On May 2, the U.S. District Court for the District of New Jersey granted a debt collector’s motion to dismiss a putative class action brought under the Fair Debt Collection Practices Act, holding the validation notice in the collection letter was not overshadowed or contradicted by other language in the letter.
The case is Reizner v. National Recoveries, Inc., No. 2:17-cv-2572 (D.N.J. May 2, 2018). A copy of the opinion can be found here.
Plaintiff Alex Reizner incurred a $96,601.75 debt with the U.S. Department of Education. The DOE assigned the debt to National Recoveries, Inc. on March 28, 2017. That day, NRI mailed a collection letter to Reizner notifying him that it was collecting on his debt to the DOE. In the second paragraph, in bold font, NRI included the following validation notice:
Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the debt, or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice, that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such verification or judgment. Upon your written request within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.
The letter also provided a phone number, fax number, and email address to which complaints, questions, or concerns could be submitted.
Reizner filed a putative class action, alleging the validation notice did not meet the requirements of § 1692g(a) of the FDCPA.
In viewing the letter from the perspective of the least sophisticated debtor, the Court rejected Reizner’s argument that the validation notice was overshadowed or contradicted. The Court found compelling that the validation notice appeared in the first two paragraphs, preceded NRI’s address and telephone number, did not expressly state that Reizner should call to contest the debt, and was in bold typeface and set off from the rest of the letter. Additionally, nothing in the rest of the letter threatened or encouraged Reizner to waive his right to challenge the debt.
In analyzing the letter, the Court distinguished the body of case law holding other collection letters in violation of the FDCPA. Those letters often encouraged the recipient to call the debt collector, which could confuse the least sophisticated consumer into believing they did not need to dispute the debt in writing, as required by the statute. Moreover, those letters often included a threat of immediate legal action if the debtor did not pay, which would contradict the 30-day timeframe in the validation notice. In others, the validation notice appeared on the back of the letter or was otherwise inconspicuously buried in the text. NRI’s letter, according to the Court, suffered from none of these defects.
NRI escaped liability because it prominently featured its validation notice and did not otherwise contradict it with threats of imminent action or an encouragement to call.
This decision highlights the importance of debt collectors including a clear and uncontradicted validation notice in their collection letters. They should evaluate their collection letters to minimize exposure to potential liability under the FDCPA.