Validation Letter Violates FDCPA
11/8/2018 8:00 AM
Court Finds Dispute Requirements in Validation Letter Confusing to the Least Sophisticated Consumer
Late last month, the U.S. District Court for the Eastern District of Pennsylvania ruled that a validation letter violated the FDCPA even though it mirrored the language of § 1692g(a). The key issue in Guzman v. HOVG, LLC, No. CV-18-3013, WL 2018------- (E.D. Pa. Oct. 31, 2018) was the Third Circuit’s interpretation that § 1692g(a) requires all disputes to be in writing to trigger the debt collectors responsibilities under the Act.
In Guzman, the debt collector sent the consumer a validation letter the front of which stated in part, “If you are not able to pay the balance, or if you have questions, please call us at 800-684-1856.” Below the body of the message, after two lines of bold, capitalized font, the letter included another statement, also in bold, capitalized font: “See reverse side for important consumer information.” After several more lines of text, the letter stated, in regular font, “If you have any questions or would like to pay by phone, call 800-684-1856.”
The back of the letter included the following validation notice, referred to on the front:
Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of the judgment and mail you a copy of such judgment or verification. If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor if different from the current creditor.”
The consumer claimed the debt collector violated the FDCPA because the validation notice did not require all disputes to be in writing and the disclaimer had two possible readings, one of which was wrong. The debt collector claimed that the letter was not deceptive because it mirrored the language of the FDPCA which complies with the statutory requirements.
When examining the arguments in the case, the court reviewed § 1692g(a) of the FDCPA, which provides the requirements for the validation notice. The court stated that sub sections (a)(4), (a)(5) and (b) all require the dispute to be in writing to trigger the debt collectors obligation to provide certain information or investigate the debt. However, subsection (a)(3) does not contain any reference to a writing requirement. Despite the plain wording of the FDCPA, the court stated that the Third Circuit has held that subsection (a)(3) also contemplates that any dispute must be in writing to be effective. Taking the Third Circuit’s interpretation of § 1692g(a) and the language urging the consumer to call the debt collector, the court agreed with the consumer’s argument. The court opined, “In sum, the content of the validation notice violates Section 1692g because the language parroting Section 1692g(a)(3)-(5) “can be reasonably read to have two or more different meanings, one of which is inaccurate…” Further, the remainder of the letter encourages the reader both to overlook the validation notice and to call, rather than write, with questions, thus increasing the likelihood that the consumer will misunderstand her validation rights. Accordingly, the validation notice is not “conveyed effectively to the debtor,” and violates the FDCPA.”
ACA International attorney member Jessica Klander of Bassford Remele offered the following analysis of the court’s decision:
The Third Circuit, and District Courts in it, have issued a rash of decisions addressing Section 1692g(a) of the FDCPA. The district courts have muddied the waters and created uncertainty on what is required in an initial validation notice. Agencies therefore are left with unclear and inconsistent direction from the courts. Here are a few things to take away:
1. Simply parroting the 1692g(a) language does not prevent potential liability in the Third Circuit.
2. Validation notices are analyzed for confusion within the context of the letter as a whole.
3. The entire letter is analyzed to determine whether any information contained in the letter could be deemed to contradict the validation notice or cause confusion in the mind of the consumer.
4. Courts especially scrutinize the placement of the validation notice language, demands for payment, and any other calls for action by the consumer (e.g. asking the consumer to “call” with questions).
5. Agencies should enlist outside counsel for ongoing and regular compliance assessments of their collection notices as the type of issue raised in this case will expose agencies to class action risks.
ACA International Members Attorney Program members interested in contributing their insights on a case for the Daily Decision Deep Dive may contact ACA International’s Communications Department at firstname.lastname@example.org.
Jessica Klander may be reached at:
100 South 5th Street
Minneapolis, MN 55402