Over the last week, the Second Circuit issued two opinions (Kolbasyuk v. Capital Management Services, LP, No. 18-1260, and Corwise v. FMS Investment Corp., No. 18-1292) that clarify a debt collector's obligations under the Fair Debt Collection Practices Act ("FDCPA") when a debt is accruing interest or fees.
In each case, the defendant-collector sent a letter that accurately stated the balance of the debt on the date the letter was sent and explained interest and fees were accruing, pursuant to the Second Circuit's decision in Avila v. Riexinger & Associates, LLC, 817 F.3d 72 (2d Cir. 2016).
The plaintiffs argued the Avila safe-harbor language the defendants provided was not enough to state the "amount of the debt" in an initial communication under FDCPA § 1692g. According to the plaintiffs, when interest or fees are accruing on a debt, § 1692g requires a debt collector to provide detailed disclosures (i.e., the rate of interest, the date from which interest is calculated, any fees that may be applied, etc.) such that the consumer can calculate the amount of the debt on any given day.
The district court dismissed each case finding these detailed disclosures are not required, and the Second Circuit affirmed. In each case, the Second Circuit agreed with the arguments presented by defendants' counsel, Sessions, Fishman, Nathan and Israel, and held: (1) FDCPA § 1692g only requires a debt collector to accurately state the balance of the debt on the date of its initial communication; and (2) FDCPA § 1692e only requires a debt collector to clarify the stated balance may increase due to accruing interest or fees.
The Second Circuit's decisions in Kolbasyuk and Corwise are significant because they provide needed clarity and impose reasonable obligations on debt collectors when attempting to collect debts that are subject to accruing interest or fees.
