On October 31, the Eastern District of Pennsylvania issued an opinion in Guzman v. HOVG, LLC, No. 18-3013, (E.D. Pa. Oct. 31, 2018), denying a debt collector’s motion to dismiss a Fair Debt Collection Practices Act-based action because the validation notice included in the collection letter did not clearly state that the debtor can only dispute the debt via writing to the debt collector. The court further held the validation notice was overshadowed by language that repeatedly instructed the debtor to call the debt collector with any questions regarding the debt even though Third Circuit precedent requires all disputes to be made in writing.

The action arose out of a debt collection letter HOVG mailed to plaintiff Javier Guzman in 2017. Included on the front side of the letter were directions for Guzman to call HOVG if he was unable to pay the balance of the debt or if he had any questions. The front side of the letter also informed Guzman that the reverse side of the letter contained “important consumer information.” Contained on the reverse side of the letter was a validation notice concerning Guzman’s rights to dispute the debt or request validation. The language of the notice tracked that of Section 1692g of the FDCPA, which does not expressly require that disputes be made in writing.

Guzman argued that the letter’s validation notice was misleading because it did not notify him that he can only dispute his debt in writing. Although the notice included the disclosure that if Guzman decided to dispute his debt in writing he would be afforded certain protections under the FDCPA, the notice did not state that the only way he could dispute the debt was in writing. HOVG responded that its letter was not a violation of the FDCPA because it accurately tracked the language of the FDCPA regarding a debtor’s right to request validation or dispute a debt. Therefore, HOVG argued, Guzman’s complaint should be dismissed because HOVG’s letter was not misleading as a matter of law.

Relying on three prior Third Circuit decisions, Caprio v. Healthcare Revenue Recovery Grp., Graziano v. Harrison, and Wilson v. Quadramed Corp., the district court agreed with Guzman that the least sophisticated debtor would find the validation notice misleading because it could be read to have two or more different meanings, one of which is inaccurate. Specifically, the court found that the least sophisticated debtor could read the first sentence of the notice, which stated Guzman had the right to dispute the debt but did not disclose that any dispute had to be in writing, to mean that a debtor could dispute a debt either orally or in writing. The court further found that when the two remaining sentences of the notice were considered, both of which explicitly stated Guzman would be afforded certain rights or protections if he disputed the debt in writing, the omission of the writing requirement in the first sentence bolstered the interpretation that a debtor could dispute the debt orally. Under Third Circuit precedent, all disputes must be made in writing to be effective and therefore, the notice’s implication that Guzman could dispute the debt orally was inaccurate.

The court further found that the language directing Guzman to call HOVG with any questions overshadowed the validation notice because it also suggested that Guzman could orally dispute the debt. Finally, the court found that the front side of the letter would not properly alert the least sophisticated debtor that a disclosure pertaining to important legal rights was contained on the reverse side. As such, the front side of the letter “obscure[d] any notice that the validation notice provides.”

While there is currently a circuit split regarding whether the FDCPA requires all disputes to be made in writing, this court’s decision makes it clear that debt collectors operating in the Third Circuit should consider including clear language regarding how a debtor may dispute his debt. We will continue to monitor and report on developments in this area of the law.