It has been nineteen years since the Seventh Circuit held that a debt collector must include a notice to consumers if the balance in a collection communication would change from day to day due to interest, fees, or other changes accruing on a debt.
However, we still see balance-related issues today under the Fair Debt Collection Practices Act as some debt collectors struggle to provide consumers with the amount of debt owed in a simple, clear manner.
Since Miller, other courts agree that a consumer must be told if the balance will increase adopting Miller’s safe harbor language. In September 2019, a court in the Eastern District of New York dismissed a case, finding the collection letter adequately set forth the amount owed because the letter included the safe harbor language.
“Additionally, debt collectors should not put the safe harbor language on an account where the balance will not increase.”
In Paracha v. MRS BPO, the fact that the balance on a second letter (mailed six months after the first letter) increased by thousands of dollars did not make the original letter deceptive or inaccurate. This decision was made because the first letter advised the consumer, through the safe harbor language, that the balance may increase over time.
Using (and not using) the right language
Debt collectors must be careful with the safe harbor language and cannot simply add it to a communication when a balance on a collection letter will increase. The safe harbor language must be accurate for the particular account in question. The safe harbor language will only be safe to the extent that it states what may cause the balance to change.
For example, according to Boucher v. Finance System of Green Bay, Inc., if the debt will increase due to interest—not due to fees or other charges—then the safe harbor language should only advise that the balance may increase from day to day due to interest and not mention fees or other charges.
Additionally, debt collectors should not put the safe harbor language on an account where the balance will not increase. Doing so could create a false sense of urgency, and a consumer may think that they need to pay the balance immediately or it will increase when in fact it will not increase. Debt collectors are not required to tell a consumer that a balance will not increase.
Courts have made clear that a debt collector has no obligation to state that the balance will not increase when the balance on a collection communication is static. But, even when a debt is static, a debt collection agency must choose their words carefully when describing the amount of the debt owed.
In Koehn v. Delta Outsource Group, Inc., a consumer sued a debt collector, arguing that the words “current balance” materially mislead and confused the consumer into thinking that the balance would change from day to day. The Seventh Circuit found that the phrase was “common and innocuous” and not a violation of the FDCPA.
Itemizing debt
Debt collectors should be wary of itemizing a debt when the debt collector does not have the right to add interest and fees. The CFPB’s proposed rulemaking does include debt itemization; however, until the rule becomes final, cases like Virden v. Client Services, Inc., suggest that listing “zero dollars” for interest and fees could mislead a consumer into thinking that interest or fees may increase. This deception would, in fact, be in violation of the FDCPA. In Virden the agency included the following itemization:
| Balance Due at Charge-Off | $1,658.91 |
| Interest | $0.00 |
| Other Charges: | $0.00 |
| Payments Made: | $0.00 |
| Current Balance: | $1,658.91 |
The court found that the least sophisticated consumer could misinterpret the “$0.00” listed for interest and other charges and that one plausible misinterpretation could be that interest and other changes would begin to accrue if the debt was not paid. Since interest and other charges would not accrue on this debt, the court ruled that the information was deceptive.
Agencies need to be careful in choosing what words they use describing the balance owed on a debt. In this context, less is more. Do not add itemizations when not required and only use safe harbor language tailored specifically to the account.