A District Court judge in Wisconsin has denied a defendant’s motion to dismiss after it was sued for violating the Fair Debt Collection Practices Act and ruled that a jury should decide whether a collection letter sent to the plaintiff was misleading because it included itemized line items for “fees” and “interest” even though neither were accruing.
A copy of the ruling in the case of Knaak v. Option Solutions can be accessed by clicking here.
The plaintiff received a collection letter from the defendant, which included an itemized list of what was owed to the creditor. The list included line items for “fees” and “interest” even though the balance for both was $0 and nothing was accruing for either item. The plaintiff sued, alleging the letter violated Section 1692e of the FDCPA by making false representations. The defendant argued that itemizing the “fees” and “interest” does not automatically mean that those balances may be accruing, with which Judge J.P. Stadtmueller of the District Court for the Eastern District of Washington agreed, but the judge determined that an unsophisticated consumer could infer that those charges were accruing. Acknowledging that both sides had reasonable arguments about the status of the debt, the judge said it was up to a jury to decide and denied the motion to dismiss.
Among the arguments made by the defendant was that it included safe harbor language which was approved by the Second Circuit Court of Appeals in Avila v. Riexinger & Associates, but the circumstances of this case are different because the debt is static.
“In this case, the confusion is whether a static debt was not accruing fees or interest, where the Letter at least implies that this may be true,” Judge Stadtmueller wrote. “The Avila-inspired paragraph in the Letter, which begins with “[w]e are willing to settle your account,” does nothing to address the deception complained-of by Plaintiff.”
