Pa. Judge: Consumers Must Know Their Right to Challenge a Debt

A Pennsylvania federal judge Tuesday denied debt collector North Shore Agency Inc.’s motion to dismiss a putative class action lawsuit. The case alleges that North Shore Agency Inc. obscured language advising consumers of their rights to challenge their debts. In his opinion, U.S. District Judge Gene Pratter noted potential holes in the Fair Debt Collection Practices Act.

“Notwithstanding the remedial aims of the FDCPA, debt collectors…appear to treat the statute, still, as possible to overcome by gamesmanship,” Judge Pratter said in the opinion. ”It seems that no debt collector would want to prominently display a notice of validation rights for concern that doing so would reduce the rate at which less sophisticated consumers simply pay to make the inconvenience (or intimidation) go away, even if the debt is not in fact valid.”

Specifically, Judge Pratter raised concerns with North Shore’s inclusion of a note on the front of the letter encouraging consumers to call customer service because it overshadowed the statutorily required “validation notice,” placed on the rear of the letter, that tells recipients to dispute debts in writing. While both sides initially focused on just the letter’s formatting, Judge Pratter said the letter’s actual content was the key issue; he seemed to agree with the plaintiff’s allegation that other statements in the letter overshadowed the official validation language.

The issue of consumer disclosures is not new in the collection industry, and it’s not going away. In fact, when we developed To the Point: Written and Verbal Communication, we culled the pressing questions and the expert answers from our Ask the Attorney webinars into one user-friendly brief and one of the top questions asked was: Which language goes on which side of the paper when sending notices? Specifically: Are there any disclosures (FDCPA or state law) that should only appear on the front page, and not on a backer? Judge Pratter’s ruling helps to answer the question a bit, but there are still legal mysteries to solve. To the Point: Written and Verbal Communication is a good start.