Second Circuit Reverses District Court, Holds Debt Collector Did Not Violate FDCPA When It Sent Proposed Settlement Notice That Did Not Include Interest

The United States Court of Appeals for the Second Circuit recently reversed a District Court and held that a debt collector did not violate the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692e, when it sent a letter that offered settlement amounts if the debtor paid by a date certain, but did not include language stating that the debt would continue accruing interest and/or fees if the specified amounts were not paid by that date.  See Cortez v. Forster & Garbus, LLP, 2021 WL 2274290 (2d Cir. June 4, 2021).  In the case, Defendant debt collector sent a letter to Plaintiff which stated that “this office has been authorized to advise you that a settlement of the above account can be arranged” and made three settlement offers to satisfy Plaintiff’s debt, if such payment was made by a certain date. Plaintiff then brought an action in the United States District Court for the Eastern District of New York under the FDCPA and citing Avila v. Riexinger & Associates, LLC, which held that collectors are required, “when they notify consumers of their account balance, to disclose that the balance may increase due to interest and fees.” Avila v. Riexinger & Associates, LLC, 817 F.3d 72, 76 (2d Cir. 2016). Defendant filed a motion for summary judgment and the District Court denied and granted summary judgment for plaintiff sua sponte, holding that the debt collector’s letter was not in conformance with Avila. This decision was discussed in a prior blog post.

The Second Circuit reversed and remanded, ordering that the District Court enter judgment in favor of Defendant. The Court clarified that the holding of Avila is that a debt collector “will not be subject to liability under [the FDCPA] for failing to disclose” in a collection notice whether an account is accruing interest and fees so long as the notice “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.” Avila, 817 F.3d at 76. Therefore, a debt collector must either disclose that interest and fees continue to accrue or offer to extinguish the debt in exchange for a specified payment. Id. Here, the Court stated that “even when viewed from the perspective of the least sophisticated consumer,” the debt collector’s notice “could only be reasonably read one way: as extending an offer to clear the outstanding debt upon payment of the specified amount(s) by the specified date(s). Since this sole reasonable interpretation was accurate, the notice did not violate the FDCPA.”

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, Desiree McDonald at, or Andrew Raimondi at