The United States District Court for the Southern District of California recently dismissed all of a plaintiff's claims in the putative class action Matthew Stuppiello v. Southwest Credit Systems, L.P. The Court held that a validation notice does not violate the Fair Debt Collection Practices Act by including a request for payment "and explain[ing] that payment of the debt will allow the consumer to avoid further collection activity." The Court also ruled that a creditor is sufficiently identified in a validation notice under the FDCPA by its commonly-used acronym.
The Court granted summary judgment for the debt collector, Southwest Credit Systems, L.P., because the validation notice provided the statutory required disclosures, was not overshadowed or contradicted by the request for payment, and complied with the FDCPA by identifying the creditor, AT&T, by its commonly-used acronym. Stuppiello also could not maintain a separate cause of action under the California Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act") because his claims were premised on the same conduct as his FDCPA claims. The Court explained that "[a] claim for violation of [the] Rosenthal Act . . . requires showing that a defendant violated any of several provisions of the FDCPA."
Section 1692g(a) of the FDCPA lists specific disclosures – typically referred to as the validation notice – that a debt collector must make to the consumer in writing. "The purpose of [this section's] notice requirement is specifically to ensure that debt collectors give consumers adequate information concerning their legal rights." Furthermore, section 1692g prohibits collection activities and communications during the 30-day period the consumer has to respond to the notice that overshadow or contradict "the disclosure of the consumer's right to dispute the debt or request the name and address of the original creditor."
Stuppiello argued that the validation notice provided by Southwest was overshadowed and contradicted by the statement:
We are willing to work with you, but you must contact our office promptly. Avoid further collection activity by enclosing your payment with the tear-off coupon below, or by contacting us . . . to make payment arrangements on your account.
However, the Court explained that this statement does not overshadow or contradict the consumer's rights to dispute the debt or request information about the creditor because "[t]he notice does not state that this is the 'only' or 'exclusive' way to avoid further collection activity . . . [i]t simply provides the consumer with an avenue for avoiding further collection activities." The Court also held that language requesting payment that is "in the same font as the surrounding text; [is] not emphasized in any other way; [is] in the nature of a request rather than a demand; and carrie[s] no sense of urgency" does not violate the FDCPA. Specifically, the Court distinguished the word "promptly", used in Southwest's validation notice, from the words "immediately" or "now" by stating that Southwest's validation notice did not carry a sense of urgency.
Stuppiello also claimed that Southwest should have included "transitional language" to explain "that if he disputes the debt and requests a verification of the debt in writing, [Southwest] must cease any collection activities." Even though section 1692g(b) states this rule, the Court explained that this rule is not one of section 1692g(a)'s enumerated disclosures. Therefore, a debt collector is not required to include such "transitional language" in the validation notice.
Lastly, Stuppiello alleged that Southwest violated section 1692g(a) and 1692e by using an acronym to identify the creditor in the validation notice. Stuppiello argued that the use of an acronym to identify a creditor is misleading because section 1692g(a) requires the "full and complete" name of the creditor. One of section 1692g(a)'s enumerated disclosures is the requirement to name the creditor to whom the debt is owed. The Court rejected Stuppiello's interpretation of this section and instead agreed with courts that have held "it is sufficient to avoid confusion if the debt collector uses the full business name of the creditor, the name under which it usually transacts business, or a commonly-used acronym."
Further discussion regarding validation notices can be found here.
The Troutman Sanders' Consumer Financial Services Law Monitor blog offers timely updates regarding the financial services industry to inform you of recent changes in the law, upcoming regulatory deadlines and significant judicial opinions that may impact your business. To view the blog, click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.