Request for Payment Did Not Overshadow Validation Notice

The inclusion of a demand for payment and a reference to credit reporting did not overshadow a collection letter’s 30-day validation notice.

12/13/2018 8:00 AM

FDCPANewsIndustry Advancement Program
Request for Payment Did Not Overshadow Validation Notice

Recently, the U.S. District Court for the Eastern District of New York ruled in favor of a debt collector when two consumers sued on allegations validation notices they received were overshadowed by demands for payment and references to credit reporting. The court determined that the statements in the notice did not obscure the consumers’ rights to dispute the debt.

In Reynolds v Caine & Weiner Co., Inc., 17-CV-7590 (DRH)(GRB), 2018 WL 5928123 (E.D.N.Y. Nov. 13, 2018), the two consumers each received validation notices that included the following statements:

“Your account had been listed with our company for collection. If paid in full to this office, all collection activity will be stopped. As required by law you are hereby notified that a negative credit report reflecting your credit score may be submitted to a credit reporting agency if you fail to fulfill the terms of your credit obligation. We will not submit this account to a credit reporting agency until the expiration of 60 days from the date of this notice.”

The above statements were followed by the standard 30-day validation notice required under 15 U.S.C. § 1692g of the FDCPA. According to the consumers, the statement, “[i]f paid in full to this office, all collection activity will be stopped[,]” overshadowed the validation notice because the statement could mislead the least sophisticated consumer into believing that the only way to make the debt collector stop its collection efforts was to pay the debt in full. Likewise, the consumers alleged the second statement referencing credit reporting might cause the least sophisticated consumer to believe the only way to avoid a negative credit report was to pay the debt and, therefore, the two statements could overshadow a consumer’s validation rights.

In its analysis of the consumers’ claims, the court observed that previous case law had determined that a request for immediate payment did not, standing alone, violate the FDCPA. The court noted that other courts had determined that a debt collector has a right to demand payment, even within the 30-day validation period, unless the customer submits a notice of dispute. While conceding that demands for immediate payment might cause confusion about the right to dispute a debt, the court nevertheless observed that overshadowing occurs “only if the demand for payment obscures the right to dispute the debt within 30 days is an issue of overshadowing raised.”

Turning to the statements at issue, the court found the language in the first statement neither demanded immediate payment nor threatened adverse consequences if the debt was not paid within 30 days. Likewise, the second statement regarding notification to credit reporting agencies did not suggest that the consumer must take action within a time frame that contradicted the 30-day validation period. Moreover, the court noted that the letter spelled out the rights under section 1692g, and the required notice appeared on the same page and in the same size and typeface as the allegedly overshadowing language.

Based on these observations, the court concluded that the challenged language, whether considered separately or together, would not imply to the least sophisticated consumer that she must take action within any time frame that contradicted the statutory 30-day period. Accordingly, the debt collector’s motion to dismiss the claims was granted.

Monica Littman Web

ACA International attorney member, Monica M. Littman of Fineman, Krekstein & Harris P.C., offered the following analysis of the district court’s decision:

The Court’s opinion reaffirmed that simply including a demand for immediate payment in an initial letter does not contradict the consumer’s right to dispute the debt within the 30-day validation period. The disputed language in this case was merely an accurate warning that the collection agency would continue to collect on the account. The challenged language did not indicate that the only way to end collection efforts was to pay the account.

Monica Littman may be reached at:

Fineman, Krekstein & Harris P.C

Ten Penn Center 
1801 Market Street, Suite 1100
Philadelphia, PA 19103


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