CFPB Stands Behind Collector for Itemizing Debt in Letter

Thanks to the team at Ballard Spahr for noticing that the Consumer Financial Protection Bureau filed an amicus brief in support of a debt collector’s position that it did not violate the Fair Debt Collection Practices Act when it included line items indicating that an individual owed $0.00 in interest and collection fees in a collection letter.

The brief was filed in the case of Hopkins v. Collecto, which is currently before the Third Circuit Court of Appeals. The plaintiff is appealing the dismissal of his class action lawsuit alleging that least sophisticated consumers would be misled into thinking that listing interest and collection fees in the letter means that they could start accruing in the future. A District Court judge in New Jersey dismissed the claim, saying it did not state a plausible claim for relief.

In its brief, the CFPB argues that the Third Circuit should uphold the dismissal of the lawsuit because the itemization of a debt in a collection letter is the same as receiving a receipt in a store after making a purchase — it “discloses what already happened, not what will or may happen in the future.” Should the plaintiff succeed, the CFPB argues, “perverse incentives” would be created to discourage collectors from providing “accurate itemizations” in collection letters.

The CFPB also cited the recent ruling out of the Seventh Circuit Court of Appeals in Degroot v. Client Services, in which a lower court’s dismissal of a very similar FDCPA suit was upheld.

Seeking to offer a solution to the problem, the CFPB referenced the model validation notice it included in its proposed debt collection rule as a potential solution to the problem at hand. In a footnote, the CFPB said it was analyzing the 14,000 comments it received about the proposed rule and considering “final action on the notice of proposed rulemaking.”

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