District Court Concludes that Validation Notice in Debt Collection Letter was Presumptively Valid because it Tracked Section 1692g of the Fair Debt Collection Practices Act (FDCPA), but Concluded that Least Sophisticated Consumer could have been Confused by “Subject To” Language in Letter and so Denies Defense Motion to Dismiss Class Action Complaint
Plaintiffs filed a putative class action against debt collection law firm alleging that a debt collection letter sent in August 2005 violated the federal Fair Debt Collection Practices Act (FDCPA). Meselsohn v. Lerman, 485 F.Supp.2d 215, 216 (E.D.N.Y. 2007). Defense attorneys moved to dismiss the class action complaint for failure to state a claim on the ground that the letter was presumptively valid. Surprisingly, plaintiff admitted that the letter “properly informs the consumer of his rights to dispute the debt, request verification of the debt and request creditor information within thirty (30) days of the initial communication from the debt collector.” Id., at 217. The class action complaint was premised on the theory that the letter violated the FDCPA because the 30-day validation period required by Section 1692g is “improperly overshadowed by the demand for payment of the debt within the same thirty days.” Id. According to plaintiff, it was unclear that he had the right “to either pay the debt or request validation,” id. (italics added). Defense attorneys argued that dismissal of the class action was warranted because the letter “tracks the statutory language of the FDCPA and is presumptively valid,” and argued further that the demand for payment “is specifically made ‘subject to’ the thirty day notice provisions” and so the validation notice is not “overshadowed” by the payment demand. Id. Plaintiff countered that the letters should have included “transitional language explaining to the consumer that the demand for payment does not override the consumer’s right to seek validation of the debt” and that it is deficient because it is not clear that the consumer may either pay the debt or dispute it. Id. The district court agreed with plaintiff.
The district court explained that whether an FDCPA violation occurred is viewed using “an objective standard, measured by how the ‘least sophisticated consumer’ would interpret the notice received from the debt collector.” Meselsohn, at 218 (citations omitted). The court recognized that if a validation notice tracks the statutory language then it is presumed to be valid, id., at 218-19, and concluded that the letter in this case was “presumptively valid,” id., at 219. Thus, unless the language was “overshadowed” or “contradicted” by other language in the letter, defendants were entitled to judgment as a matter of law. Id. In this case, the federal court found that “transitional language” was required because of the possibility for confusion. Id., at 219-20. The court at pages 219 and 220 quoted Second Circuit authority providing the following example of such transitional language,
“Although we have requested that you make immediate payment or provide a valid reason for nonpayment, you still have the right to make a written request, within thirty days of your receipt of this notice, for more information about the debt. Your rights are described on the reverse side of this notice. [¶] Our demand for immediate payment does not eliminate your right to dispute this debt within thirty days of receipt of this notice. If you choose to do so, we are required by law to cease our collection efforts until we have mailed that information to you. Your rights are described on the reverse side of this notice.” (Citation omitted.)
Based on this authority, the court found that the letter’s demand for payment within 30 days without any transitional language or further explanation clarifying that the consumer maintains the right to dispute the validity of the debt “could confuse an unsophisticated consumer.” Meselsohn, at 220. The court explained that the phrase “subject to the above” was inadequate, and did not “explain to an unsophisticated consumer that he or she has the right to either request validation of the debt or pay the debt within 30 days.” Id. Accordingly, the court denied the defense motion to dismiss. Id., at 220.
NOTE: The author confesses that he finds the court’s ruling unusual in light of the clear text of the letter. The letter sent to plaintiff was signed by “Jeffrey G. Lerman, Esq.” and stated:
Please be advised that your above referenced past due account has been referred to this office for collection.
You have thirty (30) days after receiving this notice to dispute the validity of the debt or any portion thereof. Without said notification, we will assume the debt is valid. If you dispute the debt, or any portion thereof, in writing within the thirty (30) day period, this office will obtain verification of the debt and mail you a copy of same. Upon your written request within the thirty (30) day period, we will provide the name and address of the original creditor if different from the current creditor.
Subject to the above, your payment, made payable to our client, is due at this office thirty (30) days from your receipt of this letter. If you are unable to pay the balance in full, you may contact this office and discuss a payment plan.
This communication is from a debt collector in an attempt to collect a debt. Any information obtained will be used for that purpose.
Thank you for giving this matter your attention.
Meselsohn, at 216-17. In the author’s view, the only way a “least sophisticated consumer” could be confused by this language would be to ignore entirely the words “subject to,” or at the very least, to give the phrase no meaning. The district court appears to have accepted plaintiff’s suggestion that the phrase “subject to the above” is the definitional equivalent of “notwithstanding the above.”