This article was written by David N. Anthony, Ethan G. Ostroff, and Alice Grabe and originally published on the Troutman Sanders LLP Consumer Financial Services Law Monitor and is republished here with permission.
In Igor Vayngurt v. Southwest Credit Systems, L.P., the Eastern District of New York ruled that a debt collector did not violate the Fair Debt Collection Practices Act by attempting to obtain payment of a collection fee at the same time as the principal balance of the debt and requesting prompt contact in the initial validation notice.
Vayngurt alleged that Southwest Credit Systems misrepresented the balance due by “falsely represent[ing] that the $38.80 collection fee was due in full as of the date of the Collection Letter” because the collection fee was not yet incurred. In this case, a contract between Vayngurt and his cellular phone provider stated that he “agree[s] to pay collection agency fees [the creditor] incur[s].” Vayngurt argued that the collection fee is a “contingent fee” only incurred at the time the principal balance is collected.
The Court ruled that Vayngurt and the creditor intended the collection fee to be owed at the same time as the principal balance. The Court further explained that this interpretation is favorable to the consumer because it “prevents multiple rounds of collection activity from the same debt” and “allows the collection fee to be negotiated down at the same time as the principal.”
This case also involved an overshadowing claim regarding the language used in the collection letter that stated, “We are willing to work with you, but you must contact our office promptly.” The Court ruled that this language did not overshadow the validation notice’s thirty-day dispute period because “a single sentence requesting prompt contact does not create an impression of dire urgency” when it immediately follows “the validation notice, which reference[s] the thirty-day dispute period three times.” The Court reasoned that notices requesting “prompt contact … could be to notify the sender that the debt is disputed, or to seek the identity of the original debtor” and are thus “regularly found to be consistent with § 1692g” of the FDCPA.