Second Circuit finds letter did not have to provide a breakdown of debt or inform debtor of the interest going forward to comply with the FDCPA

At issue in Kolbasyuk v. Capital Mgmt. Servs., LP, 918 F.3d 236 (2d Cir. Mar. 12, 2019) was whether a debt collection letter complied with the FDCPA where it stated the “amount of the debt” but did not provide a breakdown of the debt or inform the debtor of the precise interest he might incur going forward.

The letter at issue stated that “[a]s 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.”

After receiving the letter, the debtor filed a class action in the United States District Court for the Eastern District of New York. He alleged that the letter violated Sections 1692e and 1692g of the FDCPA because it failed to inform him, inter alia, “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.” He also 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 district court found the letter did not violate the FDCPA and dismissed the suit. On appeal, the debtor repeated the arguments he made in the lower court and the Second Circuit affirmed.

With respect to the Section 1692g claim, the debt collector was only obliged to inform the debtor of the “amount of the debt.” The “amount of the debt,” signifies the total, present quantity of money that the consumer is obligated to pay. And that is exactly the figure that the debt collector provided. Nothing in Section 1692g required it to inform the debtor of the constituent components of that debt or the precise rates by which it might later increase. The Court distinguished Carlin v. Davidson Fink LLP, 852 F.3d 207 (2d Cir. 2017) where it found that the letter in that case was not FDCPA compliant because it was an estimate of future amounts that the debtor might owe, rather than the total, present amount owed.

The Court also found the letter did not violate Section 1692e’s prescription on using false, deceptive, or misleading representation or means in connection with the collection of any debt.” The Court distinguished Avila v. Riexinger & Associates, LLC, 817 F.3d 72 (2d Cir. 2016), in which it held that the failure to disclose that a consumer’s balance might increase due to interest and fees violated Section 1692e. The letter in the instant case did disclose—quite explicitly—that the debtor’s balance might increase. Not even the least sophisticated consumer could conclude that his debt “could be satisfied by remitting the listed amount … at any time after receipt of the letter,” in the face of an explicit warning to the contrary.

Moreover, the Court noted that the letter employed the “safe harbor” language adopted by the Seventh Circuit in Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000) which, the Court reaffirmed, immunizes a debt collector from a Section 1692e claim predicated upon an alleged failure to disclose that the consumer’s balance may increase due to interest and fees


  • James Noonan

    Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.

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