Judge Grants Motion for Judgment in Favor of Defendant Over Interest Disclosure, Settlement Offer Expiration in Letter

In a case that was defended by the team at Malone Frost Martin, a District Court judge has granted a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices class action after alleging that the amount owed listed in a collection letter was lower than it should have been and that a settlement offer did not provide a deadline by which it had to be accepted.

A copy of the ruling in the case of Weiss v. Sequium Asset Solutions can be accessed by clicking here.

The plaintiff received a collection letter seeking to collect on a balance of $12,777.90, and offering to extinguish the debt if the plaintiff agreed to pay 60% of that amount. The plaintiff filed suit, alleging that the amount owed was actually significantly higher because interest had been accruing on the debt and that either the interest should have been included in the balance or it should have been disclosed that it had been waived.

Interest cases within the Second Circuit have become a common case throughout the years. Most in the industry will remember the saga of Avila v. Riexinger & Associates, which ultimately led to the creation of safe harbor language that could be included in collection letters in regards to a balance that was changing because of accruing interest. The Second Circuit also issued a ruling last year in Cortez v. Forster & Garbus, which held that a settlement offer in a collection letter does not have to state that the interest clock is running.

The plaintiff argued that the letter he received was different because it did not include a deadline to take advantage of the settlement offer, like the letter in Cortez did. During a hearing, the plaintiff’s counsel hypothesized that his client could wait 10 years before accepting the offer, and not know it had expired or not.

“The complaint does not allege that Weiss himself experienced this manner of confusion, or even that the least sophisticated consumer would,” wrote Judge Eric Komitee of the District Court for the Eastern District of New York. “In any event, Section 1692e ‘does not require that a collection notice anticipate every potential collateral consequence that could arise in connection with the payment or non-payment of a debt.’ This is especially true of potential collateral consequences that are so esoteric as to arise only if a debtor decides to wait ten years to accept a settlement offer.”

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