Taylor v. Fin. Recovery Servs., Inc.
886 F.3d 212
| 2d Cir. | 2018Background
- Taylor and Klein defaulted on Barclays credit cards; Barclays placed their accounts with Financial Recovery Services, Inc. (FRS), instructing FRS not to accrue post-placement interest or fees.
- FRS sent repeated collection notices to each consumer stating an unchanged "balance due" (Taylor: $599.98; Klein: $3,171.12) without stating whether interest or fees were accruing.
- Neither consumer paid FRS; both later filed Chapter 7 bankruptcy and FRS closed the accounts.
- Plaintiffs sued under 15 U.S.C. § 1692e (FDCPA), alleging the notices were false, deceptive, or misleading because they omitted that interest/fees were not accruing (relying on Avila v. Riexinger).
- Discovery showed unrebutted evidence that no interest or fees accrued while FRS held the accounts; FRS moved for summary judgment, which the district court granted. Plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a collection notice that states a balance but omits that interest/fees are not accruing is "misleading" under §1692e | Failure to disclose is misleading because a least-sophisticated consumer could reasonably think interest/fees were accruing (per Avila) | If no interest/fees are accruing, stating the balance is accurate and not misleading; no duty to highlight that the debt is static | Not misleading under §1692e where no interest/fees were accruing; affirm summary judgment for FRS |
| Whether Avila compels disclosure whenever a notice omits mention of interest/fees | Avila means omission creates a per se violation because consumers could be misled about whether payment would fully satisfy the debt | Avila applies when the stated balance would not satisfy the debt because interest/fees continue to accrue; it does not apply where the balance as stated would satisfy the debt | Avila and the opinion are reconcilable: omission violates §1692e (and §1692g) only if interest/fees are actually accruing |
| Whether Barclays continued to accrue interest (or retained the right to) while accounts were placed with FRS, making the notices misleading | Barclays continued to accrue interest or retained the right to do so, so the notices were misleading | Plaintiffs failed to raise a genuine factual dispute that interest/fees were accruing; even if a right existed, no charges were accruing and prompt payment would satisfy the debt | Plaintiffs failed to create a triable issue; lack of actual accrual (or evidence thereof) dooms their claim |
Key Cases Cited
- Avila v. Riexinger & Associates, LLC, 817 F.3d 72 (2d Cir. 2016) (collection notice misleading where stated balance would not satisfy debt because interest/fees continued to accrue)
- Carlin v. Davidson Fink LLP, 852 F.3d 207 (2d Cir. 2017) (interpretation of §1692g: notice must allow least-sophisticated consumer to determine amount owed now and how fees/interest will change balance)
- Chuway v. Nat'l Action Fin. Serv., Inc., 362 F.3d 944 (7th Cir. 2004) (collector complies by stating the balance due at the time without discussing a changing "current" balance)