Just when you think that you’ve seen the last of the interest disclosure issue out of New York, it rears its ugly head again. Luckily, the Second Circuit has yet again stood by the collection letter sent by the agency, finding no Fair Debt Collection Practices Act (FDCPA) violation despite the plaintiffs’ many attempts to twist and turn the interest disclosure argument. The decision is Kolbasyuk v. Capital Management Services, LP, No. 18-1260 (2d Cir. 2019).
Capital Management Services, LP (CMS) sent a collection letter that stated:
As 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. For more information, write the undersigned or call 1‐877‐335‐6949.
Plaintiff filed an FDCPA suit alleging that the letter didn’t adequately state the amount of the debt, break down what part of the balance is the principal, nor provide the interest rate or calculations about how to determine the balance at a future date. The Second Circuit noted that plaintiff’s arguments seemed to mirror its decision in Carlin v. Davidson Fink, LLP.
[article_ad] Why is this a problem? The Second Circuit found that CMS’s letter is different from the letter in Carlin, making the old case inapplicable to this instance. In Carlin, the Second Circuit took issue with an estimated payoff amount for a future date when a breakdown of the calculation was not provided. The CMS letter avoids this issue altogether since it explicitly states the amount owed as of the date of the letter rather than a future estimated amount.
Another claim made by the plaintiff was that the letter somehow misleads the consumer to believe that he could pay amount listed as due on a date later than the letter and still satisfy the debt. The court noticed the obvious -- the exact opposite is true. The letter clearly states that the balance on the letter is “as of the date of the letter” and that the balance may be greater in the future.
The court also noted that the letter used by CMS “identically tracks” the safe harbor language the Second Circuit adopted for accounts where the balance is subject to change.
Finally, the court found that there is no requirement to provide a precise breakdown of the debt or inform the consumer of the precise interest that might occur going forward. (Which should hopefully be the final nail in the coffin for the Balke issue in case any are still out there.)
Did we just do a time warp back to 2016/2017? Despite the Second Circuit already ruling extensively on the interest disclosure issues (in Avila, Taylor, and DeRosa), it seems prior decisions have not deterred the filing of these claims. At insideARM, we’d talked extensively about the litigation dilemma and how the current structure of the FDCPA makes debt collectors easy targets to line pockets with settlements. When will enough be enough? How many times does the Second Circuit have to put forward similar rulings with almost identical reasonings on these issues? Do these repeated hyper-technical actions really protect consumers from unscrupulous debt collectors, as is the mission of the FDCPA, or are they just clogging up court dockets and wasting everyone’s resources?