March 17, 2009

Purnell v. Arrow Financial Services

Filed under: Credit Reports,FDCPA

Unlike the notice requirements of § 1692g(a), however, there are no time limits for a debt collector to validate the debt under § 1692g(b). In fact, § 1692g(b) does not require the debt collector to validate the debt at all, as long as it ceases any collection activity.  Smith v. Transworld Sys., Inc., 953 F.2d 1025, 1031 (6th Cir. 1992). That is, the debt collector has a choice: it either may choose not to verify the debt and abandon its collection efforts, or it may decide to verify the debt and resume collection activities once the requested validation has been provided. Jang v. A.M. Miller & Assocs., 122 F.3d 480, 483 (7th Cir. 1997). We find that the language of § 1692g(b) dictates that each “failure to cease” collection activity without having validated the debt—like each “communication” of false credit information under § 1692e(8)—presents a discrete claim for violation of the FDCPA such that only those collection activities taken outside the limitations period would be time-barred.

Defendant argues that even if not time-barred, plaintiff’s § 1692g(b) claims were “futile” because it would be irreconcilable for a court to find a debt collector violated § 1692g(b) for reporting a disputed debt, when § 1692e(8) authorizes a debt collector to report an account as disputed. This misstates the § 1692g(b) claims, which allege that defendant reported the debt without first providing the requested validation. Once validation is sent to the consumer, § 1692g(b) is no longer an impediment to collection activities. The FTC’s Opinion Letter touches on the intersection of these provisions, suggesting that although reporting a disputed debt without first validating the debt violates § 1692g(b), “if a dispute is received after a debt has been reported to a consumer reporting agency, the debt collector is obligated by Section 1692e(8) to inform the consumer reporting agency of the dispute.”  We are not persuaded that the obligation to inform the credit agency that a reported debt is disputed relieves a debt collector from any potential liability for violations of § 1692g(b). This is particularly true since it will always be the case that a § 1692g(b) claim involves a disputed debt. 

Purnell v. Arrow Fin. Servs., LLC., 2008 WL 523587 (6th Cir. Dec. 16, 2008) (unpublished)

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