Failure to Disclose Interest on Collection Letter Violates FDCPA

Posted By Law Office of Simon Goldenberg, PLLC || 25-Oct-2017

Consumer law can be difficult to parse out, not just for the average person, but for courts as well. An appeals decision by a second circuit court in the case of Avila v. Riexinger & Associates is but one in a string of cases concerning the language and interpretation of the Fair Debt Collection Practices Act (FDCPA). The decision provides a glimpse at questionable tactics used by some collectors, and also reinforces the importance of consumers protecting themselves from such practices.

Avila v. Riexinger & Associates

The case of Avila v. Riexinger was centered around the issuing of collection letters, a common practice of creditors nationwide. Annmarie Avila’s counsel claimed that letters she received from Riexinger & Associates violated the FDCPA, specifically section 1692e. This section provides that any attempts to collect debt must not be “false, deceptive, or misleading.” Avila’s counsel argued that the presentation of a “current balance” on her collection letter was indeed misleading, because it lacked any notice of the interest and fees that were accruing over time. The initial judgment in District Court dismissed the charges, acknowledging the fact that courts were split on whether debtors must disclose interest and fees.

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Appeals Court: Analysis

In rendering their appeals decision, the Second Circuit court used what they refer to as the “least sophisticated consumer” standard. This means that when determining whether the collection letters were misleading, they were examined through the eyes of a consumer who could not be considered even as sophisticated as the average consumer. If this less sophisticated consumer could read the letter and interpret it in more than one reasonable manner, the court would rule that it was indeed false and misleading. The Court ruled that because the letter could be understood as saying that the consumer only owed the balance stated, the letters were in violation of section 1692e. Furthermore, the Court held that for debtors to disclose the presence of interest and fees would be most in line with the congressional intent of protecting consumers rights.

Avila: Safe Harbor Language

When the district court made its initial decision in Avila v. Riexinger, they stated concerns that requiring debt collectors to disclose interest and fees may lead to more abusive practices. The Second Circuit court agreed that this may become an issue, and as such adopted what is known as a “safe harbor” approach. A “safe harbor” is a legal provision that attempts to reduce liability in certain situations or when certain conditions are met.

In the case of Avila v. Riexinger, the Second Circuit used “safe harbor” to outline specific language to be used on debt collection letters so that they are in compliance with section 1692e. The Court reiterated a statement that appeared in the decision for Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C.

  • “As of the date of this letter, you owe $___ [the exact amount due]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For further information, write the undersigned or call 1–800– [phone number].”

The Court further clarified that this “safe harbor” provision does not mean that debt collectors must use this language specifically, only that doing so would ensure compliance with the FDCPA.

Fair Debt Collection Lawyers

The case of Avila v. Riexinger & Associates demonstrates the monumental importance of the Fair Debt Collection Practices Act. It is absolutely crucial that those being sent collection letters remain vigilant about the balances they owe and be aware of any abusive behavior by their debt collectors.

You may be entitled up to $1000 in statutory damages, plus actual damages, and attorneys fees, if you are a victim of debt collector abuse or any other fdcpa violation. If you believe that your consumer rights have been violated by a debt collector, contact the New York & New Jersey Fair Debt Lawyers at the Law Office of Simon Goldenberg PLLC.

Call today to speak to a consumer lawyer - (888) 301-0584.

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Not legal advice, for informational purposes only. Not responsible for typographical errors. Our law firm does not have any involvement or affiliation to the case discussed in this article. We are headquartered in New York City and we practice law only in NY and NJ. Contact us to learn more.

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