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2nd Circuit Clarifies Notice Requirement In Debt Collection Letters

Posted by Arnold A. Arpino | Apr 05, 2016 | 0 Comments

Avila v. Riexinger Associates LLC

Debt Collectors are required to disclose that a balance may increase in the future due to interest or other charges and fees a Federal Appeals Court ruled last week. 

In the case before the Court, the Plaintiff's received debt collection letter from Riexinger & Associates, a Georgia based law firm.  The letter described a "current balance" but did not include a notice that the balance could be subject to accrued interest.  The debtor's believed that their balance was static, and by paying the amount shown on the letter that their debt obligation would be completely satisfied.  This, however, was not the case.  As the balances accrued interest and the consumer was not made aware of that fact.

The question before the Court was whether or not this was a violation of the notice requirements under the Fair Debt Collection Practices Act 15 USC 1692(e). 

The Court held that it was.

The Court offered a few alternatives.  First, the 2nd Circuit adopted the "safe harbor" approach adopted by the Seventh Circuit in Miller v. McCall, Raymer, Padrick, Cobb, Nichols & Clark LLC (214 F.3d 872 7th Cir. 2000).   The Miller Court held that a debt collector would be shielded from liability if the notice stated "As of the date of this letter you owe $____.  Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater.  Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you be depositing the check for collection."  The Circuit did not require that this exact language be used, but said that language similar to the Miller Court would shield debt collectors from liability.

Next, the Circuit suggested debt collectors would also be shielded if they utilized the language suggested by the Jones Court (755 F. Supp 2d at 397) .  The Jones court's proposed language was: "As of today, [date], you owe $___. This amount consists of principal of $___, accrued interest of $___, and fees of $____.  This balance will continue to accrue interest after [date] at a rate of [rate] per [day/week/month/year].  It is important to note, that the Miller language and Jones language are not required.  They are merely suggestions from the Court on how debt collectors can protect themselves from future litigation. 

Lastly, the Court held that a debt collector will not be subject to liability under section 1692e if the collection notice accurately informs the consumer that the amount of debt stated in the letter will increase over time, or if the collection notice clearly states that the holder of the debt will accept payment of the amount set forth in full satisfaction of the debt if payment is made by a specified date. 

In our estimation, this will mostly affect debt collectors who collect state court judgments where statutory interest accrues daily.  It may also affect debt collectors who collect prejudgment interest pursuant to a contract with the consumer.  Debt collectors may want to review their mail merge letters to ensure that any balances they collect which may contain future interest are compliant and consistent with this decision. 

About the Author

Arnold A. Arpino

Managing Shareholder focusing on Creditor's Rights, Real Estate, & Non-Taxable Estate Planning.


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Arnold A. Arpino & Associates, P.C., is a full service law firm that represents individuals and businesses in a variety of different practice areas. Our firm regularly appears in the Courts throughout Long Island, New York City, and the Hudson Valley.