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Judge Grants MTD in FDCPA Case over Avila Disclosure in Collection Letter

A District Court judge in New York has granted a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act for a number of reasons, including saying in a collection letter than the balance owed “may” increase because of interest that was accruing when, in fact, the balance owed was increasing because of accruing interest.

A copy of the ruling in the case of Paracha v. MRS BPO can be accessed by clicking here.

The plaintiff received a collection letter from the defendant in relation to an unpaid student loan. After receiving the initial letter, the plaintiff requested additional information about the debt, and was sent another letter. In the second letter, the balance owed was thousands of dollars higher than in the original letter. The plaintiff then filed suit, alleging a number of violations, including that the letter did not “set forth the ‘amount’ of the debt, as it ‘did not explain whether interest actually was accruing and did not explain the basis for the accrual of any interest,’ even though the debt was in fact accruing interest at the time. Paracha also alleges that the letter did not explain what he would need to pay to resolve the debt ‘at any given moment in the future.’ ” As well, the plaintiff claimed “the letter’s representation that the debt ‘may’ be accruing interest, when it was actually accruing interest at the time, ‘amounted to a false, deceptive or misleading means in connection with the collection of a debt.’ “

By stating the amount that was owed and by including safe harbor language provided in the case of Avila v. Riexinger & Associates, the defendant “sufficiently advised Paracha that the amount of debt may increase over time,” wrote Judge Roslynn Mauskopf of the District Court for the Eastern District of New York.

The plaintiff requested the defendant be forced to adopt different language than prescribed in Avila, requiring it to say that interest will accrue instead of may accrue, but Judge Mauskopf “decline[d]” the “invitation to demand more detailed disclosures than Avila requires.”

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