On November 15, the U.S. District Court for the Northern District of New York ruled that a law firm did not violate the Fair Debt Collection Practices Act when it stated in its collection letter that the "amount due" was $5,794.54 but failed to indicate that this amount could increase due to interest assessed pursuant to N.Y. C.P.L.R. § 5001. In Altieri v. Overton, Russell, Doerr and Donovan, LLP, the Court reaffirmed the holding in Cruz v. Credit Control Servs., Inc., No 2:17-cv-1994, 2017 U.S. Dist. LEXIS 186125 (E.D.N.Y. Nov. 8, 2017), by finding that interest cannot be assessed on an account unless and until a civil action is commenced. Further, the Court rejected the consumer's argument that the creditor could sell the consumer's account to a third party who, in turn, could seek interest and fees under N.Y. C.P.L.R. § 5001. The Court stated that the potential for future events, such as the consumer's debt being sold to a third party who would then seek to add interest pursuant to N.Y. C.P.L.R. § 5001, does not make the "amount due" in the collection letter false or in violation of the Second Circuit ruling in Avila v. Riexinger & Associates, LLC.
The Court further ruled that the law firm did not violate the FDCPA when it sent a collection letter on the firm's letterhead providing a disclaimer that no attorney from the law firm had reviewed the particular circumstances of the subject account and that the consumer's "failure to respond to [the law firm's letter] within the 30-day period will result in the continuation of [the law firm's] efforts to collect this debt and the reporting of this account to a credit reporting agency." The district court rejected the consumer's argument that since the letter was sent on the law firm's letterhead, "the 'least sophisticated consumer' will assume that actions which only an attorney can take such as the filing of a lawsuit will in fact be a part of the continuation of [the law firm's] efforts to collect the debt which 'will' occur."
District courts in the Second Circuit have struggled to apply the holding in Avila as it pertains to these "current balance" claims. The Altieri holding gives the debt collection industry some reprieve by providing relief from creative consumer attorneys bringing actions on claims that cannot accrue statutory interest because a court of law has never ordered the interest under state statute.
We will continue to report as these "current balance" cases develop and shape the law.
The Troutman Sanders' Consumer Financial Services Law Monitor blog offers timely updates regarding the financial services industry to inform you of recent changes in the law, upcoming regulatory deadlines and significant judicial opinions that may impact your business. To view the blog, click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
