Court Denies Request for Re-Hearing in Taylor Interest Disclosure Case

Yesterday the U.S. Court of Appeals for the Second Circuit denied a petition by plaintiffs Christine Taylor and Christina Klein for a rehearing, or a rehearing en banc (by the full court), in their case against Financial Recovery Services, Inc. (FRS).

In a decision released March 29, 2018, the 2^nd Circuit upheld the district court’s opinion in Taylor v. FRS. In Taylor, the district court found that not including an interest disclosure was not a violation of the FDCPA. The 2^nd Circuit agreed with the district court, finding that the concerns addressed in Avila were not present in the Taylor case.

The court referenced that in Avila, the consumer could be misled into thinking that he paid the account in full by paying the balance listed on the letter when this was not in fact so because interest would have accrued on the balance between the date of the letter and the date the payment is processed. The 2^nd Circuit found that this was not a concern in Taylor because had the consumer paid the balance on FRS’s letter, then the account would have indeed been paid in full. In its decision, the court said,

“It is hard to see how or where the FDCPA imposes a duty on debt collectors to encourage consumers to delay repayment of their debts. And requiring debt collectors to draw attention to the fact that a previously dynamic debt is now static might even create a perverse incentive for them to continue accruing interest or fees on debts when they might not otherwise do so. Construing the FDCPA in light of its consumer protection purpose, we hold that 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 Section 1692e.”

insideARM Perspective

John Rossman, Attorney with Moss & Barnett (the law firm that prevailed in the Taylor case), commented on this recent development:

"Too often debt collectors are sued for making clear statements in communications that comply with existing law.  This case, coupled with other recent cases focusing on the materiality of purported FDCPA violations, evidence that courts can and will reject theoretical and hypothetical claimed violations of the FDCPA.  Any debt collector named as a Defendant in an FDCPA lawsuit should carefully examine the facts and law of the claims to determine if a common sense defense such as this can be maintained."

insideARM has previously written about other cases involving the FRS and the statement regarding tax consequences. See the article on the Remington case here and the Everett case here. Click here to listen to a podcast on the topic from Moss & Barnett.