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Second Circuit Affirms Dismissal of FDCPA Suit Over Interest Disclosure in Letter

The Second Circuit Court of Appeals has affirmed a lower court’s ruling dismissing a class-action lawsuit that accused a collection agency of violating the Fair Debt Collection Practices Act because of disclosures in the letter related to the accrual of interest on the unpaid debt.

A copy of the ruling in Kolbasyuk v. Capital Management Services can be accessed by clicking here.

The plaintiff sued the defendant after receiving a collection letter that included the following passage:

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.

The lawsuit claimed the letter violated Sections 1692e and 1692g of the FDCPA, because the letter failed to disclose “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.”

A District Court judge in the Eastern District of New York dismissed the suit, a decision which the plaintiff appealed to the Second Circuit.

The Second Circuit ruled the letter did not violate Section 1692g because the statute requires a notice to reference “the amount of the debt” and not the individual components of a debt, such as the principal and interest.

The Second Circuit took issue with the plaintiff citing Carlin v. Davidson Fink LLP as a precedent in its favor. The letter in Carlin was a payoff statement that included an estimate of the total amount due, and not the actual amount that was owed. That difference, “presented an altogether different question than CMS’s letter to Kolbasyuk, which clearly states the total, present quantity of Kolbasyuk’s debt as of the letter’s date,” Judge Debra Ann Livingston wrote in the Second Circuit’s ruling.

The plaintiff also tried to use Avila v. Riexinger & Associates LLC in arguing that the letter violated Section 1692e of the FDCPA by mis-stating the amount of the debt, but, Judge Livingston noted, the language in the defendant’s letter did disclose that the balance might increase.

“Kolbasyuk presents no other theory under which CMS might have violated Section 1692e,” Judge Livingston wrote. “Nor can we imagine one. Absent additional facts not present on this record, nothing about CMS’s letter could be fairly characterized as ‘false, deceptive, or misleading.’ Accordingly, the district court did not err in concluding that Kolbasyuk’s complaint fails to state a claim that CMS ‘use[d] any false, deceptive, or misleading representation or means in connection with the collection’ of the debt at issue here.”

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