New York Federal Court Denies Debt Collector’s Motion to Dismiss FDCPA Action, Holds Debt Collection Letters Did Not Comply with Safe Harbor Rule

The United States District Court for the Eastern District of New York recently denied a debt collector’s motion to dismiss an action under the Fair Debt Collection Practices Act (“FDCPA”) alleging that collection letters sent—with no mention of interest accrual or late payment fees—violates the Act.  See Watson v. Midland Credit Mgmt., Inc., 2019 WL 2527295 (E.D.N.Y. June 19, 2019).  In the case, the defendant debt collector sent the plaintiffs three identical letters stating that the plaintiffs had been “pre-approved” for a “discount program” and by participating in the program the plaintiffs could “put the debt behind [them].”  The letters offered the plaintiffs three different options for debt repayment at a discounted rate and two of the three offers specified a precise amount to be paid and a payment due date.  The third option offered “Monthly Payments As Low As: $50 per month” with no mention of amount to be paid or payment due date.  The plaintiffs claimed that the letters were “deceptive” and, therefore, violate 15 U.S.C. § 1692e because the “discount” payment options failed to state whether acceptance of discounted rate would resolve plaintiffs’ outstanding debts, whether interest would continue to accrue on plaintiffs’ accounts, or whether plaintiffs would incur late payment fees.

The Court denied the defendant’s motion to dismiss.  In Avila v. Riexinger & Associates, LLC, 817 F.3d 72 (2d Cir. 2016), the Second Circuit held that a debt collector does not violate the FDCPA for failing to inform the debtor of accruing interest or late payment fees if the letter either (i) “accurately informs the consumer that the amount of the debt stated in the letter will increase over time,” or (ii) “clearly states that the holder of the debt will accept payment of the amount set forth in full satisfaction of the debt if payment is made by a specified date.”  Here, the letters at issue contained two offers that met this second prong of the Avila safe harbor by setting forth the amount the defendant would accept as of a specified date, but the letters also offered a third option which failed to state the precise amount of the settlement offer.  Therefore, the “plaintiffs’ complaint contained a plausible claim for relief” and survived the defendant’s motion to dismiss.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Anthony Lombardo at