A District Court judge in Wisconsin has denied a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act because it included safe harbor language in a collection letter that it did not need to include.
A copy of the ruling in Hoffman v. Keith D. Weiner & Associates, Co., can be accessed by clicking here.
The plaintiff received a collection letter from the defendant in reference to an unpaid residential lease agreement. The letter included the following statement: “As of the date of this letter, you owe the balance stated above. Because of interest and other charges that may vary from day to day, the amount due on the day you pay may be greater.”
The rub is that the plaintiff alleges the defendant did not and could not add “interest and other charges,” which could “trick the consumer into thinking that if he or she does not pay immediately, the balance owed will grow,” and thus violate Section 1692e of the FDCPA.
In using the safe harbor statement when it did not need to, Judge Lynn Adelman of the District Court for the Eastern District of Wisconsin ruled the defendant essentially created a potential FDCPA violation. The safe harbor language stems from Miller v. McCalla, Raymer, Padrick, Cobb, Nicholas & Clark and is used to satisfy the collector’s “duty to state the amount of the debt in cases where the amount varies from day to day.” The safe harbor language is:
As of the date of this letter, you owe $___ [the exact amount due]. 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 further information, write the undersigned or call 1-800-[phone number].
The defendant in this case used a form of the Miller safe harbor language, but did not need to do so. The defendant argued that it might bring a lawsuit in the future and thus be entitled to add post-judgment interest, and that if it didn’t include the safe harbor statement in the initial letter, it could be sued at a later date for not accurately stating the amount of the debt if it did win a judgment and try to collect interest. Judge Adelman was unpersuaded.
“…a dunning letter does not have to inform a consumer that in the event the debt collector brings a lawsuit to collect and wins, it may add post-judgment interest to the balance due,” he wrote.
Judge Adelman went on to provide a different safe harbor disclosure that might be used in these kinds of cases going forward.
For example, the debt collector could state the amount owed as of the date of the letter and then state that “if we decide to file a lawsuit to collect this debt and win, we may add court costs and post-judgment interest to the balance stated above.” In other words, the debt collector is not compelled to repurpose the Millersafe-harbor language to a situation for which it was not designed.