The U.S. Court of Appeals for the Second Circuit recently held that a debt collector’s settlement offer must indicate whether interest and fees are continuing to accrue on the outstanding debt, or alternatively, whether payment of the settlement amount by a specified date will constitute full satisfaction of the debt. The plaintiff allegedly incurred credit card debt that was placed with defendant debt collection company. The defendant mailed plaintiff a collection notice offering to settle the debt. The plaintiff sued the debt collection company by claiming that the notice violated Section 1692e of the Fair Debt Collection Practices Act (FDCPA) “by failing to disclose that interest was continuing to accrue on his balance.”
In ruling in favor of the debt collection company, the appellate panel:
Putting it Into Practice: This decision strengthens the precedent established in Avila seeking to minimize litigation under FDCPA by providing for the use of safe harbor to shield debt collectors from FDCPA claims based on the failure to provide additional detailed disclosures. It also serves as a reminder that the safe harbor language will not stave off liability for debt collectors in every instance, but merely in cases where the language is clear and accurate.