In Ceban v. Capital Management Services, L.P., Case No. 17-cv-4554 (E.D.N.Y. Jan. 17, 2018), the District Court held that the statement “[t]his settlement may have tax consequences” in a debt collection letter does not violate the Fair Debt Collection Practices Act (“FDCPA”).
On or about August 6, 2016, Plaintiff, Julian Ceban (“Plaintiff”) received a collection letter from defendant Capital Management Services, L.P. (“Defendant”) concerning his outstanding debt (the “Letter”). The letter stated, in relevant part, that Defendant was “authorized to accept less than the full balance due as settlement” and that Plaintiff could “contact [Defendant] to discuss a potential settlement.” Further, the letter indicated: “This settlement may have tax consequences. If you are uncertain of the tax consequences, consult a tax advisor.”
On August 2, 2017, Plaintiff commenced an action in the District Court for the Eastern District of New York alleging the Letter violated FDCPA Sections 1692d, 1692e, , 1692f and 1692k. Specifically, Plaintiff alleged the tax consequence language in the Letter rendered it false, deceptive and misleading. Defendant moved to dismiss the Complaint on the grounds that Plaintiff lacked standing to commence the action and failed to state a claim.
In granting the Motion to Dismiss the Court held, in part, that the Letter was not false, deceptive or misleading. See Avila v. Riexinger & Assoc’s, LLC, 817 F.3d 72, 75 (2d Cir. 2016) (quoting Clomon v. Jackson, 988 F.2d 131, 1318 (2d Cir. 1993). First, the Court noted, and Plaintiff agreed, the statement in the Letter that “this settlement may have tax consequences” was not false. See e.g. Taylor v. Fin. Recovery Servs., Inc., 252 F. Supp. 3d 344, 353 (S.D.N.Y. 2017). Second, the potential tax consequences language was not deceptive or misleading because Defendant’s “decision to alert Plaintiff to something he should consider without wading into the technicalities of an issue about which it has no expertise is perfectly in keeping with the FDCPA’s goal of enabling the consumer to ‘understand, make informed decisions about, and participate fully and meaningfully in the debt collection process.’” Quoting Tourgeman v. Collings Fin. Servs., Inc., 755 F.3d 1109, 1122 (9th Cir. 2014). The Court distinguished this language from Gammon v. GC Services Ltd. Partnership, 27 F.3d 1254 (7th Cir.1994). Unlike Gammon, where the language implied that the debt collector could use the IRS and state tax...
