FDCPA Reviews Class Action Case Involving Language in Collection Letters

Association of Business Training
March 20, 2014 — 906 views  

Debtors can verbally dispute a debt’s validity and it need not necessarily be in writing, the Fourth Circuit judges panels have ruled. The case involving Clarks and Absolute Collection Service was earlier dismissed by a North Carolina judge. When an appeal was made, the judges in the Fourth Circuit said the case needed to be revived and returned it for more action.

Dana and David Clark were the two defendants in the Clark v Absolute Collection Service case, and were defaulters in two debts relating to healthcare some years back. The couple were sent two letters by Absolute Collection Service, which was under contract to recover the debts from the duo. The Clark couple sued ACS for FDCPA violations and said ACS had not allowed them right to question the debt verbally. They were citing the 1692g(a)(3) section of the FDCPA to substantiate their stand.

What is FDCPA?

The Fair Debt Collection Practices Act or FDCPA was chalked out to propagate fair practices in debt collection. It applies to a debt that a consumer had made for family or domestic purposes and not for business reasons.

Though the FDCPA requires a notice to be sent out by the collector or his/her representative, it should have a statement that says that unless a consumer disputes a debt’s validity or any of its portion within a month of receiving it, it is assumed that the debt is valid. This law however makes no mention of disputing the validity of a debt in writing. There is however a subsection where it does mention writing, in another context. In that context, the law says that upon communication from the consumer in writing within the one month that the debt is disputed, the collector has to get verification.

In writing or not?

The North Carolina district court had dismissed the complaint and said that if a verbal dispute of debt validity was allowed, consumers would be more vulnerable than when writing was required. However, the panel of Fourth Circuit did not agree, and said that the FDCPA had made it clear what defines communications between collectors of debts and consumers. The panel cited sections where it says communication in writing is required such as 1692g(a)(5), 1692g(a)(4), and 1692g(b), but pointed out that Section 1692g(a)(3) did not mention that communication in writing was needed. It based its ruling on the intent of the statute, which was in favor of protecting consumer rights and was independent of the other subsections.

Association of Business Training