Avila v. Riexinger & Associates, LLC
2016 U.S. App. LEXIS 5327
| 2d Cir. | 2016Background
- Plaintiffs Annmarie Avila and Sara El-rod received collection letters from Riexinger & Associates stating a “current balance” but not disclosing that interest or late fees could increase the amount.
- Notices invited payment (including a detachable credit-card payment slip) that repeated the “current balance.”
- Plaintiffs alleged they reasonably believed the stated amount would satisfy the debt regardless of when payment was made; Avila alleged high daily interest had in fact accrued.
- Defendants moved to dismiss; the district court granted the motion, joining courts holding no duty to disclose accrual of future interest or fees.
- Plaintiffs appealed the dismissal of their FDCPA claim under 15 U.S.C. § 1692e (prohibiting false, deceptive, or misleading representations in debt collection).
- The Second Circuit vacated dismissal, holding that stating a “current balance” without disclosing possible ongoing accrual may mislead the least sophisticated consumer and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a collection notice stating a “current balance” must disclose that the balance may increase due to accruing interest/fees under 15 U.S.C. § 1692e | The notice is misleading because a reasonable consumer could believe payment of the stated “current balance” will fully satisfy the debt; omission of accrual disclosures is deceptive | No disclosure required; section 1692g requires only disclosure of “the amount of the debt,” and other courts have held no duty to warn that debt may increase | The omission can be misleading to the least sophisticated consumer; debt collectors must disclose that the balance may increase or provide a clear safe-harbor (e.g., state that amount may increase, or offer to accept the amount as full satisfaction if paid by a specific date) |
Key Cases Cited
- Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993) (adopts the least sophisticated consumer standard for FDCPA claims)
- Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85 (2d Cir. 2008) (FDCPA is a consumer-protection statute to be liberally construed)
- Vincent v. The Money Store, 736 F.3d 88 (2d Cir. 2013) (interpretation of FDCPA with congressional purpose in mind)
- Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996) (discussion of misleading communications under FDCPA)
- Miller v. McCalla, Raymer, Padrick, Cobb, Nichols & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000) (provides a safe-harbor disclosure form for variable balances)
- Jones v. Midland Funding, LLC, 755 F. Supp. 2d 393 (D. Conn. 2010) (supports disclosing that interest accrues and the applicable rate)
- Dragon v. I.C. Sys., Inc., 483 F. Supp. 2d 198 (D. Conn. 2007) (held collection notice potentially misleading because amount stated could be read as fixed)