Collection letter wasn’t misleading, federal court rules

A new federal appeals court ruling is good news for creditors trying to collect their money. And it centers on one of the key tools in your arsenal: collection letters.

One creditor landed in hot water when a customer asserted that a fee breakdown on a letter was misleading and violated the Fair Debt Collection Practices Act.

Check out what happened here to make sure your own company’s collection efforts stay on track.

Collection letter gave an unfair edge?

A creditor sent a collections letter to a consumer over a past-due debt.

In it, the company asserted the customer owed $1,088.34 and offered to resolve the debt in full with a payment of $761.84.

The business itemized interest charges and collection fees on the letter. Specifically interest was listed as $0.

The debtor cried foul.

The reason? Breaking out the 0 on the letter implied that if the debt were to go up, an “unsophisticated” consumer would assume there was a possibility of future interest charges.

And that would make the customer unfairly prioritize that invoice for payment (since he wouldn’t want the debt to get larger).

But the court disagreed. Requiring “assurances by debt collectors that itemized amounts ‘will not change in the future…’” would actually make collection letters more confusing.

You’re best off keeping your correspondence as clear and concise as possible to avoid a similar issue.

Cite: Hopkins v. Collecto, Inc., dba EOS CCA; US Asset Management, Inc.; John Does 1 to 10, CA3, No. 20-1955, 4/12/21.