FDCPA – trap – Do NOT require a consumer to put its dispute in writing

In October of 2006, the FDCPA was amended to exclude pleadings from the definition of initial communication. Hence, if a complaint is not an initial communication, the service of a complaint upon a defendant does not trigger a duty on the collector/lawyer to serve the debtor with a validation notice. But recently, the 6th Circuit has decided the case of Jerman v. Carlisle, 2007 U.S. Dist. LEXIS 44731.
In Jerman, the Plaintiff was served with a complaint before the October 2006 amendment to the FDCPA and thus properly alleged that the complaint was an initial communication. The court agreed. However, it is unlikely that the court would have reached the same conclusion if the Plaintiff were served with the complaint after the October 2006 amendment to the FDCPA.
However, there are 2 other very important lessons to be garnered from this case for all consumer debt collectors:
1. Do NOT state in your validation letters that a consumer must provide its dispute or demand for validation in writing to you. There is no such requirement under the FDCPA. Although it is good practice to reduce things to writing to avoid the “he said/she said” controversy, there is still no requirement imposed upon a debtor by the FDCPA to make such demands in writing. If there is anything in your letter that requires the debtor to make his demand/dispute in writing, take it out TODAY…WITHOUT FAIL. The Jerman case is a class action.
2. Do NOT send the validation notice with a complaint. The debtor made a very interesting argument. Jerman alleged that the 30 day window within which Jerman was provided by the FDCPA to dispute the complaint overshadowed, if not misled Jerman into thinking that he would have 30 days to dispute the complaint. In Ohio, where this case arose, a debtor has only 28 days to file an answer to a complaint or the debtor will be defaulted. The court did not address this issue. But I believe that the debtor’s position is correct. In Jerman, the Defendant law firm sued the Plaintiff and attached its FDCPA validation notice (the one requiring that all disputes and requests be in writing). By serving the Plaintiff with a complaint in which the debtor has only 28 days to respond and attaching a letter that states that the debtor has 30 days to dispute the debt or demand verification, there is little doubt that this would tend to mislead the “least sophisticated” consumer. That is the standard used to determine whether the FDCPA has been violated. Indeed, I would conclude that unless you are an attorney, even a reasonably prudent person could be misled. Moral of the story – if you are going to sue a debtor, do not include the validation notice with the complaint. You are far better off sending a demand letter that includes the validation notice in it and then waiting a week or so to serve the debtor with a complaint. These are two separate mailings and thus would be less likely to be seen as misleading the least sophisticated consumer. The best practice, in my opinion, is to simply send the validation notice and then wait the 30 days to file the lawsuit.

This entry was posted on Monday, June 25th, 2007 and is filed under Debt Collection Laws - Federal . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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