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District Court finds telephone numbers did not overshadow debt validation notice

On February 28, the U.S. District Court for the District of New Jersey dismissed a putative class action alleging a debt collector violated the FDCPA by sending a collection letter, which allegedly failed to properly notify the plaintiff of his right to dispute the debt. According to the opinion, the collection agency sent a one-page collection letter notifying him that a dispute must be in writing. The letter also contained two telephone numbers and requested the consumer call with any questions or concerns. In his complaint, the consumer argued that the inclusion of the phone numbers and request for telephone contact, “overshadows or contradicts” the debt dispute notice required by law. The collection agency moved for judgment on the pleadings and dismissal, arguing that the consumer failed to state a legal claim under the FDCPA. The court agreed, stating that “nothing about the form of the letter overshadows or contradicts the information in the validation notice.” Specifically, the sentence that requested the consumer call the collection agency does not mention disputing the debt, and the only reference to disputing the debt is in the standard validation notice one paragraph below, which specifies it must be done in writing. Because the consumer’s FDCPA claims failed, the court entered judgment and dismissed the action.

Courts FDCPA Debt Collection Debt Verification

Colorado appeals court holds second collection letter violated state debt collection law

On October 18, the Colorado Court of Appeals held that a debt collector’s second collection letter violated the Colorado Fair Debt Collection Practices Act (CFDCPA) requirement for proper notification of the consumer’s right to dispute and request validation of the debt, reversing the lower court’s ruling. According to the opinion, a consumer filed a complaint against the debt collector alleging the two letters she received violated the CFDCPA, and the lower court disagreed, granting summary judgment in favor of the debt collector. Upon review, the appeals court determined that the first letter contained all the disclosures required under the CFDCPA but that the debt collector’s second letter, which prominently used the bold and capitalized phrase "we cannot help you unless you call," overshadowed or contradicted the statutorily required disclosures made by the company in the first letter. Specifically, the court concluded that the second letter, which arrived within the thirty-day statutory period initiated by the first letter, was “capable of being reasonably interpreted by the least sophisticated consumer as changing the manner in which the consumer was required by law to dispute the debt” and is therefore deceptive or misleading in violation of the CFDCPA.

Courts State Issues Debt Collection Debt Verification Deceptive

6th Circuit cites Spokeo, but holds plaintiffs alleged sufficient harm from deficient debt collection letters

On July 30, the U.S. Court of Appeals for the 6th Circuit held that consumers had standing to sue a debt collector whose letters allegedly failed to instruct them that the Fair Debt Collection Practices Act (FDCPA) makes certain debt verification information available only if the debt is disputed “in writing.” The court found that these alleged violations of the FDCPA presented sufficiently concrete harm to satisfy the “injury-in-fact” required for standing under Article III of the Constitution.

The debt collector had filed a motion to dismiss in the lower court, arguing that the putative class action plaintiffs lacked Article III standing under the Supreme Court’s 2016 ruling in Spokeo, Inc. v. Robins (covered by a Buckley Sandler Special Alert). The district court denied the motion, determining that the letters “created a ‘substantial’ risk that consumers would waive important protections afforded to them by the FDCPA” due to the insufficient instructions. The 6th Circuit affirmed. After analyzing Spokeo, the court agreed that the “purported FDCPA violations created a material risk of harm to the interests recognized by Congress in enacting the FDCPA,” namely the risk of unintentionally waiving the verification and suspension rights afforded by the FDCPA when a debt is disputed.

Courts Appellate Sixth Circuit Spokeo Debt Collection Debt Verification FDCPA