The History of validation/Verification

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If anyone has been following the discussion about validation, you will know my posts indicate that validation is a limted tool, inspite of the many success stories from consumers who used the "DV" process.

What I never thought about, was the lack of information on the history of validation/verification, and how it has BECOME limited.

Debt validation, originally called "cerification" was contained in 2 major bills around 1975. The fist 2 bills actually required the debt collector to maintain DETAILED RECORDS of the account they were collecting on. Not only that, they were REQUIRED to notify the consumer of the right to INSPECT the files personally.

The validation statutes have since evolved to what they are today. In reality, a debt collector legally verifies a debt by sending very little information which is FAR less than "proof." They are only required to send this limited information if the consumer sends a request in a narrow timeframe, the initial 30-days. The start of the initial 30-days is even subject to debate, evidenced just by the discussions here.

Now, the Collector's Association (ACA) is pushing HR 3066 through Congress. One of the major amendments to the FDCPA purposed by the ACA, is to allow a debt collector to CONTINUE COLLECTION ACTIVITY during the 30-day validation period. If this passes, what protections does the consumer have?

If they dont have to cease collection activity, and there is no set time frame when a debt collector has to provide verification to a consumer, what would be the advantage of requesting verification?

Just in the past 30-years, the validation provision has gone from allowing a consumer to inspect the files, to now forcing a time limit on the consumer to request verification, and if the ACA is successful, validation will be near powerless.

It is this likely eventuality that I post the "warnings" about the limits of validation. If we don't prepare for this by exploring and understanding limits of current tactics, and alternatives, we will get further behind in the fight against debt collectors.

I will keep everyone up to date on the bill, and am working with the NCLC to put together a "Consumer Action Committe" to give our "input" on the purposed changes by the ACA.

[DocDon]

I thought there was already an opinion that states a CA does not have to cease collection during the initial 30-day period UNLESS they receive DV?

Now, if you're saying they want to change the FDCPA to allow continued collection while in possession of a DV, then again, it's nothing that we are suggesting that is the cause or will change that. Our focus needs to be contacting the members of the subcommittee and our legislators.

Of course they are going to fight against the FDCPA. They would love nothing more than to have that thorn in their side removed. The fact remains that there is precedent and opinion that contradicts any precedent or opinion they can dig up. That's the way it is. You probably learned that in your first semester.

So yes, we need to band together on this, same as they are. I see nothing on the FTC site that shows they are looking for public opinion on the matter. That's something to consider as well.

[DocDon]

By the way, here's the bill:

http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.3066.IH:

108th CONGRESS

1st Session

H. R. 3066

To amend the Fair Debt Collection Practices Act to make certain technical corrections, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

September 10, 2003

Mr. GARRETT of New Jersey (for himself, Mr. ANDREWS, Mrs. KELLY, Mr. MURPHY, Mr. BEREUTER, Mr. BOYD, Mr. RAMSTAD, Mr. MOORE, Mr. CARTER, Mr. MCCOTTER, Mr. FEENEY, Ms. GINNY BROWN-WAITE of Florida, Mr. HENSARLING, and Ms. HART) introduced the following bill; which was referred to the Committee on Financial Services

--------------------------------------------------------------------------------

A BILL

To amend the Fair Debt Collection Practices Act to make certain technical corrections, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Clarifications to the Fair Debt Collection Practices Act'.

SEC. 2. ELIMINATING REQUIREMENT FOR THE `VALIDATION NOTICE' IN FORMAL PLEADINGS.

Section 809 of the Fair Debt Collection Practices Act (15 U.S.C. 1692g) is amended by adding at the end the following new subsection:

`(d) FORMAL PLEADINGS EXCLUDED- Communications which are formal pleadings in a civil action shall not be considered communications for purposes of this title.'

SEC. 3. CODIFICATION OF THE CONSUMER VALIDATION NOTICE.

Section 809 of the Fair Debt Collection Practices Act (15 U.S.C. 1692g) is amended--

(1) in the portion of subsection (a) that precedes paragraph (1), by inserting `a written notice described in subsection (e) or' before `a written notice'; and

(2) by inserting after subsection (d) (as added by section 2 of this Act) the following new subsection:

`(e) ALTERNATIVE VERSION OF NOTICE- A notice is described in this subsection for purposes of subsection (a) if the notice contains--

`(1) the amount of the debt;

`(2) the name of the creditor to whom the debt is owed; and

`(3) a statement containing the following: `Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this 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 a judgment and provide you with a copy of such judgment or verification. If you request of 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.'.

SEC. 4. CLARIFYING RIGHT TO COLLECT WITHIN THE FIRST 30 DAYS.

Section 809( of the Fair Debt Collection Practices Act (15 U.S.C. 1692g() is amended by striking `If the consumer' and inserting `Collection activities and communications may continue during the thirty-day period. However, if the consumer'.

SEC. 5. CLARIFYING THE REFERENCE TO `ATTORNEY' AND `REASONABLE TIME'.

The Fair Debt Collection Practices Act is amended--

(1) in section 804(6) (15 U.S.C. 1692b(6))--

(A) by striking `an attorney' and inserting `an attorney at law'; and

( by striking `a reasonable period of time' and inserting `30 days'; and

(2) in section 805(a)(2) (15 U.S.C. 1692c(a)(2))--

(A) by striking `an attorney' and inserting `an attorney at law'; and

( by striking `a reasonable period of time' and inserting `30 days'.

SEC. 6. CEASING COMMUNICATIONS.

Subsection © of section 805 of the Fair Debt Collection Practices Act (15 U.S.C. 1692c©) is amended to read as follows:

`© CEASING COMMUNICATION-

`(1) IN GENERAL- If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except for one additional communication which may be made by the debt collector for any of the following purposes (however many may apply):

`(A) To advise the consumer that the debt collector's further efforts are being terminated.

`( To notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor.

`© Where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

`(2) EFFECTIVE DATE OF NOTICE- If a notice referred to in paragraph (1) from a consumer is made by mail, notification shall be complete upon receipt.'.

SEC. 7. THE `BRADY AMENDMENT'.

Section 807[ of the Fair Debt Collection Practices Act (15 U.S.C. Section 1692e[) is amended by striking `disputed debt' and inserting `debt which has been disputed by the consumer in writing'.

SEC. 8. VALIDATION OF DEBTS.

Section 809(a)(3) of the Fair Debt Collection Practices Act (15 U.S.C. 1692g(a)(3)) is amended by inserting `in writing,' after `any portion thereof,'.

[DocDon]

As you can see (aside from the sections I've skipped because THAT's where the interpretation of law comes in), that the major difference is what the CA is obligated to give you should you not request DV within 30 days. They've take the "assume" the debt is valid to "all indicators show the debt is valid", and they no longer have to validate the debt.

There was already opinion that the intial 30-day period is not a grace period.

If you look down to the Brady Amendment, they've added the phrase "in writing". We promote that anyway. Everything should be done in writing.

[LadynRed]

So, basically, consumers will be FORCED to fight these scumbags in court to make the PROVE the debt is, in fact, valid. They're just trying to make it as easy as possible for themselves to collect on INVALID debts (such as CAMCO's portfolio) AND cost US a lot of money to defend ourselves in court by going thru the entire discovery process on every damn case !

You can bet MY Congressmen will get letters on this horse manure bill.

[Recovering Attorney]

The Brady amendment refers to Brady vs The Credit Recovery Company, Inc., 160 F 3rd 64 ( 1st Circuit 1998).

Consumer sued collection agency and its president under the FDCPA alleging that defendants violated teh FDCPA by failing to inform a creditor that the consumer disputed the debt. Consumer had responded to a dunning letter by phoning the CA to dispute the debt. When he found it on a CR a while later, he sued. The 1st Circuit held that 15 USC 1692e(8) , the provision requring a CA who knows or should know that a given debt is disputed to disclose its disputed status to persons inquiring about a consumer's credit history, does not impose a writing requirement on consumers who wih to dispute a debt.

This amendment does not change the use of DV, but it limits the ability of a consumer to sue a CA for reporting disputed debts incorrectly, as it would place a requirement on the consumer to dispute in writing. Given teh barrage of phone calls that precede or follow letters, this is dangerous.