Debt Validation Myths - Debunking Debt Validation Misconceptions
Written by: Kristy Welsh
Last Updated: September 29, 2016
The following myths are based upon misconceptions regarding the Fair Debt Collection Practices Act (FDCPA) U.S.C. § 1692. We are not addressing individual state debt collection laws.
NOTE: 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.
Having said that, the following "myths" refer to initial communications that do contain the required information.
A consumer can send a debt validation letter to a debt collector at any time, and the collector must respond.
This 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, a 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.
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 term "communication" means "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." Listed below are some court cases addressing this very topic.
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 'communication 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."
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."
This is not required.
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. 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:
- A credit card statement (such as a charge-off statement) that matches the balance claimed.by the debt collector.
- A list of charges that total the amount claimed in the initial communication.
An initial communication can validate a debt.
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 communication 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 initial 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.
If demanded, a collection agency must, in its response, prove it is licensed to collect debts in the consumer's state.
The FDCPA makes no such requirement.
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. 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."