The Eastern District of New York issued a scathing opinion about reverse Avila claims and issued a crushing blow to the plaintiffs' bar in the decision for Kraus v. Professional Collections Bureau of Maryland, Inc., 2017 WL 6398744 (E.D.N.Y. Nov. 27, 2017). The decision (read it here) provides an excellent policy argument regarding the absurdity of reverse Avila claims and how they have morphed the FDCPA from a shield to a sword for consumers. The decision also finds that a settlement offer letter with a deadline satisfies Avila’s requirement to clearly state that a specific amount paid by a specific date would satisfy the debt.
Most importantly, the court flat-out said what the industry has been saying for years regarding the plaintiffs' bar’s abuse of the FDCPA:
While the Court struggles to see how Avila protects consumers, little imagination is required to envision how the plaintiffs' bar will make use of it. During oral argument, plaintiff's counsel advised the Court that many cases have been filed as a result of the Avila decision. No doubt this is true. But are those cases serving to root out genuine instances of debt-collection abuse? Or are they, instead, serving largely to facilitate debt evasion and to prop profits among the plaintiffs' bar? With the FDCPA, Congress intended to “arm[ ] consumers with a shield against the overly zealous debt collector.” The Court worries that, by carrying the least-sophisticated-consumer standard and strict liability to an illogical extreme, this circuit has fashioned that shield into a sword.(Citations omitted.)
Interestingly, unless the below arguments were brought up by PCBM during oral arguments, the court came to these conclusions on its own. PCBM’s motion to dismiss contained a single, completely different argument.
The Decision’s Policy Argument
Judge Glasser states that Avila and its progeny have lost sight of the purpose of the FDCPA: to protect consumers from abusive debt collection practices. The decision rips into the widespread abuse of the FDCPA, which caused it to become a debt relief statute rather than a shield for consumers as it was initially intended to be. When asked during oral argument why his client sought his assistance, plaintiff’s counsel stated it was because she was in financial distress and was seeking some relief – not mentioning anything about feeling abused by the letter received.
Specifically regarding Avila, the decision states that there is nothing ambiguous, deceptive, or misleading about a letter that accurately conveys the balance but is silent as to interest. Judge Glasser slams the argument, stating it is as plausible as alleging that the letter is ambiguous about the existence of Bigfoot. (Yes, Bigfoot was referenced.)
The court ultimately finds that “[a] debtor who assumes his account balance will never increase, simply because a collection letter provides no information regarding interest, does so unreasonably, and this irrationality should not be rewarded by courts at the expense of non-abusive debt collectors.”
Second Prong of Avila Satisfied
The court avoids going against precedent in the Eastern District by providing a conclusion that the settlement offer in PCBM’s letter satisfies the second prong of Avila. According to Avila, if interest is accruing, the letter must inform the consumer that the balance may increase or, in the alternative, clearly state a specific amount paid by a specific date would resolve the account.
PCBM’s letter clearly stated that it would accept payment of $1552.45 on or before June 20, 2016 to settle the account. According to Judge Glasser, this is sufficient.
This is the blow that the industry has been waiting for. No article will do this decision justice, so it is recommended that the decision is read in full by all in the industry. Once again, read it here.