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Appeals Court Affirms Ruling in FDCPA Over Static Balance of Debt

The Second Circuit Court of Appeals has issued a non-precedential summary order affirming a lower court’s granting of a motion for judgment on the pleadings in favor of a defendant that was sued for allegedly violating the Fair Debt Collection Practices Act by sending a collection letter that included an itemized list of what was owed, even though interest, fees, or other charges were not accruing.

A copy of the ruling in the case of Dow v. Frontline Asset Strategies can be accessed by clicking here.

The plaintiff sued for the defendant after she received a collection letter that broke out the interest, fees, and other charges as separate line items, even though each of those items had a $0 balance. The letter also included the phrase, “[a]s of the date of this letter, you owe…”

The plaintiff alleged the letter violated Section 1692e of the FDCPA by using false and deceptive means to collect on a debt. A least sophisticated consumer, the plaintiff alleged, could be confused into thinking the debt was dynamic, meaning the balance owed could increase.

Citing its own ruling in Taylor v. Financial Recovery Services, Inc., the Second Circuit quickly shot down the plaintiff’s argument. The plaintiff attempted to differentiate her case from Taylor because the letter in that case did not include separate line items for interest, fees, and other charges. Arguing that requiring debt collectors to “draw attention” to the fact a debt is static “could incentivize” collectors to make all debts dynamic, the Appeals Court affirmed the lower court’s ruling.

“We do not find the notice to be misleading here given that these lines reflect $0 in interest or fees and charges had accrued,” the Appeals Court wrote. “Nor does language such as ‘as of this date, you owe $____’ change our calculus. This stock language is present in a number of collection notices, including those considered not misleading in Taylor. Because there is no other information relating to interest, fees, or charges in the notice — a fact alleged in Dow’s complaint — we cannot say that the least sophisticated consumer would read the collection notice here as suggesting their debt is dynamic.”

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