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Collection Lawyer Comments on "Initial Communication"


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Particularly this interesting tidbit:

Section 802 of S. 2586 purports to cure the problem created by the split in the case law by amending Section 1692g so as to expressly state that a communication in the form of a formal pleading in a civil action will not trigger the duty to send the validation notice. The wording of the amendment, however, fails to resolve an important open question under the Act, while simultaneously setting a trap for unwary collection attorneys.

He goes on to cite Rule 7 and how only "formal pleadings" are protected.


Rule 7(B) is entitled “Motions and Other Papers.” The implication of Rule 7 is that the only documents constituting “pleadings” in a civil case are those enumerated in Rule 7(a). Therefore, while the amendment may exempt a Rule 7(a) pleading from “initial communication” status, it does not necessarily exempt motions and discovery documents from “initial communication” status, nor does it exempt transmittal letters. Therefore, a law firm that files suit on a debt without first sending a validation notice runs the risk that the service on the consumer of a transmittal letter or any court document other than a Rule 7(a) pleading could start the five-day clock to mail out a validation notice. Collection attorneys who choose to sue first will need to implement policies and procedures to ensure that within five days of service of the first non-pleading document they send their Section 1692g(a) notices.

But he goes on.

The second danger created by this exemption is that the amendment allows a consumer to set up an FDCPA case, regardless of the collection lawyer’s use of a transmittal letter. A consumer who is served with a “formal pleading” need only call the law firm representing the creditor and ask the cost to settle, and that conversation will start the five-day clock for the sending of the validation notice. A law firm that uses the exemption as a justification to sue without first sending a notice needs to establish protocols to ensure that the validation notice will be sent to the debtor within five days of any call from the debtor to the attorney’s office. Similar protocols need to be implemented to deal with the situation in which the attorney merely serves a pleading and the debtor shows up for trial or a hearing. If the debtor discusses the case with the attorney (either in open court or outside of the courtroom) that conversation would also start the five-day clock

And finally.

A third danger of the pleadings amendment is that it creates the potential for an “overshadowing” violation. Multiple courts have held that it is not enough merely to give the validation notice. The notice must not be accompanied or followed during the validation period by any messages that: (a) overshadow or contradict the consumer’s rights under Section 1692g; or (B) attempt to coerce the consumer into taking less than the full thirty days to dispute the debt or request verification of the debt or a copy of a judgment or the name and address of the original creditor.5 Although courts have recognized that Section 1692g does not create a grace period and that collection activity can take place during the thirty-day validation period,6 the case law has held that any such collection efforts must not overshadow the consumer’s validation rights. The 2006 amendment codifies these rules.

And he says plenty more with examples. Definitely worth the read.

Now the question is. Has anyone fought one this way?

Time to do some research... xrulesx

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The validation notice may not either "overshadow" or be contradicted by other language or material in the collection letter.

All Courts of Appeals which have addressed the issue of overshadowing, have held that, even though the § 1692g(a) information is properly included in a communication from a debt collector to a debtor, the

debt collector may not overshadow or contradict that information with other

messages sent with the validation notice or within the validation period.

In Miller v. Payco-General American Credits, Inc. the debt collector's

"screaming headlines, bright colors and huge lettering" utilizing language "IMMEDIATE FULL PAYMENT", "PHONE US TODAY" and "NOW", were held to have overshadowed the 30 day validation notice. A collection letter from an attorney demanding payment within ten days upon the threat of suit contradicted the 30 day validation notice.

In Avila v. Rubin,111 the Seventh Circuit held that a demand for payment in ten days violated the FDCPA. A district court held that the debt collector’s statement “PAYMENTS DUE IMMEDIATELY” centered on the page overshadowed the validation notice.The Ninth Circuit has stated: "Requiring a payment that would eliminate the debt before the debtor can challenge the validity of that debt directly conflicts with the protections for debtors set forth in section 1692g.

The contradiction of the validation notice need not be “threatening” to prove a violation of the FDCPA. A collection demand is overshadows or contradicts the validation notice if it would make the least sophisticated consumer uncertain as to his or her rights.

A collection letter is deceptive when it can be reasonably read to have two or more different meanings, one of which is inaccurate. A follow-up letter which cuts short the 30 day period within which to request validation rights violates the FDCPA. Stated another way, if the collection letter would confuse the unsophisticated consumer as to his or her validations rights,

the FDCPA is violated.

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