DEBT VALIDATION MYTHS
The following are based upon misconceptions regarding the Fair Debt Collection Practices Act (FDCPA) U.S.C. § 1692
An initial communication is the first communication received by a consumer in regard to a debt. If that communication does not contain the name of the current creditor, amount of the debt, and the 30-day notice (1692g), the debt collector must send that information within 5 days.
The following "myths" refer to initial communications that DO contain the information in 1692g(a).
FAIR DEBT COLLECTION PRACTICES ACT
1692g - Validation of debts
(a) Notice of debt; contents Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
(b) Disputed debts
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.
(c) Admission of liability
The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.
(d) Legal pleadings
A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a).
(e) Notice provisions
The sending or delivery of any form or notice which does not relate to the collection of a debt and is expressly required by title 26, title V of Gramm-Leach-Bliley Act [15 U.S.C. 6801 et seq.], or any provision of Federal or State law relating to notice of data security breach or privacy, or any regulation prescribed under any such provision of law, shall not be treated as an initial communication in connection with debt collection for purposes of this section.
A consumer can send a debt validation letter to a debt collector at any time, and the collector must respond.
That is not true. According to the FDCPA, a letter requesting validation must be sent within 30 days of a debt collector's initial communication. An initial communication is usually the first debt collection letter which contains the 30-day notice found in § 1692g(a) of the FDCPA.
Once a debt collector receives a timely validation request, it must cease collection efforts until it validates the debt. It cannot send more letters or make phone calls requesting or demanding payment. In the event that it is reporting the debt to the credit reporting agencies, it cannot update the collection entry EXCEPT to report that the debt is disputed. Reporting the fact that the debt is disputed is a requirement in § 1692e(8) of the Act.
A debt collector is required to respond to a timely validation request within 30 days of the receipt of the request.
False. The 30-day requirement is placed on consumers. While a consumer must send a validation request within 30 days of the first collection letter that contains the 30-day notice, a debt collector can take as long as he chooses to respond. However, he cannot attempt to collect again until he provides validation.
Note that after receiving a timely validation request, debt collector does not have to validate if he chooses to cease collection efforts. He may never respond at all, or he may send a letter informing the consumer that the file on the account is closed.
If debt collectors were required to respond to validation requests in 30 days, they could not cease collection efforts.
They may provide the requested validations and continue their debt collecting activities, or they may cease all collection activities. See Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1031 (6th Cir.1992).
Under the FDCPA, a debt collector who receives a written dispute of a debt from a consumer need not verify the debt at all, but can instead cease efforts to collect the disputed debt. See Jang v. A.M. Miller & Assocs., 122 F.3d 480, 483 (7th Cir.1997).
Once a consumer disputes a debt, the debt collector has a choice whether to verify the debt or cease collection efforts. 15 U.S.C. § 1692g(b); see Guerrero v. RJM Acquisitions, LLC, 499 F.3d 926, 940 (9th Cir. 2007).
In the event that a consumer has never received a collection letter from a collection agency, a collection entry (also known as "tradeline" or "TL") on a consumer's credit report can be considered an "initial communication" triggering a consumer's right to request validation under 1692g(b).
While some courts have ruled that reporting to credit reporting agencies is a "communication" as defined by 1692a(2), ("the conveying of information regarding a debt directly or indirectly to any person through any medium"), to date, no court has ruled that reporting to credit reporting agencies is an "initial communication".
Some courts have ruled that an entry found on a credit report does NOT constitute an "initial communication".
Robinson v. TSYS Total Debt Management, Inc. Dist. Court, D. Maryland, 2006
"The above allegations identify two candidates for the 'initial communication' that is required to trigger 15 U.S.C. § 1692g. The first candidate—'when Defendant communicated the debt to Plaintiffs credit report'—cannot support a claim under the FDCPA because it is not a communication with a consumer. See 15 U.S.C. § 1692g(a) (identifying 'initial communication" as "with a consumer in connection with the collection of any debt')."
Pretlow v. AFNI, Inc. WD Virginia, 2008
"Plaintiffs have not alleged that they received any communications from Defendant which would form the basis of a debt validation claim. Their claim is based, rather, on communications between Defendant and certain credit reporting agencies. Section 1692g is therefore inapplicable on the facts pled."
Toth v. Cavalry Portfolio Services, LLC. Dist. Court, D. Nevada, 2013
"As it is undisputed that no notice was provided, the only question remaining is whether Defendant had an "initial communication" with Plaintiff, the consumer. Plaintiff argues that Defendant communicated with Plaintiff 'using the credit reporting bureaus as a vehicle' (#9; 4:8-9). In other words, Plaintiff argues that by reporting Plaintiff's past-due account to the credit reporting agencies, Defendant communicated with Plaintiff via those agencies."
"Because Defendant never had an 'initial communication' with Plaintiff, Plaintiff has failed to state a claim upon which relief can be granted."
Berberyan v. Asset Acceptance, LLC, Dist. Court, CD California, 2013
"In opposition, plaintiff argues that defendant 'communicated' with her through its alleged reporting of a debt that appeared on her credit report, but plaintiff offers no authority that supports such an expansive reading of the term 'communicated.' Opp'n at 6. Defendant must do something more than allegedly place notice of a disputed debt on plaintiff's credit report to trigger its disclosure duties."
Gonzalez v. Midland Funding, LLC, Dist. Court, ND Texas, 2013
"Plaintiff fails to allege any facts that can show there was ever an initial communication by defendants to plaintiff, and does not allege that he responded to any such communication within a thirty-day period. It appears that plaintiff may believe that his unsolicited letter demanding validation from defendants qualifies as an initial communication under § 1692g; however, the initial communication is an attempt by the debt collector to collect a debt, not an attempt by a consumer to challenge a debt. "
Williams v. LVNV Funding, LLC, Dist. Court, D. Colorado, 2014
"Plaintiff attempts to argue that 'the reporting [to the credit agencies] of the account the first time would be an initial communication'; however, the Court is not persuaded by self-serving statements lacking any supporting authority."
Perry v. Trident Asset Management, LLC, Dist. Court, ED Missouri, 2015
"However, the crux of the dispute here is not whether reporting debt is a 'communication' or 'debt collection activity,'but rather whether it is a 'ommunication with a consumer'that triggers § 1692g(a)'s validation notice requirements. Plaintiff cites no cases finding that reporting to a credit agency is a communication with a consumer, and the Court has found none."
Danehy v. Jaggee & Asher, LLP, Dist. Court, North Carolina, 2015
"Accessing a consumer report does not constitute an initial communication with a consumer as contemplated by § 1692g(a). Without knowledge as to when, or if, plaintiff would request his consumer report, defendant J&A could not have intended to communicate with plaintiff indirectly through TransUnion."
Friend v. Financial Recoveries Limited, Dist. Court, MD Pennsylvania, 2017
“Here, as noted above, Plaintiff's 1692g(a) claim appears to hinge upon Financial Recoveries' alleged reporting of information concerning Plaintiff to Credit Reporting Agencies. (Doc. 5, pp. 4, 6-7). However, a plain reading of sections 1692a and 1692g reveal a number of deficiencies with Plaintiff's section 1692g(a) claim. For example, a Credit Reporting Agency is not a ‘consumer’ under the FDCPA because, in part, it is not a ‘natural person.’ 15 U.S.C. §§ 1692a, g. Thus, an alleged communication with a Credit Reporting Agency fails to activate the notice requirements found in section 1692g(a) which serve as the basis for Plaintiff's section 1692g claim.”
Leato v. Alliant Capital Management, LLC, Dist. Court, ND Illinois, 2015
“But it is frankly absurd to link Section 1692g (a) and its required within-five-day notices with a ‘soft pull’ communication that a debt collector has sent only to a credit reporting agency (and not to the debtors themselves) for the sole purpose of obtaining a consumer report as a purely informational matter.”
Williams v. LVNV Funding, LLC, Dist. Court, D. Colorado 2014
“Plaintiff attempts to argue that "the reporting [to the credit agencies] of the account the first time would be an initial communication" (Response, ¶ 26); however, the Court is not persuaded by self-serving statements lacking any supporting authority.l
Bagramian v. Legal Recovery Law Offices, Inc, Dist. Court, CD California 2013
“Defendant must do something more than allegedly make an inquiry into plaintiff's credit report to trigger its disclosure duties.”
A debt collector must provide a copy of a signed contract to validate/verify a debt .
Debt collectors are not required to provide a copy of a signed contract or credit card application. The Fourth and Ninth Circuit Courts of Appeals have ruled that "debt collectors do not have to vouch for the validity of the underlying debt." The requirement to provide a "contract" would require proving that the debt is valid.
Chaudhry v. Gallerizzo, 4th Circuit Court of Appeals
Contrary to Appellants' contention, verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. There is no concomitant obligation to forward copies of bills or other detailed evidence of the debt. Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir.1999).
We agree with the district court that "[v]erification only requires a debt collector to confirm with his client that a particular amount is actually being claimed, not to vouch for the validity of the underlying debt." Chaudhry at 406.
Clark v. Capital Credit & Collection Services, Inc., 9th Circuit Court of Appeals
We adopt as a baseline the more reasonable standard articulated by the Fourth Circuit in Chaudhry. At the minimum, "verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed." Clark v. Capital Credit & Collection Services Inc., 460 F.3d 1162 (9th Cir.2006)(citing Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir.1999)).
Myers v. Midland Credit Management, Inc., M.D.Pennsylvania (2014)
"Plaintiff's dispute letter to Midland requests 'a copy of the contract which proves the amount of the alleged high balance which you are claiming. If you do not have a contract, then please provide specific and detailed alternate proof of the alleged high balance.' Again, the FDCPA does not require that Midland comply with this request. Instead, the statute simply requires a debt collector to confirm the amount of the debt and the identity of the creditor, and relay that information to the debtor."
Roseborough v. Firstsource Advantage, LLC, M.D. North Carolina (2015)
"Here, Plaintiff contends that Defendant violated its duty to verify by providing nothing other than copies of a couple of alleged statements with no signed verification or accounting of the alleged account or copy of any signed contract or agreement. Plaintiff requests too much. The caselaw clearly repudiates Plaintiff's additional verification demands." See Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999)("[V]erification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt.").
Smith v. Encore Capital Grp. Inc., E.D. Wisconsin (2013)
"However, his allegations include that the April 2, 2012, collection letter failed to include a signed verification or accounting of the alleged account and failed to include a signed contract or agreement. Smith's allegations regarding this claim are not plausible. He points to no statute or caselaw indicating that verification of a debt must be signed or accompanied by signed contracts."
Ritter v. Cohen & Slamowitz, LLC, E.D. New York (2015)
"Accepting the Plaintiff's allegations as true, in response to her disputing the Debt, the Defendants provided credit card statements covering a period of two years. Those statements, while not providing an itemization of charges, clearly contained the Plaintiff's name and home address, and included a charge-off in the amount of $918.78 — the amount the Defendants claim is owed. District courts within this Circuit have repeatedly recognized such evidence as sufficient to satisfy the verification requirement under the FDCPA, so that the Plaintiff's allegations, even if true, do not allege a violation of the statute."
Breen v. Howard Lee Schiff, D. Connecticut
"Here, Schiff's September 13, 2010 letter which enclosed a copy of the Plaintiff's Discover Card Statement unequivocally satisfied its obligation under the FDCPA to verify the debt. Indeed, the Statement indicated that the amount being demanded is what the creditor claimed was owed. Moreover, the Statement served the purpose of the verification requirement by ensuring that Schiff was not dunning the wrong person or attempting to collect debts which the consumer had already paid. It appears that Plaintiff is under the misimpression that the Statement included in Schiff's September 13, 2010 letter did not fulfill the verification requirement and that Schiff was obligated to do more. However, the FDCPA does not require the debt collector to keep detailed files of the alleged debt and the information contained in the Statement more than satisfied the verification requirement of Section 1692g(b)."
Coats v. Mandarich Law Group, LLP E.D. California (2014)
"The documents included with the letter identify the original creditor as Bank of America, N.A., and the current owner of the debt as defendant Cach. It also identifies the original and current account numbers and provides the account balance on the placement date ($4,857.71). Id. Also included with the letter is a Bill of Sale and Assignment of Loan, reflecting that the loan was purchased by Cach. Also appended to the letter are credit card statements from the original creditor, reflect the amount plaintiff allegedly owes. Furthermore, defendants included a certificate of assignment signed by an authorized agent for Cach which certified that the information provided was accurate."
"Contrary to plaintiff's contention, this response was MORE than adequate to satisfy the verification requirements."
Jacques v. Solomon & Solomon, PC - Dist. Court of Delaware (2012)
"Plaintiff also claims that Northland violated the FDCPA by failing to prove that it had a contract with Capital One to collect the debt. Plaintiff does not cite any provision in the FDCPA that requires a collection agency to prove that it had a contract with the creditor, and the Court is likewise unable to identify one."
Fassett v. Shermeta, Adams & Von Allmen, PC , W.D. Michigan (2013)
"One main issue before the court is whether defendants violated § 1692g(b) by failing to verify the disputed debt. Plaintiff contends that he is entitled to, among other things, ledger statements, contracts, and proof that defendants are licensed to collect debts in Michigan. Defendants contend that they are not required to keep and send "detailed files" of the alleged debt for verification or validation purposes. Contrary to plaintiff's contention, § 1692g(b) does not require defendants to produce exhaustive documentation in support of the creditor's claim."
"Here, defendants' October 3, 2011 letter in response to plaintiff's request for verification identified the creditor as Capital One, identified the credit card account, identified the current balance due as $12,522.89, stated that defendants represented Capital One, and referenced the enclosed documents which validated the debt pursuant to § 1692g."
"In summary, defendants October 3, 2011 letter confirmed in writing the identity of the creditor and the amount which plaintiff owed as of the date of the letter. Nothing more is required under § 1692g."
Tilmon v. LVNV Funding, LLC - District Court of Illinois (2014)
"The record reveals that the letter provided: the reference number for the account; the account number; name of the current creditor; name of the debtor; name of the original creditor; last date of payment; balance due; date account was opened; and, date account was charged off."
"Upon review of the record, the Court FINDS it is evident that BHLM provided sufficient verification and did not violate Section 1692g(b)."
Himes v. Client Services, Inc. - District Court of New Hampshire (2014)
"Furthermore, Himes's belief that validation requires disclosure of the signed loan agreement, a sworn accounting ledger, and affidavits attesting to the current status and validity of the debt grossly overstates a debt collector's obligations under the FDCPA. To sufficiently validate a debt, the debt collector need only demonstrate that the creditor has provided some evidence that the debtor owes the specific amount demanded; a credit card statement indicating the delinquent balance serves that purpose."
Daniel v. Midland Funding, LLC - E.D. Michigan (2016)
"Moreover, as the Magistrate Judge concluded, Midland's verification of the debt in the form of those 18 itemized credit card statements permitted Plaintiff to 'sufficiently dispute the payment obligation.'" See Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC, 758 F.3d 777, 785 (6th Cir. 2014).
Goodwyn v. Capital One, NA - M.D. Georgia, (2015)
"When United Recovery received Goodwyn's dispute letter, it contacted Capital One regarding the dispute. In response, Capital One sent documentation of the debt to United Recovery. That documentation stated the account number and contained a calculation of the deficiency balance, which matched the amount United Recovery sought to collect. Based on the documentation, United Recovery confirmed the amount of the debt, to whom it was owed, and by whom, and sent that information to Goodwyn with supporting documentation. United Recovery thus satisfied its obligations under Chaudhry." See Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir.1999).
Glowacki v. Law Offices of Howard Lee Schiff, PC, District of MA (2014)
"Therefore, to sufficiently validate a debt, the debt collector need only demonstrate that the creditor has provided some evidence that the debtor owes the specific amount demanded. Here, the credit card statements provided by Schiff indicating the delinquent balance serve that purpose."
A debt collector must provide a detailed accounting of a debt in order to show how the balance was calculated, i.e. "explain and show me how you calculated what you say I owe."
That is not required.
[V]erification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999).
This provision is not intended to give a debtor a detailed accounting of debt to be collected. Maynard v. Cannon, 401 F. App’x 389, 396 (10th Cir. 2010).
The Eighth Circuit Court of Appeals confirms that the verification requirement is satisfied where the debtor "could sufficiently dispute the payment obligation." See Dunham v. Portfolio Recovery Assocs., LLC, 663 F.3d 997, 1004 (8th Cir.2011).
Proof could consist of:
1. A credit card statement (such as a charge-off statement) that matches the balance claimed.by the debt collector.
2. A list of charges that total the amount claimed in the intial communication.
A debt collector must provide proof that it is licensed to collect in one's state in order to validate a debt.
That is false. Due to the fact that not all states require that a debt collector be licensed to collect a debt, such a requirement could not be part of the validation requirement. Even if a debt collector is required to be licensed in a particular state, it has nothing to do with validating a debt. Read the provided court rulings.
In the event a state requires a debt collector to be licensed, an unlicensed collection agency might be in violation of another provision of the FDCPA, (perhaps 1692e) but it would not be in violation of the validation section of that Act. (1692g).
An initial communication can validate a debt.
That is such a ridiculous claim. 1692g(a) requires that an initial communication or a letter within 5 days of that initial communication include the name of the creditor to whom the debt is owed and the amount of the debt. If an initial communication could serve to validated a debt, it would render 1692g(b) to be meaningless. Why would a debt collector be required to "cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt" if the initial communication served to satisfy the validation requirement in 1692g(b)?
This takes us to the next myth.
A validation response from a collection agency can merely repeat the information provided in the initial communcation without providing documentary evidence of the debt.
While courts are divided as to what constitutes proper validation , they certainly have not ruled that validation may be accomplished by merely repeating the information required by 1692g(a).
In Chaudhry (see Myth #3), the Fourth Circuit Court of Appeals ruled that verifying a debt "involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt". However, documentation had been provided by the debt collector in that case.
Allowing a debt collector to validate a debt by merely repeating the information in its intial communication would be the same as allowing the collector to say "because I say so". It would be contrary to the language in 1692g(b) and would render that subsection meaningless.
A consumer should reference sections of the FDCPA and FCRA (Fair Credit Reporting Act) in a debt validation request in order to put a debt collector on notice that he is aware of his rights.
It is not necessary to include any references to the FDCPA and FCRA in a dispute and validation request letter. Simply disputing and requesting validation is enough to show that a consumer is aware that he has certain rights. In addition, it's not the consumer's responsibility to inform a debt collector of the debt collector's responsibilities that are outlined in either Act. If the debt collector is unaware of his responsibilities, it's his problem.
Upon receiving a summons and complaint, a consumer can request validation, thereby preventing any further action by the plaintiff until the debt has been validated.
As has been stated, a validation request is valid only when sent within 30 days of an initial communication. A summons and complaint is not an initial communication that would trigger the 30-day validation period.
(d) Legal pleadings
A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a).
A consumer can include both a request to validate a debt and a demand to cease and desist communications in a timely debt validation letter which would serve to prevent a lawsuit due to the fact that the "cease and desist" would prevent the debt collector from responding to the validation request.
That is incorrect because a consumer can waive his rights. Requesting validation could be considered consent to allow the debt collector to contact the consumer strictly for the purpose of validating the debt.
Clark v. Capital Credit & Collection Services, Inc. - 9th Circuit Court of Appeals, 2006
Focusing on that level of sophistication, we will enforce a waiver of the cease communication directive only where the least sophisticated debtor would understand that he or she was waiving his or her rights under § 1692c(c)."
"Applying our newly articulated waiver standard to the facts before us, it is obvious that even the least sophisticated debtor would recognize that Mrs. Clark's request for information constituted consent for Hasson, Capital's attorney, to return Mrs. Clark's telephone call in order to provide the specific information she requested."
A validation letter requesting specific documentation and citing the FDCPA and FCRA will put a debt collector "on notice" that a consumer is serious and knows his rights.
That could depend upon the debt collector. A recently formed collection agency that has little experience might be intimidated by such a letter. However, seasoned debt collectors will most certainly NOT be intimidated. In that instance, it would merely depend upon how serious a particular agency is about collecting a debt.
Requesting documentation and stating demands that are not required to validate and setting time limits not provided for in the FDCPA shows a debt collector that you do not know your rights.
There are a number of websites that provide validation letters that request documentation and state demands that are not necessary to validate a debt. As previously provided, signed contracts, detailed files, and collection agency licenses are not required.
The suggested letters may demand that a debt collector respond in 30 days. As has been shown in Myth #2, a debt collector is not required to respond in 30 days.
Those letters may also demand that the a debt collector cease collection activities for 30 days after sending validation because the consumer requires 30 days to investigate information validating the debt. Nothing in the FDCPA or rulings by courts supports that demand.
Debt collectors have seen those internet letters. They know what is NOT required to validate a debt (such as a signed contract and license to collect). All such a letter shows is that you can copy and paste a letter you found on the internet.
As previously stated in Myth #9, it's not necessary to reference various federal laws nor is it necessary to describe documentation that should be provided.
It's not the consumer's responsibility to inform the debt collector of laws and what is required to abide by those laws. That is the responsibility of the debt collector. I cannot emphasize that statement enough.
The best validation letter is a simple one. In your own words, simply state that you dispute the referenced debt and request validation. Nothing else is required of the consumer under the FDCPA. (See 1692g(a) and 1692g(b)). As I previously stated, it's the collection agency's problem if it doesn't know the laws.