Appeals Court Says Disclosure of Interest in Collection Letter is Compliant with FDCPA

U.S. Court of Appeals for the 5th Circuit holds to Texas district court decision that agency’s letter conveyed accurate, common-sense information to consumer on possible interest and other charges.

3/18/2020 8:00 AM

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Appeals Court Says Disclosure of Interest in Collection Letter is Compliant with FDCPA

A debt collection agency has received a favorable ruling on disclosure of interest under the Fair Debt Collection Practices Act.

According to the opinion from the U.S. Court of Appeals for the 5th Circuit in Marco Salinas v. R.A. Rogers, Inc., the collection agency did not use “false, deceptive, and misleading” language in a letter to the consumer.

The letter included the statement “In the event there is interest or other charges accruing on your account, the amount due may be greater than the amount shown above after the date of this notice.”

Salinas sued in response to that language, citing it was “false, deceptive and misleading,” in violation of sec. 1692e of the FDCPA because no interest or other charges could accrue on his account.

The United States District Court for the Western District of Texas, handling the original case, issued a summary judgment to the collection agency.

In the appeal, Salinas argued that the district court erred in approving the summary judgment and maintained the collection agency’s language was misleading and in violation of the FDCPA.

“Salinas also argues that the district court applied the wrong summary judgment standard because the court drew an inference in R.A. Rogers’ favor- the court inferred that R.A. Rogers would collect interest based on the fact that (under Texas law) the agency could collect interest-and, further, improperly required evidence of ‘subjective confusion’ on the part of Salinas. Because our holding today does not depend on either point, we need not address these arguments,” the appeals court states in its opinion.

The appeals court affirmed the summary judgment based on the fact that the challenged statement about interest in the letter expresses common sense. “If interest is accruing on a debt, then the amount due may go up,” the court’s opinion states. “That simple statement would have been clear even to an unsophisticated borrower thousands of years ago, just as it would be today. We therefore conclude that putting the statement in a dunning letter does not violate the FDCPA.”

“We are gratified by the common-sense approach taken by the 5th Circuit in their Salinas decision,” said Kevin Crocker, attorney with Barron & Newburger, PC, representing the collection agency. “We are also pleased that, in taking that approach, the Court found that our client’s letter was accurate and that the sentence at issue did not violate the FDCPA. We recognize that the Court’s decision may not be the ‘death knell’ to litigation in the 5th Circuit over interest disclosures and letters pertaining to a variable account balance, but we believe that the decision shows that the 5th Circuit is willing to take a pragmatic, open-minded approach, construing a letter as a whole and not merely isolated parts taken out of context.”


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

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Appeals Court Says Disclosure of Interest in Collection Letter is Compliant with FDCPA

A debt collection agency has received a favorable ruling on disclosure of interest under the Fair Debt Collection Practices Act.

According to the opinion from the U.S. Court of Appeals for the 5th Circuit in Marco Salinas v. R.A. Rogers, Inc., the collection agency did not use “false, deceptive, and misleading” language in a letter to the consumer.

The letter included the statement “In the event there is interest or other charges accruing on your account, the amount due may be greater than the amount shown above after the date of this notice.”

Salinas sued in response to that language, citing it was “false, deceptive and misleading,” in violation of sec. 1692e of the FDCPA because no interest or other charges could accrue on his account.

The United States District Court for the Western District of Texas, handling the original case, issued a summary judgment to the collection agency.

In the appeal, Salinas argued that the district court erred in approving the summary judgment and maintained the collection agency’s language was misleading and in violation of the FDCPA.

“Salinas also argues that the district court applied the wrong summary judgment standard because the court drew an inference in R.A. Rogers’ favor- the court inferred that R.A. Rogers would collect interest based on the fact that (under Texas law) the agency could collect interest-and, further, improperly required evidence of ‘subjective confusion’ on the part of Salinas. Because our holding today does not depend on either point, we need not address these arguments,” the appeals court states in its opinion.

The appeals court affirmed the summary judgment based on the fact that the challenged statement about interest in the letter expresses common sense. “If interest is accruing on a debt, then the amount due may go up,” the court’s opinion states. “That simple statement would have been clear even to an unsophisticated borrower thousands of years ago, just as it would be today. We therefore conclude that putting the statement in a dunning letter does not violate the FDCPA.”

“We are gratified by the common-sense approach taken by the 5th Circuit in their Salinas decision,” said Kevin Crocker, attorney with Barron & Newburger, PC, representing the collection agency. “We are also pleased that, in taking that approach, the Court found that our client’s letter was accurate and that the sentence at issue did not violate the FDCPA. We recognize that the Court’s decision may not be the ‘death knell’ to litigation in the 5th Circuit over interest disclosures and letters pertaining to a variable account balance, but we believe that the decision shows that the 5th Circuit is willing to take a pragmatic, open-minded approach, construing a letter as a whole and not merely isolated parts taken out of context.”


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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