8) is read literally to bar any markings on the outside of a debt collection letter envelope other than the names and addresses of the parties, it would lead to absurd results, such as proscribing the use of a stamp on a collection envelope. 

Judge Gottschall disagreed.  “Unlike Postal Service markings or language such as priority letter,” she wrote, “the disclosure of an account number is a disclosure of a debtor’s private information.  This court cannot find this disclosure so clearly benign that the unequivocal language of the statute should be ignored.”  


On September 3, Judge Edmond E. Chang of the Northern District of Illinois issued a decision stating that the display of a series of letters and numbers in which the debtor’s account number was allegedly embeddedthrough an envelope window does not violated the Fair Debt Collection Practices Act.   

In Schmid v. Transworld Systems, the plaintiff filed a class action lawsuit alleging that Transworld Systems violated 15 U.S.C. § 1692f(8) by making visible through the window of its collection envelopes a string of about twenty letters and digits.  Plaintiff claimed his Transworld Systems account number was embedded within this string of letters and digits and, therefore, the display of this sequence of letters and digits violated the FDCPA. 

To advance his argument, the plaintiff relied on the Third Circuit’s decision in Douglass v. Convergent Outsourcing, which held the display of an account number through the window of an envelope violates § 1692f(8) of the FDCPA.  The Douglass court held that an account number “is a core piece of information pertaining to one’s status as a debtor and the debt collection effort.” 

Judge Chang differentiated Doulgass from the facts presented in Schmid.  The Schmid court focused on the fact that a “non-communicative sequence of letters and numbers” does not raise concerns of unfairness or unconscionability that the FDCPA was designed to prevent.  Judge Chang reasoned that in Douglass, the court had no need to decide the precise scope of the statutory ban imposed by § 1692f(8) because the Douglass court held the display of an account number was an obvious breach of a debtor’s privacy.  Notably, in Schmid, the plaintiff did not allege that the entirety of string of letters and numbers was his account number; rather, his account number was embedded in this string. 

Judge Chang found that because a debtor would not perceive such string of “otherwise nonsensical” letters and numbers as associated with debt collection, the core concern of privacy as highlighted in the Douglass decision does not come into play.

Over the past two weeks, two separate federal district courts in New York held that having a consumer’s account number visible on the outside of an envelope containing letters from debt collection agencies does not, by itself, violate the FDCPA.  In these cases, both Judge Colleen McMahon and Judge John Curtin, of the Southern and Western Districts of New York, respectively, acknowledged the Third Circuit’s holding in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014), but ultimately chose not to apply its logic.      In Perez v. Global Credit and Collection, Judge McMahon said the information contained on the plaintiff’s envelope (an eight-digit account number) was “meaningless to anyone other than someone at Global Credit.”  Judge McMahon further stated that “[e]ven the fact that it is an account number says nothing about whether the plain white envelope contained a debt collection communication, as opposed to a renewal notice, a special offer to consumer, or any of the other myriad junk mail communications that arrive in plain white envelopes with glassine windows on a daily basis in the mailboxes of America.”   Applying the same logic, Judge Curtin stated in Gelinas v. Retrieval-Masters Creditors Bureau, that “nothing about the series of letters and numbers above the addressee’s name intimates that the contents of the envelope relate to the collection of a delinquent debt, and the visibility of these numbers and letters is neither threatening nor embarrassing.” Both judges recognized that, over time, courts have started to recognize an exception under the debt collection act for communications from creditors that include “benign” words or notations that cannot be construed as being threatening to consumers or designed to cause them embarrassment because they owe money.  Finding the account numbers at issue in this case to be just that, both Judges dismissed the cases.   

District Judge William J. Nealon of the Middle District of Pennsylvania issued two recent decisions holding that both a Quick Response (“QR”) code and a bar code appearing through the glassine window of an envelope containing a collection letter violate section 1692f(8) of the Fair Debt Collection Practices Act, which prohibits “using any language or symbol” other than a debt collector’s name and address on an envelope.  

In his July 15 opinion in Styer v. Professional Medical Management, Judge Nealon held that disclosure of a QR code on a debt-collection envelope violates section 1692f(8) of the FDCPA as a matter of law.  In his July 22 decision in Kostik v. ARS National Services, Judge Nealon held that embedding a debtor’s account number in a bar code violates section 1692f(8) of the FDCPA.  

Both of these decisions rely on the Third Circuit’s August 28, 2014, decision in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014), where it held that a debt collector’s disclosure of a debtor’s reference number through the transparent window of an envelope containing a collection letter violated section 1692f(8).

In Kostik, the debt collector argued that “imposing liability due to the possibility of illegal action by a third party is ‘inappropriate.’”  It also argued that the FDCPA “was not intended to prohibit the disclosure of benign symbols on any envelope sent by a debt collector as a means of communicating with a consumer by use of the mails.”  The company conceded that section 1692f(8) “prohibits any language or symbol from appearing on a debt-collection envelope,” but argued that courts have found benign symbols not to violate the act.  Judge Nealon declined to address this benign symbol exception since the posture was a motion to dismiss, but he did state that 1692f(8) should not be read to create absurd results. 

Judge Nealon relied on the Third Circuit’s ruling in Douglass, which held that “disclosure of the plaintiff’s account number implicated ‘a core concern animating the FDCPA—the invasion of privacy.’”  He went on to state in Kostik that “The Third Circuit stated that the plaintiff’s account number was ‘a core piece of information pertaining to [plaintiff’s] status as a debtor and [defendant’s] debt-collection effort.’”  Moreover, he relied on the Third Circuit’s conclusion in Douglass that “disclosure [of the account number] has the potential to cause harm to a consumer that the FDCPA was enacted to address.” 

Because “bar codes can be easily deciphered by consumers using widely available free applications for smartphones,” and an “account number is not meaningless,” Judge Nealon held in Kostik that the complaint stated sufficient facts to state a claim for plausible relief.  “By disclosing the bar code to the general public, it increased the risk that plaintiff would be a victim of identity theft,” the Court said.

On January 4, the Consumer Financial Protection Bureau (CFPB) and New York Attorney General (NY AG) filed a joint complaint in the U.S. District Court for the Southern District of New York against Credit Acceptance Corporation (Credit Acceptance), a major subprime indirect auto finance company. On March 14, Credit Acceptance filed a motion to dismiss the complaint, and on March 21, Troutman Pepper filed an amicus curiae brief in support of Credit Acceptance on behalf of the American Financial Services Association, the Consumer Bankers Association, and the Chamber of Commerce of the United States.

Among other things, the complaint asserts that Credit Acceptance engaged in deceptive and abusive practices in financing used automobile sales predominantly to subprime consumers by allegedly: (1) allowing and incentivizing dealers to sell vehicles at inflated cash prices that incorporated “hidden finance charges”; (2) financing sales to consumers without considering whether they have the ability to repay the credit they receive; and (3) allowing and incentivizing dealers to engage in deceptive practices in connection with the sale of add-on products.

As a threshold argument, the motion to dismiss challenges, under the appropriations clause of the U.S. Constitution, the CFPB’s right to use unappropriated funds to bring a lawsuit against Credit Acceptance. This issue is currently pending before the Supreme Court.

The motion to dismiss further argues that the complaint fails to state a valid claim as a matter of law for several reasons, including some of the key arguments highlighted below.

As to the complaint’s “hidden finance charge” claims, the motion to dismiss observes:

(1) The complaint fails to allege that Credit Acceptance deceived any consumers regarding alleged “hidden finance charges.” Indeed, the motion to dismiss explains that consumers receive credit under retail installment contracts with the motor vehicle dealers and that Credit Acceptance has no contact with vehicle purchasers until after the credit agreements are executed and assigned to the company by the dealer.

(2) The complaint does not allege a single instance where a dealer charged a consumer a higher “cash price” on a financed sale because the consumer financed the purchase, as is required to state a claim related to “hidden finance charges.” Rather than comparing the actual prices paid by the consumers at issue to those offered to cash buyers, the complaint alleges that the prices paid by consumers contained a “hidden finance charge” merely because they exceeded a hypothetical “cash price proxy” created by the plaintiffs for the purposes of the litigation. The upshot of the plaintiffs’ theory — which is based on how much a dealer was paid by the finance company — is that every contract contains a “hidden finance charge” any time a finance company accepts assignment of a contract at a “discount.” The Second Circuit has rejected similar pleading tactics in the past, and the CFPB’s official interpretation of the governing disclosure regulations is clear that assignment discounts are not finance charges unless separately imposed on consumers in individual transactions — a test the complaint’s “cash price proxy” theory does not satisfy.

(3) Assignees of consumer credit contracts are only liable under the Truth in Lending Act for violations that are apparent on the face of the TILA disclosure statement and other assigned documents, whereas alleged hidden finance charges, by definition, cannot meet this test.

As to the complaint’s ability-to-repay claims, the motion to dismiss notes that (1) the financed contracts in question clearly state the consumers’ payment obligations, (2) the vehicle purchasers are in a better position than Credit Acceptance to assess their specific financial situations and income stability, and (3) the consumer purchasers are able to consult publicly available information concerning car values and to compare prices available from competitors of the dealers. Credit Acceptance also points out that ability-to-repay requirements should not be imposed ad hoc through private litigation against a single company given there is no express statutory authorization for ability-to-pay mandates in the auto finance context (as opposed to mortgages or credit cards), and the plaintiffs did not engage in the appropriate (and transparent) notice-and-comment rulemaking process.

Lastly, in response to the complaint’s claims concerning add-on products, the motion to dismiss argues that Credit Acceptance cannot be held liable for aiding and abetting alleged dealer deceptive practices when dealers face no primary liability under the Dodd-Frank Act, and that the complaint improperly relies on an analysis of a few post-origination consumer complaints to suggest that Credit Acceptance acted knowingly or recklessly at origination (prior to accepting assignment of a contract).

We believe that the motion to dismiss articulates powerful arguments in opposition to the complaint, which we amplified in the amicus curiae brief we filed in support of the motion to dismiss. Our amicus brief explains that the complaint’s efforts to modify, through litigation, settled law that industry participants have relied on for decades is part of a longstanding CFPB pattern of regulatory overreach — “pushing the envelope,” in the words of the CFPB’s first director.

We argue:

(1) The complaint represents an end-run around the Dodd-Frank Act’s express exclusion of automobile dealerships from the CFPB’s rulemaking, enforcement, and supervisory authority.

(2) The complaint seeks to upend longstanding rules governing consumer credit disclosures, including those concerning the content of the required disclosures and the person responsible for providing them and ensuring their accuracy.

(3) The complaint attempts to circumvent express limitations on disclosure-related liability for assignees of consumer credit contracts.

(4) The complaint attempts to implement a major policy decision — the imposition of ability-to-repay requirements in the auto finance space — without an express statutory authorization (like those that exist in the mortgage and credit card contexts) or compliance with the m rulemaking channels for implementing such policy decisions.

The amicus brief further argues that the inevitable consequence of the plaintiffs’ actions in this case, if permitted to continue by the courts, would be a lack of transparency, the failure to gather necessary data and input from key industry stakeholders, and the potential for significant unintended consequences, including decreased competition in the auto finance space, higher financing costs, and a diminished availability of credit to entire categories of consumers. And, if permitted to proceed past the pleadings stage, the government’s theories could have widespread chilling effects in the auto finance industry and beyond.

We look forward to further developments in this case. Ultimately, of course, we hope to report on the vindication of Credit Acceptance and the court’s rejection of the complaint.

On February 14, 2023, the New York Court of Appeals overturned the Appellate Division, Second Department’s Kessler decision, which had applied a strict application of Real Property Actions and Proceedings Law § 1304, also known as a 90-day notice. In 2017, the Lender moved for summary judgment against Mr. Kessler on its foreclosure complaint. Mr. Kessler cross-moved to dismiss, arguing that the inclusion of the final two paragraphs in his 90-day notice, addressing bankruptcy status and military membership, violated section 1304’s “separate envelope” provision. The trial court agreed and dismissed the complaint. The Appellate Division affirmed on the same ground, holding that including in the envelope sent to the borrower any language not required by the statute violates its separate envelope provision.

On appeal to New York’s highest court, the Lender challenged whether the inclusion of concise and relevant additional information voids an otherwise proper notice to borrowers sent under section 1304, thus barring a subsequently filed foreclosure action. In reversing the Appellate Division, the Court of Appeals found that accurate statements that further the underlying statutory purpose of providing information to borrowers that is or may become relevant to avoiding foreclosure do not constitute an “other notice” in violation of the statute. Instead, the Court of Appeals found that the paragraph relating to bankruptcy proceedings may be particularly useful to avoid confusing borrowers subject to the automatic stay in bankruptcy court and to avoid potential violation of such stays by the lender. Moreover, the Court of Appeals warned that a bright-line rule against any additional language in the same envelope might conflict with specific disclosure requirements under federal law. Instead, the Court of Appeals was in favor of a workable rule that balances the practical considerations of the lender and borrower in a way that best advances the clear statutory purpose, which is to alert the borrower in default to their current status under their loan agreement and steps they may take to avert the filing of a foreclosure action.

The decision is an important and welcomed relief for many lenders and servicers within the state. Following the Appellate Division’s ruling in Kessler, many trial courts dismissed foreclosure complaints for failure to strictly comply with the 90-day notice requirements because of the inclusion of the language regarding bankruptcy and military membership. The Court of Appeals has now clarified issues related to the 90-day notice for lenders and servicers to follow.

Troutman Pepper will continue to monitor the decision’s impact and report on any relevant updates as they happen.