By: Murray Silverstein and Jacob Boehner
A collection firm’s validation notice allowing a consumer to orally dispute the validity of a debt, and requiring that the creditor receive the dispute by the consumer within 30 days were deemed deceptive and misleading, and in violation of the Fair Debt Collection Practices Act (“FDCPA”). In Homer v. The Law Offices of Frederic I. Weinberg & Assoc. , the following validation notice was analyzed by the U.S. District Court for the Eastern District of Pennsylvania, which granted the consumer’s motion for final summary judgment:
Unless this office hears from you within thirty (30) days after receipt of this letter that you dispute the validity of the debt, or any portion thereof, this office will assume the debt is valid. If you notify this office in writing within thirty (30) days of your receipt of this letter that the debt or any portion thereof is disputed, this office will obtain verification of the debt or, if the debt is founded upon a judgment, a copy of the judgment will be obtained and this office will mail to you a copy of such verification or judgment.
FDCPA § 1692g(a)(3) requires that a validation notice must contain “a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt . . . the debt will be assumed to be valid by the debt collector.” 15 U.S.C. § 1692g (a)(3). The court acknowledged that § 1692g does not explicitly state that the dispute must be in writing but relied on Third Circuit precedent in Graziano v. Harrison where that court held that any dispute must be in writing even though no such requirement is explicitly contained in § 1692g.
The Third Circuit, in Graziano , departed from the Second, Fourth, and Ninth Circuits that all hold that a debtor does not need to dispute the validity of a debt in writing. The Graziano court emphasized that the onus is on the debt collector to inform the debtor of his or her rights to dispute the debt and, in assessing the debt collector’s notice, the court must view the notice “from the perspective of the least sophisticated debtor.”
The district court, in Homer , ultimately found that the language “Unless this office hears from you . . .” was misleading in potentially causing a debtor to believe that an oral dispute of the debt was sufficient, relying on Third Circuit precedent that a writing is required.
The Homer court then analyzed whether the validation language requiring that the Plaintiff contact the firm to dispute the validity of the debt “within thirty (30) days of . . . receipt of this letter” constitutes a violation of the FDCPA. The consumer argued the FDCPA required that he send the dispute within thirty days, whereas the collection law firm argued that, for the dispute to be valid, it had to receive the dispute within thirty days.
Acknowledging that this was a question of first impression in the Third Circuit, the Homer court adopted the interpretation from the Second and Seventh Circuits that any language shortening the period for disputes to less than 30 days violates the FDCPA. The court agreed with the Second and Seventh Circuits that the FDCPA only requires that the debtor send the notice within 30 days, not that the collector receive the notice in that time period. The Homer court held that the validation notice impermissibly shortened the period to act under § 1692g(a)(3).
Collection notices must be drafted carefully – tracking the statute is, apparently, not enough. And, importantly, violative language in a validation notice may be deemed misleading and deceptive. As evidenced by the federal courts’ non-uniform stances on various issues raised by the FDCPA, debt collectors must be vigilant in this ever-changing field.
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