2nd Circuit: debt collectors do not need to state interest is not accruing

Courts Debt Collection Second Circuit FDCPA Appellate

On March 29, the U.S. Court of Appeals for the 2nd Circuit held that a debt collection letter, which does not disclose that the balance due is not accruing interest or fees is not misleading under the Fair Debt Collection Practices Act (FDCPA). The decision results from a 2016 lawsuit filed by two debtors who alleged that the debt collection notices they received from the defendants were “false, deceptive, or misleading” under Section 1692e of the FDCPA because the notices did not state whether the balances were accruing interest or fees. The district court awarded summary judgment in favor of the defendants after unrebutted evidence was produced to show that the debtor’s balances did not accrue interest or fees during the collection period.  In affirming the district court’s decision, the 2nd Circuit applied the “least sophisticated consumer” standard and found that even if a consumer interpreted the debt collection notice to believe the balance due was accruing interest or fees, the only harm that would exist is “being led to think that there is a financial benefit to making repayment sooner rather than later.” The panel also noted that the notice was consistent with Section 1692g of the FDCPA because interest and fees were not accruing, the balance due stated the accurate amount of the debt.