Collection letters used to be so simple. A bill collector would tell you how much you owed, and that was the end of it. Nowadays it seems as if even the most highly-educated consumer would find those letters confusing.
For bill collectors in New York, at least, the era of sending intentionally confusing collection letters is a major no-no. In fact, the courts in New York have held that if a letter is confusing as to the amount of money claimed to be due, the bill collector can be held liable for violating your consumer rights.
For example, look at this language (which you may find in any number of collection letters):
You are hereby notified that the above balance does not include the most recent charges assessed, any applicable over the limit fees, or your most recent daily interest charges. In order to obtain your most current balance information, please call 1-800-xxx-xxxx.
This language in a collection letter is considered a violation of the Fair Debt Collection Practices Act. Let’s take a moment and unwrap the logic, as stated in the New York case of Kolganov v. Phillips & Cohen Associates, Ltd., Case No. CV-02-3710 (SDF)(CLP) (U.S. Dist. Ct. E.D.N.Y. 2004).
A debt collection letter must clearly specify the amount of debt owed.
If you list a balance due and at the same time say that additional fees and charges apply, the balance due may be seen in one of two ways:
(1) the balance stated is the balance due; or
(2) the balance stated is the starting point, on top of which we need to add things like recent charges, over the limit fees, and recent daily interest charges.
“By leaving an indeterminate amount of interest in the balance due, a collection letter leaves the least sophisticated consumer unsure of the magnitude of the debt,” said the court in McDowall v. Leschack & Grodensky, P.C., 279 F. Supp. 2d 197, 200 (S.D.N.Y. 2003). Take a look at Grief v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 217 F. Supp. 2d 336, 341 (E.D.N.Y. 2002) while you’re at it, as well.
If You Don’t Know What You Owe, How Can You Pay It?
The logic behind the reasoning of Kolganov and other cases that speak to confusing collection letters is that you need to know the balance due in order to pay it. There’s some good sense to that, don’t you think?
What if you get a letter from a bill collector with a demand for payment of $3,000 and then paid it, only to be told that there was somehow more due? You’d be pissed, I think – and rightfully so.
On the flip side, the bill collectors would probably be driven to madness by having to track a bunch of little payments that would come in after that initial amount due. $20 here, $37.50 there … it all adds up, but the accounting would be a nightmare.
Bill Collectors Held Liable, Consumers Sleep Better At Night
Getting one of these confusing letters from a bill collector is going to give you the ability to bring a lawsuit under the Fair Debt Collection Practice Act. You’ll get some damage money out of it, and your legal fees will be paid by the sloppy collection agency.
But for those who claim that such lawsuits against bill collectors are annoyances and nothing more, I counter by pointing out that in our society money talks. The laws are clear, and the goal is to level the playing field and make things fair.
The debt collection industry lives and dies on the almighty dollar. In order to teach a lesson, you need to impose a penalty that’s understood.