Fourth Circuit Says FDCPA Allows Verbal Disputes in Letter Class Action

A panel of judges in the Fourth Circuit of Appeals Friday revived a class action case against a debt collector over language used in the firm’s collection letters. At issue was the demand that any disputes be made in writing, which the plaintiffs claim was a violation of the FDCPA.

The case, Clark et al. v. Absolute Collection Service, had been dismissed by a district judge in North Carolina early last year. But on appeal, the Fourth Circuit panel found that there was cause to revive the case and send it back for further action.

The two defendants in the case, a married couple, defaulted on two separate healthcare debts from the same medical office in 2011. Absolute Collection Service (ACS), contracted to collect the debts, sent two initial letters to the couple with the following validation notice:

ALL PORTIONS OF THIS CLAIM SHALL BE ASSUMED VALID UNLESS DISPUTED IN WRITING WITHIN THIRTY (30) DAYS; IN WHICH CASE, VERIFICATION OF THE DEBT OR A COPY OF THE JUDGMENT WILL BE PROVIDED TO YOU. IF THE ORIGINAL CREDITOR IS DIFFERENT FROM THE ABOVE NAMED CREDITOR, THE NAME OF THE ORIGINAL CREDITOR WILL BE PROVIDED UPON REQUEST.

The Clarks sued the company for FDCPA violations asserting that ACS violated their right to challenge their debt orally under section 1692g(a)(3) of the FDCPA because the collection notice stated that the debt would be “assumed valid unless disputed in writing.” ACS moved to dismiss arguing that section 1692g(a)(3) contains an inherent writing requirement.

The district court agreed, dismissing the complaint stating that permitting an oral dispute of the validity of a debt under section 1692g(a)(3) would leave consumers “with fewer protections and in a potentially far more confusing station than if a writing is required.”

But the Fourth Circuit panel Friday disagreed and noted that two other circuit courts of appeal – the Second Circuit (in Hooks) and the Ninth Circuit (in Camacho) — had made rulings the other way while only one — the Third Circuit in 1991’s Graziano — agreed with the dismissal reasoning.

In line with the Second and Ninth Circuits, the Fourth Circuit found that the FDCPA clearly defines communications between a debt collector and consumers. Sections 1692g(a)(4), 1692g(a)(5), and 1692g(b) explicitly require written communication, whereas section 1692g(a)(3) plainly does not. With that, the panel vacated the district court’s judgment and remanded the case for further action.