Any debt collector trying to collect a debt must send the consumer the disclosures described by the Fair Debt Collection Practices Act, the U.S. Court of Appeals for the Ninth Circuit has decided. If multiple debt collectors attempt collection, each must provide the disclosures either in their initial contact with the consumer or within five days thereafter (Hernandez v. Williams, Zinman & Parham PC).
The FDCPA says that “Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall . . . send the consumer a written notice” that tells the consumer of her right to demand that the debt be fully described and validated (15 U.S.C. §1692g(a)). These disclosures sometimes are called the “validation notice.” Including the validation notice in the initial communication is permitted, and is the normal tactic.
According to the court, the consumer fell behind in her payments on an automobile loan. Debt collector Thunderbird Collection Specialists sent the consumer a dunning letter that she apparently ignored. Williams, Zinman & Parham, a law firm, then wrote the consumer to demand payment on behalf of its client, Thunderbird. Thunderbird’s letter apparently included the validation notice, but the consumer claimed that the notice in WZP’s letter was deficient. She sued the firm for not providing a complete validation notice within five days of its initial communication with her.
Who must give the notice? The essential issue was the meaning of “the initial communication.” WZP claimed that, for any debt, there could be only one initial communication, no matter how many debt collectors became involved. The consumer claimed that the initial communication was the first communication from each debt collector that was involved.
According to the court, this was a case of first impression in the appellate courts, as no U.S. Court of Appeals had previously issued a published opinion. After interpreting the phrase in light of the entire act, including the act’s intent, the court determined that each debt collector must provide the validation notice.
Ambiguous phrase. “The initial communication” was ambiguous, the court began. The FDCPA did not define “initial,” and the interpretations advocated by both sides were rational.
On the one hand, using “the initial communication,” rather than “an initial communication,” implied there could be only one, the court said. On the other hand, using “a debt collector” implied an obligation that applied to all debt collectors.
Since the text of the FDCPA was not definitive, a broader view of the act was required.
The broader view. Elsewhere in the FDCPA, “a debt collector” applied to all debt collectors that participated in the collection process, the court said. Also, the statute’s definition of “debt collector” covered all collectors, not just the first in line. WZP’s arguments to the contrary, based on comparisons to other specific language in the act, did not persuade the court differently.
For one thing, accepting WZP’s argument would create a loophole that would undermine the act’s requirement that a debt collector had to stop its collection efforts until it satisfied a consumer’s demand for verification. A debt collector could evade the pause requirement by passing the debt to a second debt collector that would not be required to provide the validation notice, the court pointed out.
The consumer-friendly interpretation also was more consistent with the FDCPA’s goal of protecting consumers from abusive collection practices, the court pointed out. Since information about a debt, or about a dispute of that debt, can be lost each time the debt is sold, it is important that consumers retain all of their validation and dispute rights.
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