The United States Court of Appeals for the Second Circuit recently held that a debt collector’s letter to debtors that stated a current balance but that did not disclose that the amount could increase over time due to interest or fees violated the Fair Debt Collection Practices Act (“FDCPA”).  See Avila v. Riexinger & Associates, LLC, 2016 WL 1104776 (2d Cir. Mar. 22, 2016).  The plaintiffs in the action filed a complaint against the defendant debt collector alleging that the debt collector’s correspondence to them stated a current balance, but the correspondence did not state that this amount could increase.  They argued that, pursuant to 15 USC 1692e, this correspondence violated the FDCPA because it was a “false representation of the character, amount, or legal status of any debt[.]”  The United States District Court for the Eastern District of New York granted the defendant’s motion to dismiss, holding that a statement of the current balance was sufficient under the FDCPA.  The Second Circuit reversed, however, finding that the least sophisticated consumer might incorrectly believe that paying the stated current balance would satisfy the debt.  Instead, the Court found that the FDCPA requires that a debt collector send a notice that “either accurately informs the consumer that the amount of the debt stated in the letter will increase over time, or 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.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.