United States District Court, E.D. New York
FATEMA ISLAM, Individually and on behalf of a class, Plaintiff,
AMERICAN RECOVERY SERVICE INCORPORATED, Defendant.
MEMORANDUM DECISION AND ORDER
M. COGAN U.S.D.J.
Second Circuit's decision in Avila v. Riexinger &
Associates, 817 F.3d 72 (2d Cir. 2016), has led to a
number of lawsuits in this district challenging the adequacy
of disclosures concerning the accrual, or non-accrual, of
post-default charges under the Fair Debt Collection Practices
Act. Avila's narrow holding is this: if
post-default interest or fees are accruing, it is not
sufficient for the collection letter to list the
"current amount" of the debt. The collection letter
has to say that the amount may increase over time.
complaint before me seeks to extend Avila to cases
where post-default charges are not accruing, but where the
collection letter, by referencing the amount due "as of
the date of this letter, " arguably implies that they
are. Although the facts of Avila are thus
distinguishable, its analytical framework is so indulgent of
plaintiffs and their attorneys that I am constrained to deny
defendant's motion for summary judgment and to grant
material facts are undisputed.
August 4, 2016, Bank of America, N.A., placed plaintiffs
credit-card account with defendant for collection. One week
later, on August 11, 2016, defendant sent plaintiff a
collection letter which stated, in part, that "fa]s
of the date above, you owe $14413.78." (Emphasis
added). The letter then set forth a table identifying Bank of
America as the "original creditor"; the "total
amount of the debt due as of charge-off' as $14, 413.78;
the "total amount of interest accrued since charge
off' as $0; and the "total amount of non-interest
charges or fees accrued since charge-off as $0. After this
table, the letter again advised that "[t]he balance owed
above reflects the total balance due as of the date of
this letter. The itemization reflects the post
charge-off activity we received from Bank of America."
sent a second collection letter on September 23, 2016, which
did not contain the language "as of the date of this
letter." It simply listed the "Balance Owed"
as $14, 413.78, the same amount demanded in the first
America has a policy of not accruing interest or fees once it
has charged off a bad debt. Thus, consistent with the
letter's terms, no interest or expenses accrued after
August 4, 2016, the date on which the account was put out for
collection to defendant.
solely on the language in the August 11th letter, plaintiff
contends that defendant violated the FDCPA in three respects:
(1) by violating the general prohibition against
"deceptive [or] misleading" representations in 15
U.S.C. § 1692e; (2) by violating the specific
prohibition against "[t]he use of any false
representation or deceptive means ... to attempt to collect
any debt" in § 1692e(10); and (3) by violating
§ 1692g, which requires that a collection letter state
the "amount of the debt."
Avila, the collection letter noted in two places the
"current balance" of the debt, but did not disclose
that after the date of the collection letter, the account was
continuing to accrue interest at the alleged rate of 500% per
year plus late fees. The Second Circuit held that referring
to the "current balance" was not sufficient to
disclose that the amount would increase after the date of the
letter, and thus was a "deceptive [or] misleading
representation" of the amount due under the general
prohibition of 15 U.S.C. § 1692e. Its decision was
premised on two principles: (1) the FDCPA should be liberally
construed because it is a consumer-protection statute,
see Vincent v. The Money Store, 736 F.3d
88, 98 (2d Cir. 2013); Jacobson v. Healthcare Fin.
Servs., Inc.. 516 F.3d 85, 95 (2d Cir. 2008);
and (2) the collection letter must be assessed from the
perspective of the "least sophisticated consumer."
See Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.
1993). Applying these principles, the Court held that
A reasonable consumer could read the notice and be misled
into believing that she could pay her debt in full by paying
the amount listed on the notice. In fact, however, if
interest is accruing daily, or if there are undisclosed late
fees, a consumer who pays the "current balance"
stated on the notice will not know whether the debt has been
paid in full.
Avila, 817 F.3d at 76. Based on the procedure set
forth in Miller v. McCalla, Raymer, Padrick,
Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872
(7th Cir. 2000), the Second Circuit adopted a "safe
harbor" option for debt collectors seeking to recover
debts where the amount varies from day to day, under which a
debt collector can advise the debtor either that the
"current balance" may increase over time, or that
the debt collector will accept the current balance as payment
of course apply Avila as controlling precedent, and
although it is factually distinguishable, its analytical
framework dictates the result here. Specifically, it applied
the "liberal construction" and
"least-sophisticated consumer" principles so
broadly, to such a harmless, technical violation, that it
effectively exchanged the words "deceptive" and
"misleading" in the statute for
"ambiguous." If a collection letter ...