On January 31, 2014, the U.S. Court of Appeals for the Fourth Circuit held that an oral dispute of an alleged consumer debt is sufficient under Section 1692g(a)(3) of the Fair Debt Collection Practices Act (“FDCPA”). See, Clark v. Absolute Collection Serv., Inc., No. 13-1151, 2014 WL 34943 (4th Cir. Jan. 31, 2014). The court specifically rejected the debt collectors claims that its validation notice, which required a written dispute, was valid and enforceable.
Within 5 days of its initial communication with the consumer, the debt collector must send a validation notice, commonly referred to as a “30-day validation statement.” The purpose of the notice is to inform the consumer of the amount owed, that the collector is a “debt collector” under the FDCPA, and provide notice that the consumer may dispute the validity of the debt within 30 days. This notice creates important legal obligations upon the debt collector. Specifically, if the consumer timely disputes the validity of the debt, the collector cannot assume the debt to be valid, and must request verification of the debt with the original creditor. The debt collector must also provide the consumer with proper verification of the underlying debt before engaging in further collection activity, and must notify any credit reporting bureau that the debt is disputed.
In Clark, the debt collector moved to dismiss plaintiff’s complaint on the basis that its collection notice, which specifically required written disputes, was proper under Section 1692g(a)(3) of the FDCPA. Joining the Second and Ninth Circuits, the court held that the FDCPA “plainly does not” require a written communication to dispute a debt. The court rejected the debt collector’s argument that Section 1692g(a)(3) imposes an” inherent writing requirement.” The federal circuits are currently split with regard to this requirement, potentially setting up a U.S. Supreme Court review on this issue. Until that time, Nevadans facing a 30-day validation statement are permitted to dispute the debt orally, imposing the aforementioned requirements on the debt collector. These cases provide significant protections to consumers facing improper or unfair debt collection practices, especially where the underlying debt is invalid and timely disputed.