Dispute Letters: Written? Verbal?

[David A. Szwak]

"Whether the FDCPA requires that a dispute by a consumer concerning the subject indebtedness must be made in writing has not yet been resolved in this circuit. Other circuits have addressed the issue, but they have reached opposite conclusions. The Third Circuit in Graziano v. Harrison, 950 F.2d 107, 112 (3d Cir.1991), held that a writing requirement must be read into the statutory scheme, while the Ninth Circuit in Camacho v. Bridgeport Fin., Inc., 430 F.3d 1078, 1082 (9th Cir.2005), reasoned that courts must give effect to the plain meaning of the statute and where there is no explicit requirement in the statute for the dispute to be made in writing, a collection notice that requires any dispute to be written does not comply with 15 U.S.C. § 1692g.
In Graziano, a lawyer operating as a debt collector, sent a "dunning" letter to the consumer who then sued for violation of 15 U.S.C. § 1692g on the basis that the collection notice stated that a dispute must be made in writing. The debt collector argued that while § 1692g(a)(3) [FN6] does not, in plain language, require that a dispute be made in writing, both §§ 1692g(a)(4) [FN7] and 1692g(a)(5), [FN8] require that a debtor communicate any request to the debt collector in writing in order to trigger the protections provided for within those sections. Graziano, 950 F.2d at 112. The Third Circuit found the apparent inconsistency troubling, reasoning that:


FN6. 15 U.S.C. § 1692g(a)(3) requires inclusion of "a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector."



FN7. 15 U.S.C. § 1692g(a)(4) requires inclusion of "a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector."



FN8. 15 U.S.C § 1692g(a)(5) requires inclusion of "a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor."


*4 pon the debtor's non-written dispute, the debt collector would be without any statutory ground for assuming that the debt was valid, but nevertheless would not be required to verify the debt or to advise the debtor of the identity of the original creditor and would be permitted to continue debt collection efforts.
Id. at 112.
The court noted as an additional reason to require that a dispute be made in written form that future conflicts would be more likely prevented. Id. Based on such logic, the Third Circuit concluded that a writing requirement should be read into § 1692g(a)(3), and that a validation notice requiring written notice of dispute therefore conforms with the FDCPA. Id.
In contrast, the Ninth Circuit, in Camacho, relied on the plain wording of the statute to determine that a validation notice requiring written notice of dispute is non-compliant with the FDCPA in the absence of specific statutory language imposing such a requirement. Camacho, 430 F.3d at 1080. The court noted the example of statutory interpretation set forth in Lamie v. United States Trustee, 540 U.S. 526, 526 (2004), in which the Supreme Court reasoned that absent sufficient indication to the contrary, it would refrain from grafting language onto a statute, even if it suspected that Congress inadvertently omitted such language, as long as the plain language of the statutory scheme did not lead to an absurd result. The Ninth Circuit then found that the plain meaning of § 1692g is that consumer debtors can invoke their rights under subsection (a)(3) by either oral or written communication of a dispute, while the following two subsections, (a)(4) and (a)(5), are only triggered by a written communication of a dispute. Camacho, 430 F.3d at 1081. While the court noted the apparent inconsistency in such an analysis, it also took note of Russello v. United States, 464 U.S. 16, 23 (1983), in which the Supreme Court had held earlier that where Congress uses language within the same statute in one section, but not another, such an omission is presumed to be an intentional legislative act of inclusion or exclusion.
The Ninth Circuit observed as well in Camacho that certain rights are invoked by an oral dispute, although there may not be as many rights that are invoked as are triggered by written dispute. Camacho, 430 F.3d at 1081-82. One right a consumer asserts when an oral dispute is made of a debt is the right to prevent the debt collector from communicating the debtor's credit information to others without also conveying the fact that the debt is disputed. [FN9] Id. at 1082. Another right exercised by a consumer making an oral dispute is to prohibit the debt collector from applying payments made to an aggregated account to the particular debt in dispute. [FN10] Id. at 1082. A third right activated by an oral dispute is the opportunity for the consumer to provide information about inconvenient contact times or locations in order to prevent a debt collector from contacting the consumer during those times or at those locations. [FN11] The exercise of any of these rights also entitles the consumer to relief if the debt collector disregards the consumer's information. Id. at 1082. The Ninth Circuit also found that giving effect to the plain meaning of the statute as concerns whether a dispute must be in writing is also consistent with the primary purpose of the statutory scheme, which is to eliminate abusive debt collection practices without consumers being misled or becoming unduly confused. Id. at 1082; see also Jang v. A.M. Miller & Assoc., 122 F.3d 480, 484 (7th Cir.1997) (collection notices that contain verbatim statutory language are not confusing as a matter of law). [FN12]


FN9. 15 U.S.C. § 1692e(8) prohibits transmitting information about the alleged debt when the debt collector knows or should know the consumer has notified the debt collector of dispute.



FN10. 15 U.S.C. § 1692h prohibits application of payment to any debt which is disputed by the consumer.



FN11. 15 U.S.C. § 1692c(a)(1) prohibits a debt collector from communicating with a consumer in connection with the collection of any debt at a time or place known or which should be known to be inconvenient to the consumer.



FN12. The Defendants' reference to Withers v. Eveland, 988 F.Supp. 942, 947 (E.D.Va.1997), for the supposed proposition that a court in this district has found that a dispute must be in writing is inapposite because the issue in the case involved the language demanding payment as opposed to the validity of the notice. (Def.'s Mem. at 10).


*5 The Defendants also contend that the "safe harbor" letter discussed in Bartlett v. Heibl, 128 F.3d 497, 501-502 (7th Cir.1997), that are utilized in Continuing Legal Education materials sanctioned by the Virginia State Bar, contains just such a writing requirement and, therefore, by holding that a validation notice requiring written notice of a dispute is violative of the statutory scheme results in a condemnation, if not criminalization of procedures relied upon by many scrupulous attorneys. (Defs.' Reply Mem. at 11- 12; ex. A ¶ 3). However, the Defendants fail to note that neither the safe harbor language in Bartlett, nor that contained in the educational materials, contain a requirement that a consumer dispute be made in writing. See Bartlett, 128 F.3d at 501-502; (Defs.' Reply Mem. at 11-12; ex. A ¶ 3).
Bartlett stands for the proposition that the least sophisticated consumer may be confused when presented with one time period in the portion of the letter that demands payment, and a conflicting time period in the portion of the letter that gives the validation notice. Id., 128 F.3d at 499. The court in Bartlett suggests a solution to this problem by creating "safe harbor" language that explains the difference between the distinctive time periods. Id., 128 F.3d at 501-502. The subject language also correctly states in the portion of the letter that gives the validation notice that "Federal law gives you 30 days after you receive this letter to dispute the validity of the debt or any part of it. If you don't dispute it within that period, I'll assume that it's valid." Id., 128 F.3d at 501-502 (emphasis added). This portion of the validation notice, which notifies consumers of their rights under § 1692g(a)(3), does not contain a requirement that the dispute be made in writing. Id., 128 F.3d at 501-502. Therefore, Bartlett simply does not address the issue of whether requiring written notice of the initial dispute is acceptable, and it does not set forth language that inadvertently imposes such a requirement. Id., 128 F.3d at 501-502. Instead, the third sentence of the validation notice clarifies that a written notice of dispute, while not required to initially dispute the debt, will trigger additional rights. Id., 128 F.3d at 501-502. Those additional rights are the right to request and obtain proof of the debt and the right to request and obtain creditor information--rights conferred by 15 U.S.C. §§ 1692g(a)(4) and 1692g(a)(5). Id., 128 F.3d at 501-502. [FN13] Letters using the "safe harbor" language are therefore correctly worded to describe the rights of the consumer found in the FDCPA. Virginia lawyers following this example are, in fact, thereby complying with the law, and they need not worry about criminalization of their practices as suggested by SGL. SLG did not use such language in the SLG letter and did so to their detriment.


FN13. The "safe harbor" validation notice language provides, in full: "Federal law gives you 30 days after you receive this letter to
dispute the validity of the debt or any part of it. If you don't dispute it within that period, I'll assume that it's valid. If you do dispute it--by notifying me in writing to that effect--I will, as required by the law, obtain and mail to you proof of the debt. And if, within the same period, you request in writing the name and address of your original creditor, if the original creditor is different from the current creditor ..., I will furnish you with that information too." The first two references to any "dispute" do not specify that the dispute must be in writing, while the latter references have such a requirement. Id. at 501-502 (emphasis and notation added).


The reasoning of the Ninth Circuit's opinion is more persuasive as it reinforces the FDCPA's imperative to address abusive debt collection practices, while continuing to allow those debt collectors who comply with the rules to rely on the "safe harbor" language of the statutory scheme. Such an interpretation of the statutory scheme is also a proper application of the least sophisticated consumer standard dictated by U.S. v. Nat'l Fin. Servs., Inc., where an unsophisticated consumer, or one with minimal English literacy skills, might only be able to invoke their rights via oral communication. U.S. v. Nat'l Fin. Servs., Inc., 98 F.3d at 139. Moreover, the fact that the protections that may be afforded through oral communication are fewer than those accessed with a written dispute does not signify that an oral dispute notice is invalid."

Turner v. Shenandoah Legal Group, P.C.
Slip Copy, 2006 WL 1685698
E.D.Va.,2006.
Jun 12, 2006