A collection letter violated the Fair Debt Collection Practices Act (FDCPA) because its invitation to call a toll-free number could be read by the “least sophisticated debtor” to permit the debt to be effectively disputed by telephone, the U.S. Court of Appeals for the Third Circuit has ruled.
FDCPA Section 1692g requires a debt collector to send a written “validation notice” to a consumer within five days of the collector’s initial attempt to collect a debt and specifies what information the notice must contain. This section requires the notice to include statements that if the consumer disputes a debt in writing or makes a written request for the name and address of the original creditor, the collector will provide verification of the debt or the requested information. This section also requires a debt collector to cease all collection efforts if it receives a written dispute or information request until the verification or information is provided.
While Section 1692g further requires the validation notice to include a statement that the debt will be assumed to be valid unless the consumer disputes the debt within 30 days, the section is silent on what form the dispute must take to avoid that assumption. Reading the section’s requirements together, the Third Circuit has previously held that, to be effective, a debtor must dispute a debt in writing.
In Caprio v. Healthcare Revenue Recovery Group, LLC, the debt collector, on the front of a double-sided collection letter, told the debtor that “[i]f we can answer any questions, or if you feel you do not owe this amount, please call [our toll-free number] or write us at the above address.” The words “please call” and the telephone number were in bold, and, in the letterhead at the top of the collection letter, the telephone number appeared again in a larger font than the collector’s address. The FDCPA validation notice required by Section 1692g appeared on the letter’s reverse side.
Reversing the district court’s grant of judgment on the pleadings in favor of the debt collector, the Third Circuit held that the “substance” and “form” of the collection letter “overshadowed and contradicted” the validation notice in violation of Section 1692g. In reviewing the letter’s substance, the Third Circuit acknowledged that it did not expressly state that a telephone call would be sufficient to dispute the debt and could be read merely to invite the plaintiff to call the collector. The court found, however, that the “least sophisticated debtor” could read the letter’s “please call” statement as an instruction to call or write to dispute the debt.
On the letter’s form, the court found that the emphasis on “please call” and the telephone number, combined with the placement of the validation notice on the reverse side, made it more likely that the “least sophisticated debtor” would take the easier alternative of making a toll-free call to dispute the debt. The Third Circuit concluded that the collection letter was deceptive because it could reasonably be read to mean that the plaintiff could call the collector to dispute the debt, even though “a telephone call is not a legally effective alternative for disputing the debt.”
Members of Ballard Spahr’s Consumer Financial Services Group regularly consult with their clients engaged in consumer debt collection on compliance with the FDCPA and state debt collection laws. The Group has created a team of lawyers who are already helping debt collectors and debt buyers to prepare for their first Consumer Financial Protection Bureau examinations.
The Group is nationally recognized for its guidance in structuring and documenting prepaid cards and other consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).
For more information, please contact Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, John L. Culhane, Jr., at 215.864.8535 or culhane@ballardspahr.com, Collection Documentation Task Force Chair Christopher J. Willis at 678.420.9436 or willisc@ballardspahr.com, Glen P. Trudel at 302.252.4464 or trudelg@ballarspahr.com, Stefanie H. Jackman at 678.420.9490 or jackmans@ballardspahr.com, or Heather S. Klein at 215.864.8732 or kleinh@ballardspahr.com.
