In an unpublished ruling, the U.S. Court of Appeals for the Second Circuit held that when a debt collector did not seek to collect fees and interest after default, its letter to a borrower that did not state whether fees and interest continued to accrue after default did not engage in deceptive or misleading conduct in violation of the FDCPA.
A copy of the opinion in Derosa v. CAC Financial Corp. is available at: Link to Opinion.
After a borrower defaulted on her credit card account, the original creditor assigned the account to a debt collector. The debt collector sent a letter to the borrower requesting that she contact the debt collector to resolve the debt. The letter listed the amount due on the account. However, the letter did not indicate “whether interest and fees continued to accrue while the account was in collection.”
The borrower sued the debt collector alleging that the letter violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., because the failure to indicate whether interest and fees continued to accrue was a “deceptive or misleading collection notice.”
The parties filed cross-motions for summary judgment. The trial court granted the debt collector’s motion and denied the borrower’s motion. This appeal followed.
The Second Circuit reviewed the grant and denial of summary judgment de novo.
Initially, the Second Circuit observed that it previously decided in Taylor v. Financial Recovery Services, Inc., 886 F.3d 212 (2d Cir. 2018), that collection notices that do not state whether interest and fees continue to accrue on a debt do not violate the FDCPA “per se.” Specifically, if a debt is not accruing any interest and fees, then, “a collection notice that fails to disclose that interest and fees are not currently accruing on a debt is not misleading within the meaning” of the FDCPA. Id. at 215.
The remaining issue involved if the borrower created a genuine dispute of material fact regarding whether the debt collector continued to charge interest and fees on the account after acquiring the debt sufficient to defeat summary judgment.
In support of its motion for summary judgment, the debt collector submitted a declaration that it did not charge interest or fees to the account. The debt collector also introduced two letters into evidence, one of which the borrower did not dispute receiving, which showed that the amount the borrower owed on the debt did not change over time.
In response, the borrower introduced her declaration stating that her account had previously “accrued interest on any balances carried, and late fees on any late or missed payments,” and the generic credit card agreement, which allowed the creditor, if it chose to do so, to collect interest and fees after default.
The Second Circuit found that the borrower’s evidence failed to create a genuine dispute of material fact because whether the account accrued interest and fees when the original creditor administered the account does not establish whether the debt collector continued to attempt to collect interest and fees after it acquired the debt. The borrower’s speculation that the debt collector continued the original creditor’s practice failed to defeat summary judgment against the specific evidence present here that the debt collector did not continue to collect fees and interest after the assignment of the debt.
Thus, the Second Circuit determined that the borrower failed to demonstrate a genuine dispute of material fact regarding whether the debt collector continued to charge interest and fees on the account after acquiring the debt.
Accordingly, the Second Circuit affirmed the trial court’s judgment in favor of the debt collector.