Financial Recovery Services Letter Implied Increasing Debt Amount Class Action

Among the most important things for a debtor to know is the amount of the debt, and whether that amount is still increasing via the accrual of interest, late charges, and fees. The complaint for this class action claims that Financial Recovery Services, Inc. failed to make this clear in its debt collection letter to Mabel Reyes, in violation of the Fair Debt Collection Practices Act (FDCPA).

The class for this action is

• All individuals with addresses in Nassau County, New York
• To whom Financial Recovery Services sent a letter trying to collect a consumer debt,
• Between June 21, 2017 and July 12, 2018,
• Which failed to state the true amount of a debt
• By implying that a payment made sooner rather than later may be more economical for the consumer and using false, deceptive, and misleading representations. 

Congress passed the FDCPA to reduce the incidence of unfair, abusive, false, or misleading tactics in the collection of consumer debts. Abusive practices, it believed, contributed to “the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of privacy. Another aim was to “insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.”

The FDCPA has strict provisions as to information that must be provided to consumer debtors by third-party debt collectors.

Plaintiff Reyes allegedly incurred a credit card debt to Discover Bank, which at some point transferred responsibility for collection to Financial Recovery.

On or about November 13, 2017, Financial Recovery sent Reyes a collection letter, which is attached to the complaint as Exhibit A. The letter contains the following line: “As of the date of this notice, you owe $1,625.45.” The complaint claims that the use of the phrase “as of the date of this notice” implies that the amount might be different on a different date and implies that interest and fees might still be added to the amount. However, the complaint claims that the FDCPA requires that debt collectors tell consumers if their debt balance is still increasing.

The complaint claims that the ambiguity of the phrase prevents the clarity that the FDCPA requires. It says that the phrase suggests that the consumer would be better off paying the debt sooner rather than later. In this, the complaint says, it is false or misleading. Reyes could not be sure whether the amount of her debt was increasing or not.