In Carlin v. Davidson Fink, the defendant, a law firm engaged in, among other things, the business of debt collection and foreclosure actions, commenced a foreclosure action against the plaintiff. The defendant attached to the complaint a "Notice Required by the Fair Debt Collection Practices Act," which stated that the debt set out in the complaint will deemed to be valid unless the plaintiff disputed it within 30 days of receipt of the Notice.
On July 12, 2013, The plaintiff sent a letter to the defendant within the 30-day period disputing the validity of the debt and requesting a verification of the dollar amount of the the purported debt.
On August 9, 2013, the defendant complied, but stated that the amount provided included certain fees that were not yet due, and that if the amount was paid and any of those fees did not actually become due, such fees would be refunded.
The Fair Debt Collection Practices Act requires that within five days of an initial communication with a consumer, a debt collector has to provide a written notice containing, among other things, the amount of the debt.
The action was brought because plaintiff claimed that the defendant had not complied with that requirement. The defendant moved to dismiss.the action, which motion was denied, but on a motion for reconsideration, the court dismissed the action. The plaintiff appealed. The two questions at issue was which document was the initial communication, and whether the notice had been provided.
The Court first held that the complaint was not the initial communication. The Second Circuit had previously held that a complaint could be an initial communication, but the statute had been amended to eliminate a pleading as an initial communication.
The plaintiff's letter was not an initial communication because an initial communication under the statute was one sent by the debt collector to the consumer.
The Court held that the defendant's August 9, 2013 letter to the plaintiff was the initial communication.
The Court then held that the notice contained in the letter did not comply with the statute because because it "d[id] not specify what the 'estimated fees, costs, [and] additional payments' are." The Court stated that "[w]e do not hold that a debt collector may never satisfy its obligation under [the statute] by providing a payoff statement that provides an amount due, including expected fees and costs. But a statement is incomplete where, as here, it omits information allowing the least sophisticated consumer to determine the minimum amount she owes at the time of the notice, what she will need to pay to resolve the debt at any given moment in the future, and an explanation of any fees and interest that will cause the balance to increase."
The Court acknowledged that the defendant's notice may be common in the debt collection interest, but stated that the Fair Debt Collection Practices Act "does not insulate a debt collector from liability merely because others in the industry engage in the same practice."
The Court vacated the order and judgment of the District Court and remanded the case for further proceedings.
The decision in this appeal can be found here.