FDCPA’s Validation Requirement Does Not Extend to Investigation Into Liability, Says Court
A federal court of appeals has ruled that the Fair Debt Collection Practices Act does not require debt collectors to confirm whether an account is actually owed. Instead, held the court, the debt collector can merely parrot the information provided by the creditor who hired the debt collector.
The decision hinges on the provision of the Fair Debt Collection Practices Act (FDCPA) requiring that debt collectors provide “verification” (also called “validation”) of debts. If a consumer sends a written dispute within 30 days of the first collection notice, she or he can ask for verification. This is usually interpreted to require that the collector provide any information about the debt. Some courts even allow consumers to request specific information.
In this recent case however, the court ruled that debt collectors do not have to “undertake an investigation into whether the creditor is actually entitled to the money it seeks” when a consumer says the debt is not correct.
The implication of this decision is that debt collectors can simply repeat the information provided to them by the creditors they’re collecting for and that even if the information is incorrect, the debt collector might not be liable. It thus has the effect of preventing consumers from getting accurate information about accounts in collection, when the purpose of the FDCPA is the exact opposite.
It remains to be seen whether other courts will go along with this decision. Furthermore, the case appears to have been imprudently brought, as it does not appear from the decision that the consumer actually had a purpose for disputing the account other than slowing down the collection process. Regardless, it is an argument that consumers should be aware of when bringing FDCPA claims.
Fairview Law is a Charlotte, North Carolina business and franchise law firm. Give us a call at 980-999-3557 if we can help your business or business owner(s) with debt issues.