Tuesday, March 30, 2010

Verification of Debts Under Section 1692g(b) of the FDCPA

Consumers and their counsel often argue that a debt collector has not properly “verified” a debt under section 1692g(b) of the FDCPA unless the collector has provided the consumer with detailed evidence of the debt, like a signed contract, charge slips, monthly account statements or other documentary evidence showing the details of the debt. But this is not what the law requires. The standard for debt validation is actually very minimal. A collector can discharge its duty to verify a debt simply by sending the debtor a written notice confirming that the amount the collector is demanding is what the creditor claims is owed. Nothing further is required.

The FDCPA provides that when a collector receives a written request for verification of the debt within thirty days of the date the consumer receives the section 1692g notice, the collector must stop further collection efforts until verification of the debt is mailed to the consumer. Section 1692g(b) of the FDCPA provides in relevant part as follows: “[T]he debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, . . . and a copy of such verification or judgment, . . . is mailed to the consumer by the debt collector.” See 15 U.S.C. § 1692g(b).

The statute does not define the term “verification of the debt” and this can leave collectors wondering about exactly what is required of them. The circuit courts that have addressed this issue have held that a collector can satisfy its duty to verify the debt under section 1692g(b) of the FDCPA by providing the debtor written confirmation of the amount that the creditor claims is owed. See Clark v. Capital Credit & Collection Services, Inc., 460 F. 3d 1162, 1173-1174 (9th Cir. 2006); Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999).

As the Chaudhry court observed, Congress did not implement the verification requirements of section 1692g(b) as a mechanism to allow consumers to demand that collectors provide them detailed evidence of the debt. The goal of section 1692g(b) was much more modest:

Consistent with the legislative history, verification is only intended to eliminate the ... problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid. (Citation). There is no concomitant obligation to forward copies of bills or other detailed evidence of the debt.

See Chaudhry, 174 F. 3d at 406. In Clark, the Ninth Circuit followed Chaudhry, and rejected the consumer’s argument that in order to verify a debt, a collector must provide copies of bills or other detailed evidence. The Clark court stated:

[V]erification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed.

See Clark, 460 F.3d at 1173-74 (citations omitted).

Collectors may find that providing consumers with further documentation of the debt, beyond the minimum verification requirements, will assist them in their collection efforts. But their failure to do so will not run afoul of section 1692g(b) of the FDCPA.