Validation - The Last Word?

Validation â?? The Last Word:

Okay, here goes my attempt to be helpful and to once and for all define what Validation is, what is required (i.e. what is Full or Proper Validation) and what does a CA have to supply and not supply.

Iâ??ll use Section 809 of the FDCPA, parts of the â??Wollmanâ? opinion letter from the FTC, and parts of the â??Spears vs. Brennanâ? case.

According to Section 809(a) of the FDCPA, only 5 items are required for Validation:

1 â?? Amount of the Debt.

2- Name of the Creditor

3 â?? A statement that unless the consumer, within 30 days after RECEIPT of the notice, disputes validity of the debt, or any portion, then the debt collector (i.e. the CA) can ASSUME the debt is valid.

4 â?? A statement that if consumer notifies the debt collector in writing within the 30 day period that he disputes the debt, the debt collector will obtain VERIFICATION of the debt FROM the OC, and the Debt Collector will send the info to the consumer.

5 â?? If consumer sends a written request to the debt collector, debt collector must provide the name and address of the OC.

My analysis:

Most of this information is usually provided in the first Collection Notice or â??Dunning Letter,â? so must of the Validation has already been done.

A consumer can write to the CA (from now on Iâ??m using CA to mean any debt collector) within the initial 30 days of receiving that first notice, and DISPUTE the debt, and this means the CA has to VERIFIY the debt.

This is where we can get the CA to trip up. This is where the consumer can request the CA to provide an original, signed contract, to include fees, charges, interest, record of payments, etc â?¦ and a written contract or agreement showing that the CA has authority to collect this debt on behalf of the OC, etc â?¦

So, it not with ask for Validation that consumers can request all this work, information, and documentation from the CA, but with the "embedded" Dispute and Verification process built in with item 4 of 809(a).

To support this, we look to the Spears vs. Brennan case:

Spears Link http://www.state.in.us/judiciary/opinions/archive/03260101.ewn.html

Spearsâ?? counsel Shepard sent Brennan a letter declaring that Spears disputes your debt collection-related allegations, denies the same, and demands strict proof and verification thereof. Record at 21. As such, Brennan should have ceased his debt collection efforts immediately upon receiving that letter. Instead, Brennan proceeded to obtain a default judgment against Spears on the debt collection claim before he had mailed Spears the necessary verification and, thus, violated 15 U.S.C. § 1692g(b).
Brennan maintains, however, that there was no violation of the FDCPA because he sent adequate verification of the debt [to Spears] in the October 30, 1996 notice of claim. Brief of Appellee at 13. Specifically, Brennan claims that a copy of the consumer credit contract between Spears and American General attached to the notice of claim provided sufficient verification of the debt within the meaning of 15 U.S.C. § 1692g(b). We cannot agree.
The contract in no way provides sufficient verification of the debt. A review of the document reveals that it identifies only the terms of Spearsâ?? loan, including a 17.99% annual interest rate and the original loan amount of $2,561.59. The loan agreement contains no accounting of any payments made by Spears, the dates on which those payments were made, the interest which had accrued, or any late fees which had been assessed once Spears stopped making the required payments.

Notice the parts I underlined. Spears (the consumer) DISPUTED the debt and requested full VERIFICATION of the debt. Brennan (The CA or debt collector) said he did provide full verification by producing the contract.

Nope, Spearâ??s lawyer argued that the contract did not include fees, interest, charges, records of payments, etc â?¦ so was not a Full Verification. The Judge/Court agreed.

So, itâ??s not the act of Validating, itâ??s the actual Disputing and requesting Verification that is built into 809(a), item 4, that consumers can request all this information (basically ask for the moon!) and get away with it.

Below is Section 809 of the FDCPA. Notice the underlined portions that pertain to what Iâ??ve been saying.

Link to FDCPA http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#809

§ 809. Validation of debts [15 USC 1692g]

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing --

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) 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;

(4) 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; and

(5) 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.

(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

(c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

The â??Wollmanâ? opinion letter goes on to further clarify that the CA must obtain the Verification of the debt from the OC, and the CA must be the party to supply the Verification information to the consumer.

It also further states that Verification is not merely providing an â??itemization of what the debt collector already has,â? see underlined portion.

Link to Wollman letter http://www.ftc.gov/os/statutes/fdcpa/letters/wollman.htm

Because one of the principal purposes of this Section is to help consumers who have been misidentified by the debt collector or who dispute the amount of the debt, it is important that the verification of the identity of the consumer and the amount of the debt be obtained directly from the creditor. Mere itemization of what the debt collector already has does not accomplish this purpose. As stated above, the statute requires the debt collector, not the creditor, to mail the verification to the consumer.

The only issue left is when the consumer claims he never got an initial notice, or when a consumer wants to Dispute and request Verification beyond the initial 30 day time frame.

By the way, itâ??s this Dispute and Verification action that I believe is whatâ??s commonly being referred to as Validation, or â??requesting Validation from the CA,â? or abbreviated as DV or D/V in postings.

Most people say/agree that a consumer still has the right to â??request validationâ? after the initial 30 days, and since 809(a), item 3 is â??Silentâ? on this, meaning, all it says will happen if consumer does NOT make a written dispute within 30 days is just that the CA can ASSUME the debt is valid â?? since it doesnâ??t go on to say, â??â?¦and the consumer will lose his right to dispute or request verification/validationâ?¦etcâ?

.. that since it doesnâ??t specify any penalty, loss of right, or anything, that by this â??SILENCEâ? it is really saying that the consumer can STILL request dispute and verification.

This is further supported by 809(c) which states that just because the consumer does not make written dispute, it DOES NOT mean he is implying the debt is valid or that he agrees to it.

FedUp2003

 

..Continued

So, the issue then is this, who has burden of proof whether or not a consumer received a first notice, or on what date?

Three scenarios:

1 â?? Consumer did receive first notice, but lies and says he didnâ??t and so claims Iâ??m just finding out about this and so Iâ??m allowed my 30 days.

2 â?? CA sent first notice, but it got lost in the mail or had wrong address. Still, consumer can send in dispute and say I just now learned of this and am within my 30 days.

3 â?? CA never sent the first notice, in which consumer is entitled to make his written dispute.

In my opinion, I believe that the CA should have to prove that they DID send that first notice and on what dateâ?¦

â?¦NOT that the consumer has to prove that he didnâ??t receive it.

But how is this done, does it have to go to court?

Example, I didnâ??t receive my notice, then about 4 months after the CA reports this to the CRAâ??s, I pull my credit report and notice the collection accounts. So I send a written dispute/request for verification to the CA.

But the CA refuses, says you are beyond your 30 days, you say I never was notified, now itâ??s your word against the CAâ??s.

How can one force the CA to carry out the dispute investigation and verification? Do you ultimately have to file suit? Or do you just not care, and send a Second Dispute letter, then an ITS, and if you do have to go to court just hope that the Judge agrees with you and concludes that the burden of proof was with the CA to prove they did indeed send a first notice and on what date?

Well, thatâ??s about it. Iâ??m open for comments, debate, discussion, etc â?¦

FedUp2003

 

Those last 2 postings has taken out all of my steam for tonight, but soon I will post more on what I think are the reasons to use this "Validation" strategy, when it will most likely work, in what situations, and the "method to the madness" so to speak.

It will be at this point that I really want some good feedback from others who have used these various Validation strategies, under what circumstances, and what the outcome was.

Hopefully this Thread can become the thread to end all others on Validation, and get ranked at the top of the Board, or at least incorporated into one of the FAQ's or Primers.

FedUp2003

 

Exactly!

This is what I was getting to when I said that through the Dispute and Verification afforded is in 809(a), item 4, that we can request ALL this kind of info/documentation, and itâ??s supported by case law, the Spears vs. Brennan case, in which Spearsâ?? lawyer claimed a contract alone was not proof enough, he needed fees, charges, records of payments, etc â?¦.and the Judge agreed.

Yes, the Thread that Butch created on Validation is one of the all-time greats, this is where I learned most about the subject and is where I pulled a lot of my information and inspiration from.

Itâ??s just that, the thread deviated a little, and then Bill Bauer and HelpWanted went into lengthy diatribes (although they also provided a lot of info for thought and debate), itâ??s just that the thread was SO long and really bounced back and forth a lot ..

With this thread, Iâ??m hoping to condense it all, and also Butchâ??s thread never really specified what was considered Proper or Full Validation and how do we demand it â?? the information was there, you just had to be able to distill it down and find it.

With this thread, I hope to make it more in laymenâ??s terms, and also to continue on soon with strategies for itâ??s use, different situations to use it in, and have postings from our friends of their success stories and/or experience in using this.

Thank-you keepmine,

This is good info to know, I was wrong then in assuming the Court would make the CA prove they sent the first notice vs. the consumer having to prove they didnâ??t receive it.

Excellent!

Good clarification pd11604. The dispute letter within first 30 days â??freezesâ? the CA from any collection activities, to include reporting to the CRAâ??s.

There is some debate as to whether the CA can report to the CRA's during the initial 30 days of the first notice, and some case law or FTC opinion letter was quoted, and I believe the consensus is that they can, but usually don't because if and when they receive a written dispute from the consumer they MUST remove it from the CRA's, so most CA's will wait for that first 30 days before reporting it.

Even though it seems the CA must also remove it from the CRA's even if a consumer sends a written dispute after the first 30 days, most CA's will go ahead and report it after the first 30 days because they are able to ASSUME the debt is valid and they figure that if the consumer hasn't said anything by now, they likely won't and therefore they usually don't have to turn right around and remove this report from the CRA's.

If dispute letter sent after the first 30 days, the CA must simply â??stopâ? or â??suspendâ? their collection activities until they Verify.

And finally:

quote:

Originally posted by MaxedOut
And collection activities include reporting to the CRA, right?

It seems to be the general consensus that whether the written dispute to the CA is within or beyond the initial 30 days of first notice, that when a CA has to stop all collection activities while â??verifyingâ? DOES indeed include reporting to the CRAâ??s. I guess if and when the CA verifies, they then can mail the info to the consumer and at that time resume collection activities, to include reporting to the CRAâ??s.

Does this about cover everything?

FedUp2003

 

Re: Re: Validation - The Last Word?

Okay, good stuff.

But, this at least comes real close to defining what is Proper or Full Validation. When I started reading through Creditnet a couple of weeks ago, including re-reading Butch's great thread about 5 or 6 times, I noticed that a very common repeated posting or question was "what is full validation" and a concept that I was light years away from comprehending.

I think at least now, we are close and have a pretty good idea of the things we can request, and with Spears vs. Brennan, we have kinda of a guideline.

But, LKH and lbrown59 confuse me...

Earlier in this thread pd11604 answered MaxedOut by saying, and I'm paraphrasing here, "that there is a general consensus that reporting to a CRA is considered 'collection activity'" which led me to believe that during the times that a CA has to stop collection activity, that it included reporting to a CRA, which to us means that the Derog won't show in the Credit Reports while they are Validating.

Then LKH posts that there is nothing saying the CA has to remove the listing, just list it as In Dispute.

Then lbrown59 Quotes the question that MaxedOut posted, which is "Does stopping collection activities mean to stop reporting to the CRA's as well..." and lbrown59 just says "YEP."

So, what is lbrown59 saying, that he agrees with pd11604 or with LKH? Maybe lbrown59 was relying to MaxedOut's earlier post, but LKH's got stuck in between.

What is the correct answer to this:

If a CA has already listed a collection account to the CRA's on you, do they have to remove that listing while they are under Dispute and Vallidation?

Any one?

FedUp2003

 

Aha!

Great info LKH, that clears it up.

If not yet reported, they can't report it once they receive your Dispute and Validation letter, but then can report it if and when they finish the Validation and mail it off to the consumer.

If already reported, the CA must mark it as "In Dispute" with the CRA's.

And the thing most are hoping to trip them up with, is sending a Validation letter to the CA, then Dispute with the CRA, and technically if the CA hasn't properly finished the Validation then they aren't allowed to Verify to the CRA.

If they do, you got them for an FDCPA violation.

And if they don't Verify to the CRA, like they aren't supposed to if they haven't finished their Validation, then you still might catch them in an FDCPA violation if they didn't mark the file as "In Dispute" with the CRA.

And if the CA doesn't Verify to the CRA because it can't complete the Validation within 30 days of the CRA contacting them, then the CRA has to delete the Tradeline.

Gotcha! Now I'm starting to see the beauty of this process now and how it might just work.


FedUp2003