Skip to main content
Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • District Court rules model validation is not required under FDCPA

    Courts

    On October 13, the U.S. District Court for the Central District of Illinois granted a debt collector’s motion to remand a case back to state court in an FDCPA suit. According to the order, the plaintiff collected unpaid debts for a hospital (defendant) for approximately 15 years. The terms of the formalized agreement established a one-year term that was set to renew automatically so long as the parties agreed to its terms. The agreement required the plaintiff to comply with various laws and regulations, including the FDCPA, and regulations by the CFPB. In November 2021, Regulation F, promulgated by the CFPB, took effect, which clarified a provision of the FDCPA by requiring debt collectors to convey in their initial communications with debtors the debtors’ right to dispute the debt. The order further noted that after the Bureau “provided notice of its intent to enact Regulation F and the public comment period ended, [the plaintiff] ‘began working with its third-party software provider and third-party letter printer to modify [the plaintiff’s] initial contact letter to reflect the safe harbor model in Regulation F.’” However, the defendant was not able to ensure the changes were made before the regulation took effect. The defendant sent the plaintiff a letter declaring that it was in breach of the agreement since it failed to use the safe-harbor model language. The defendant asserted that the plaintiff’s “failure to use the safe-harbor model amounted to a violation of Regulation F and the FDCPA.” The letter requested that the plaintiff terminate all collection activity on the defendant’s accounts. The plaintiff filed suit, seeking a declaratory judgment that the letter it was using complied with the FDCPA. The defendant removed the case to federal court, and the plaintiff filed a motion to remand. The court found that using model notice language is not required under the FDCPA or Regulation F. The court noted that “[a] debt collector may comply by using a different form so long as the required information is provided in a clear and conspicuous manner.” The court further noted that the alleged federal issue in the claim “is not substantial enough” to warrant keeping the case in federal court and granted the plaintiff’s motion to remand the case back to state court.

    Courts FDCPA Debt Collection Model Valuation Regulation F CFPB

Upcoming Events