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  1. #1

    Default Why Can Collection Agencies Get Away With Not Validating Debts

    In GUERRERO v RJM the district court judge said this:

    The Court notes that even if Defendant had ceased with its efforts to collect the alleged debt, Defendant still would have been obligated to verify the debt.

    Under 15 U.S.C. § 1692g(a)(4), a debt collector must inform a consumer that if the consumer timely notifies the debt collector in writing that the debt is disputed, the debt collector will obtain verification of the debt and that such verification will be mailed to the consumer by the debt collector.

    The statute could not have required such a statement without intending that a debt collector be required to follow through with the promise to obtain and send verification.
    The appeals court mostly disagreed (one dissenter) but skirted the issue as to why congress would want CA's to write that the CA's would send validation and why congress really didn't intend that CA's actually had to send it.

    I think that congress really intended for the CA's to identify the consumer with the debt. If the first CA is allowed to simply cease collections without verifying, each successive CA can do the same thing. Each successive CA could write dunning letters without anyone knowing if the debt is legit. Years later CA's could be comming out of the nowhere and asking for payment on a debt which has never been verified.

    What was congress' intention?

  2. #2
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    Default Re: Why Do Ca's Need Not Validate when They Say They Will

    I believe the problem is that although section (a) states that a verification will be mailed at the debtors request, section (b) states that collection activities will cease until the verification is sent.

    So, what happens is: they quit collecting so they see no reason to send verification.



    while they state this in the opinion:

    RJM and amici urge us also to correct the district court's conclusion that "even if [RJM] had ceased with its efforts to collect the alleged debt, [RJM] still would have been obligated to verify" it. We respectfully disagree with the district court, and hold that the Act requires a debt collector who receives notice that a consumer disputes an alleged debt to cease collection efforts until it provides the consumer with verification of the debt. The Act does not impose an independent obligation to verify a debt where the collector ceases all collection efforts directed at the consumer.
    I disagree with their conclusion. In section (a), it states that a notice must be provided that states:

    (4) a statement that if the consumer notifies the debt collector 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 or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
    I see this as a directive itself that the debtor will be mailed such verification. The court obviously read section (b) to mean that the only reason that a verification would need be required to be sent pursuant to the debtors demand would be to be allowed to continue collections efforts.

    I suggest that the statement in sec (a) stands alone and does in fact intend to mean that a verification must be sent, irrespective of any other actions.

    Additionally, I suggest they misconstrued sec (b) in their interpretation:
    (b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
    It says nothing about the requirement for verification is predicated upon the intent of continued collections activities. It merely states what actions the CA can, or can't take (in this case) if the debtor demands verification and then we go back to section (a) where it states verification WILL be sent to the debtor upon request.

    Now, there is something for the debtor in another section, maybe:



    (8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.
    I could interpret that to mean that if a CA sells or transfers a debt that has been disputed to a subsequent CA, they have violated this section unless they also forward the fact the debt has been disputed.



    Then, as a purchaser of a debt, I believe the subsequent CA inherits any contractual or legal actions attached to the debt. As such, if the subsequent CA contacts the debtor prior to a verification being delivered to the debtor, they have in fact violated the previously discussed section and the first CA has violated this section if they have not passed the fact of the dispute along with the paper. Kind of a catch 22 amongst the CAs.

    may be a stretch but may be something for a person with a bit of time on their hands.

  3. #3

    Default Re: Why Can Collection Agencies Get Away With Not Validating Debts

    Now, there is something for the debtor in another section, maybe:

    (8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.
    I could interpret that to mean that if a CA sells or transfers a debt that has been disputed to a subsequent CA, they have violated this section unless they also forward the fact the debt has been disputed.
    This is pretty clear cut and goes deeper than just selling the debt:

    § 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]

    (2) Duty to correct and update information. A person who

    (A) regularly and in the ordinary course of business furnishes information to
    one or more consumer reporting agencies about the person's transactions
    or experiences with any consumer; and

    (B) has furnished to a consumer reporting agency information that the person
    determines is not complete or accurate, shall promptly notify the consumer
    reporting agency of that determination and provide to the agency any
    corrections to that information, or any additional information, that is
    necessary to make the information provided by the person to the agency
    complete and accurate, and shall not thereafter furnish to the agency any
    of the information that remains not complete or accurate.

    (3) Duty to provide notice of dispute. If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.
    I have read some cases about "completeness or accuracy" but none that dealt with the non-dispute issue. Being that multi-CA's over the decades have walked away from collecting a debt because they did not wish to trouble themselves with validation, you would think that there is a case out there somewhere which deals with at least one of the CA's not reporting the debt as disputed.

    It would certainly be a counterclaim for a consumer to bring up in any action brought against the consumer by a debt collector because most CA's think they can just drop the case without reporting that the debt is disputed. The FDCPA and the FCRA dictate that they cannot.

    I, as you do, think it is the same for the validation issue.

    It says nothing about the requirement for verification is predicated upon the intent of continued collections activities. It merely states what actions the CA can, or can't take (in this case) if the debtor demands verification and then we go back to section (a) where it states verification WILL be sent to the debtor upon request.
    But the loophole seems to be that the FDCPA does not give a "direct" directive. The court wants it spelled out that a collector must send the validation.

    The way I read 809 is that once the consumer requests validation, this act alone triggers the requirment for validation to be sent and there is nothing the CA can do to stop that action which has been put into motion. Even if the CA decides to give up the chase it still must validate.

    I think the appeal's court opinion was conclusory. It uses 809(a) for its reasoning while leaving out (a)(4) completely. It doesn't, as the district court did, consider the intention of congress as to why the CA's would be instructed to write that the CA's would send validation upon request.

    The appeal's court said :

    The Act does not impose an independent obligation to verify a debt where the collector ceases all collection efforts directed at the consumer.
    Here, I think they are definitely wrong. The CA said, in writing, that it would send validation if the consumer requests it withing 30 days. If the consumer requests validation within the alloted time then the CA is obligated.

  4. #4
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    Default Re: Why Can Collection Agencies Get Away With Not Validating Debts

    It would certainly be a counterclaim for a consumer to bring up in any action brought against the consumer by a debt collector because most CA's think they can just drop the case without reporting that the debt is disputed. The FDCPA and the FCRA dictate that they cannot.
    No, it would not be a counterclaim. It does nothing to change the collection issue itself. It would be a separate action against the CA for a violation of the FDCPA. It would be handles seperately from the debt issue.

    I



    But the loophole seems to be that the FDCPA does not give a "direct" directive. The court wants it spelled out that a collector must send the validation.
    I read section (a) as mandating it. it states:

    (a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—
    (4) a statement that if the consumer notifies the debt collector 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 or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
    it requires the statement that the debt collector WILL obtain verification if the debtor follows the procedure. I don't see how it can be any clearer.

    The way I read 809 is that once the consumer requests validation, this act alone triggers the requirment for validation to be sent and there is nothing the CA can do to stop that action which has been put into motion. Even if the CA decides to give up the chase it still must validate
    .agreed



    I think the appeal's court opinion was conclusory. It uses 809(a) for its reasoning while leaving out (a)(4) completely. It doesn't, as the district court did, consider the intention of congress as to why the CA's would be instructed to write that the CA's would send validation upon request
    .I don't even believe it requires interpretation. The plain language states that if requested, CA WILL provide verification.

    I suppose if they want to argue that that statement does not mean the CA must provide the verification they could but that would mean that statement is now meaningless. There would be no justification for that section if it did not mean that the statement it speaks of was required to actually be sent, not merely that the CA has to include a meaningless statement in the correspondence.




    Here, I think they are definitely wrong. The CA said, in writing, that it would send validation if the consumer requests it withing 30 days. If the consumer requests validation within the alloted time then the CA is obligated.
    that is my belief and point.

  5. #5

    Default Re: Why Can Collection Agencies Get Away With Not Validating Debts

    No, it would not be a counterclaim.
    Well...I'd use it as a counterclaim if the CA brought action against me. The CA would have violated the FDCPA and FCRA while chasing after the debt. The two would be tied together.

    it requires the statement that the debt collector WILL obtain verification if the debtor follows the procedure. I don't see how it can be any clearer.
    To begin with, they don't even address (a)(4). I took another look and I just can't see it. Correct me if I am wrong. I did, however, find where the dissenting judge, Fletcher, said the same thing that I have been saying:

    Even though the majority rejects Guerrero’s claims under both sections, its analysis is based almost exclusively on § 1692g(b) and on one district court case interpreting thatsection.
    The court is hung up on (b). They didn't consider the section you are quoting. That's the problem.

    If they would have considered (a)(4) then your argument should have prevailed. Otherwise, they would have had to explain why they didn't think that congress really intended for the CA's to actually send the verification when the CA's stated, in writng, that they would.

    There is no explanation. It is quite clear to me that congress intended that the right debt be identified with the right consumer. The only way to do that is to validate.

    Personally, I think the court was bowing to the pressure by the collection industry. Just think how things would change if the CA's would all have to validate even though they had decided they didn't want to litigated against an informed consumer.

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