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Financial Services Law Insights and Observations

Court dismisses FDCPA action after plaintiff admits possibility of late charges

Courts FDCPA Debt Collection Fees

Courts

On June 20, the U.S. District Court for the Eastern District of New York granted a debt collector’s motion to dismiss in an FDCPA action after the plaintiff conceded that it was possible for late charges to be imposed on his account in the future. The consumer filed an action against the debt collector after he received a collection notice stating that, “[a]s of the date of this letter, you owe the total balance due reflected above. 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.” The consumer argued the letter violated the FDCP’s prohibition on using any false, deceptive, or misleading representation or means in connection with the collection of any debt,  because the debt was not subject to the imposition of late charges, because his original creditor, the Department of Education, allegedly “‘did not have the legal or contractual authority to assess late charges on the [debt],’ and [the debt collector] was ‘never authorized . . . to charge or add late charges to the balance of the [debt].’” After discussing conflicting precedents, the court noted that it need not reach the issue because the plaintiff conceded that it would be possible for his account to be assessed late charges in the future should he rehabilitate his debt and subsequently fail to make timely payments. Because late charges could “conceivably be assessed” the debt collector’s letter was not inaccurate, as the plaintiff alleged and therefore, the court dismissed the action.

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