Collection Letters and Overshadowing Claims

The Fair Debt Collection Practices Act (“FDCPA”) prohibits debt collectors from confusing a consumer as to his or her right to dispute a debt or to determine the identity of the original creditor. See 15 U.S.C. 1692g(b). This requirement is not limited by the size of the consumer debt. The United States Court of Appeals for the First Circuit had the “relatively rare” opportunity to look at this issue in Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98 (1st Cir. 2014).

In Pollard, Robbie Pollard incurred a $611.84 debt and the Law Office of Mandy L. Spaulding (“Spaulding”) was subsequently retained to collect the debt. Spaulding sent a collection letter that stated that it had been retained to collect the monies owed and was “not inclined to use further resources attempting to collect this debt before filing suit.” It further explained that Spaulding planned to collect the debt “through whatever legal means are available and without your cooperation” and went on to inform Pollard that Spaulding was “obligated to my clients to pursue the next logical course of action without delay.” Below the signature block, in smaller print, were several paragraphs preceded by the caption “Notice of Important Rights.” These paragraphs then contained the statutorily mandated notice of consumer rights set out in 15 U.S.C. 1692g (a) (3)-(5). following receipt of the letter, Pollard disputed ownership of the debt and requested validation. One month later Pollard filed suit for violations of the FDCPA. Spaulding answered and moved for judgment on the pleadings. The district court concluded that the collection letter violated section 1692g as a matter of law. Pollard and Spaulding then agreed upon the damages and attorneys’ fees recoverable by Pollard but preserved Spaulding’s right to appeal.

In affirming the district court’s decision, the 1st Circuit restated that the purpose of the FDCPA is to eliminate “the use of abusive, deceptive, and unfair debt collection practices.” The FDCPA also requires that a debt collector inform the consumer that she has thirty days from receipt of the validation notice within which to dispute the debt before the debt is assumed valid and if she disputes the debt, the debt collector will provide her with validation of the debt’s validity. While the consumer requests information concerning the identity of the original creditor or disputes the debt, a debt collector must suspend collection efforts until it supplies such data. See Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98 (1st Cir. 2014), citing,15 U.S.C. 1692g (b). The 1st Circuit also reviewed the history of the FDCPA and various court opinions that require that validation notices convey the consumer’s rights in a non-confusing manner. See Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98 (1st Cir. 2014), citing, McMurray v. ProCollect, Inc., 687 F.3d 665, 668 n. 1 (5th Cir. 2012).

With respect to the merits, the 1st Circuit, joined the majority of federal circuit courts, and held that a collection letter should be viewed from the perspective of the hypothetical unsophisticated consumer. See Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98 (1st Cir. 2014).  The unsophisticated consumer standard protects “all consumers, including, the untrained and the credulous.” See Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98 (1st Cir. 2014), citing, Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1236 (5th Cir. 1997). The 1st Circuit was clear to point out that the hypothetical unsophisticated consumer standard remained an objective standard and preserved an element of reasonableness and stated that a debt collector will not be held liable based on an individual consumer’s farfetched reading of a collection letter.  See Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98 (1st Cir. 2014), citing, Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1236 (5th Cir. 1997).

The Pollard case is a reminder that the act of sending out a collection letter is not just a mechanical function. Time should be taken to make sure that the facts are correct and that the letter complies with the statutory requirements under both the FDCPA and each state’s debt collection law including, but not limited to, the size of the font, typeface and layout of the letter. The opinions in this blog are solely the author’s and any comments, suggestions or replies should be sent to me at john@jrjoneslaw.com.

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