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Financial Services Law Insights and Observations

District Court: Collection can resume after debt is verified

Courts Debt Collection Consumer Finance FDCPA Validation Notice


On March 24, the U.S. District Court for the Southern District of Illinois granted defendants’ motion for summary judgment in an action concerning whether the defendants failed to adequately validate plaintiff’s debt. Plaintiff incurred a debt that was charged off and sold to one of the defendants for collection. The defendant creditor used the second defendant to manage collection of the account. An independent third party hired by the defendant creditor to collect on the debt sent an email containing a FDCPA-required validation notice to the plaintiff, who responded by sending a written validation request to the third party. In response, the second defendant sent two letters to the plaintiff, validating the debt and including the name of the original creditor, the current creditor, the last four digits of the account number, and the amount owed. The plaintiff submitted additional validation requests to the second defendant. The account was eventually placed with a different third-party collection agency, which sent a verification letter containing the same information to the plaintiff. The plaintiff sent a validation request to the new collection agency, as well as an additional request to the second defendant, and received responses to these validation requests as well.

The plaintiff sued, premising her FDCPA claims on the argument that the defendants acted deceptively when they attempted to collect on a debt by placing the account with the second collection agency while the debt was being actively disputed. The court disagreed, stating that after the defendants “provided verification of the debt, they were free to resume collection efforts.” The court explained that the plaintiff “cannot forestall collection efforts by disputing the debt into perpetuity,” and added that nothing in the FDCPA prevents the use of more than one collection agency to collect on a debt. The court also said the fact that the initial validation response was sent after the 30-day statutory validation period expired and contained a second validation notice, did not adversely impact the plaintiff nor “create actionable confusion,” particularly because “the second validation notice was sent after Plaintiff exercised her statutory right to dispute the debt.”