Court Rules in Favor of Consumer

Requesting validation of an alleged debt is common practice today and more and more consumers are aware of this right and exercising it in relation to all collection notices. The Fair Debt Collection Practices Act (FDCPA) under Section 1692g, et seq. requires that all debt collectors provide consumers with a “30-day validation notice” within five (5) days of their initial contact with the consumer, explaining the consumer has 30 days to request a validation of the debt from that collector. When a consumer receives a collection letter, under the FDCPA, the consumer has the right to request a validation of the debt, which basically means the consumer wishes the collector to contact the original creditor and check to make sure the debt is truly owned by him or her and that the amount stated due is accurate. The intent of the legislature is to make sure a collector is collecting from the correct consumer for the correct amount.

One catch is that the consumer must request this validation from the collector within thirty (30) days of the first collection letter received from that collector. Once the initial thirty days have passed the debt is basically assumed valid or accepted by the consumer. If a debt is disputed the collector must stop all debt collection efforts (phone calls, collection letters, etc.) until a validation is provided to the consumer. If the collector continues collecting without providing validation there has been a violation of the FDCPA and the consumer (if a lawsuit is brought against the collector and the consumer prevails) may be entitled to a $1000 statutory award.

Recently the Second Circuit Court of Appeals held in Ellis v. Solomon and Solomon P.C that the defendant violated the Fair Debt Collection Practices Act when it filed a collection lawsuit against a debtor during the 30-day validation period without providing additional explanation to the debtor about how the lawsuit affected the notice. Ellis had requested a validation and two weeks later received a collection lawsuit. The Second Circuit held that the validation notice in the original collection letter was “overshadowed” when the debt collector served Ellis with a summons and complaint during the validation period without explaining that the lawsuit has no effect on the information conveyed in the validation notice.

The courts held that even though collectors have a right to continue their efforts to collect debts during the validation period under the FDCPA, if they do not wait until the end of the 30-day period to file a lawsuit they must explain the lawsuit’s lack of impact on the previous disclosures to the consumer.

This ruling was in the Second Circuit, which consists of Connecticut, New York and Vermont.

The Ellis ruling is a small victory for consumers, making the notices and information clearer and more understandable. Debt collectors, including collection attorneys will go to any length to collect funds, whether it is from the correct consumer or within the law. There are a growing number of lawsuits against debt collectors for violations of the FDCPA. This is reflective of the growing number of “collect by any means” mentality of the collection business.

According to WebRecon, LLC, The number of FDCPA lawsuits against debt collectors is growing significantly each year.

2009: 8287 FDCPA
2008: 5188 FDCPA
2007: 3813 FDCPA
2006: 3220 FDCPA

Being in debt is never a good situation and hardly anyone does it on purpose. Life situations force us to take steps to survive and then we are left with the aftermath. This ruling at least helps to give consumers some additional protection against abusive debt collection tactics, especially for some consumers not as sophisticated and may not understand collection letters and their meanings.

If you have oppressive debts and would like a free debt consultation, contact www.CreditCardDebtNegotiator.com, or call (614) 453-5963.