A Cautious Win for Creditors and Debt Collectors

insideARM.com ran a story recently about an FDCPA case that wasn’t decided in favor of the consumer.

The meat of this story is about how, exactly, the words if and unlessfunction in a collection letter.

In one case, Camacho v. Bridgeport Fin., Inc., Bridgeport Financial did not prevail in the FDCPA lawsuit brought against it by a consumer because the language in its initial contact made it sound like the consumer must dispute the debt in writing: “Unless you notify this office in writing within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.”

In another case, Riggs v. Prober & Raphael, Prober & Raphael may have gotten lucky. The language they use isn’t quite so definitive:

“Please be advised that if you notify my office in writing within 30 days that all or a part of your obligation or judgment to FIRESIDE BANK is disputed, then I will mail to you written verification of the obligation or judgment and the amounts owed to FIRESIDE BANK. In addition, upon your written request within 30 days of receipt of this letter, I will provide you with the name and address of the original creditor, if different from the current creditor.

If I do not hear from you within 30 days, I will assume that your debt to FIRESIDE BANK is valid.”

That unless in Bridgeport’s letter sounded, at least to the Ninth Circuit Court, like it was a requirement – something that the Fair Debt Collection Practices Act actually doesn’t intend. The FDCPA does not make written communication the only communication a consumer can use to dispute a debt. Look at section 1692g(a)(3-4):

§ 809. Validation of debts

(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—

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector

(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

Pay particular attention to that if in (4). And for the Ninth Circuit Court, that’s where Prober & Raphael got it right and stayed on the right side of the FDCPA. The word if doesn’t sound like it’s dictating the terms of the communication to the consumer.

As much as possible, our communications to debtors should adhere to the FDCPA, especially when the FDCPA’s language can protect an agency. We can still be sued for following the FDCPA – being compliant isn’t a shield against lawsuits. But adhering to the FDCPA can protect us in court.

In this specific case, though… It’s too soon to tell. Basing an argument off of something as slippery as the difference between if and unlessmakes us a little anxious. What thoughts do you have?