A rash of cases coming out of the District Courts in the Third Circuit (Pennsylvania and New Jersey) suggest debt collection companies violate the FDCPA by providing to consumers a required notice written by Congress. You might have to read the first sentence again. It is hard to believe that a business who follows the law and includes a notice verbatim from a statute could be found in violation of that statute for providing the required notice. It happened in Henry v. Radius Global Solutions, LLC, Guzman v. HOVG, LLC and others.
The real absurdity is these cases actually make it harder on consumers to dispute. This is counter-productive. Debt collection companies do not want to make it difficult for consumers to dispute. Collection agencies prefer to know when a consumer disputes a debt as soon as possible so that they can resolve the dispute. Best practices, in fact, demonstrate that agencies across the United States offer easy ways for consumers to dispute, including but not limited to: email, phone calls, through a website, even by text message. Nevertheless, these cases out of the Third Circuit suggest an agency should tell a consumer that they have to dispute in writing.
These cases arose from Cadillo v. Stoneleigh Recovery Associates, LLC, a case still pending in the District of New Jersey. Stoneleigh moved to dismiss the lawsuit for failure to state a claim. Cadillo contended that the last sentence of Stoneleigh’s letter providing a phone number, hours of operation, and a statement to “call with questions” overshadowed the validation notice which requires a consumer to dispute in writing. The Court did not agree and rejected Cadillo’s claim about the last sentence. But, the Court did something unique, finding the case could not be dismissed because the content of the notice itself—in particular the word “if”—could confuse the least sophisticated consumer about the requirement to dispute in writing.
Congress wrote three separate sentences that make up the validation notice of section 1692g(a). In the very first of the three sentences, Congress did not use the words “in writing.”
Section 1692g(a)(3) reads: “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.”
Section 1692g(a)(4) says: “if the consumer notifies the debt collection 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 . . . .”
Section 1692g(a)(5) reads: “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.”
Putting all these sentences together, debt collectors have always copied the language verbatim from the statute providing the following “validation notice” to consumers:
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 mail you 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.
The Cadillo Court came to its decision because of Graziano v. Harrison, a Third Circuit case, where a debt collector added the words “in writing” to the first sentence of the notice—even though those words are not in section 1692g(a)(3). The Graziano court held the notice did not violate the statute because Congress probably forgot the words “in writing” since they appear in sections (4) and (5). Putting aside the long-standing legal rule that if a word is missing from a statute, you must presume Congress intentionally left it out; nothing in Graziano suggests that a debt collector should add words into the statute. And, of course, several other Circuit Courts held Congress left it out on purpose so, basically everywhere else in the country a consumer does not have to dispute “in writing” to trigger their 1692g(a)(3) rights.
But after Cadillo, not only are agencies facing copy-cat cases alleging the word “if” in the validation notice violates the statute, but new riffs on that claim, like, permitting a consumer to dispute through a website violates the FDCPA in the Third Circuit because it is not “in writing.” Just because a collection agency offers a consumer a quick and convenient way to dispute (like through a website or by email) does not on its face violate the statute especially as those options require the consumer to “write.” These cases are on appeal. In the meantime, debt collectors continue to get sued for providing the required notice as written by Congress.
Kelly Knepper-Stephens is Vice President of Legal & Compliance for TrueAccord. Her work focuses on government regulation, compliance, and civil litigation. Kelly serves on the Board of Directors for the Receivables Management Association International and is an ACA Certified Instructor.