Friday, February 7, 2014

FYI: 4th Cir Holds FDCPA Allows Oral Disputes, Circuit Split Widens on the Issue

The U.S. Court of Appeals for the Fourth Circuit recently vacated the dismissal of a federal Fair Debt Collection Practices Act (“FDCPA”) action, holding that the FDCPA does not require that a consumer must dispute the validity of a debt in writing, thereby allowing oral disputes. 


There is now a widening split in the circuit courts on this issue.  The Third Circuit has held that section 1692g(a)(3) must be read to include a writing requirement. See Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991).  On the other hand, the Second and Ninth Circuits have held that the plain text of section 1692g(a)(3) permits oral disputes. See Hooks v. Forman, Holt, Eliades & Ravin, LLC, 717 F.3d 282 (2d Cir. 2013); Camacho v. Bridgeport Fin. Inc., 430 F.3d 1078 (9th Cir. 2005).  Thus, the Fourth Circuit joins the Second and Ninth Circuits on this issue.


A copy of the opinion is available at:


Two plaintiffs sued the defendant debt collector under the FDCPA, alleging that that the debt collector’s “debt validation” or “1692g” notice violated the FDCPA by stating that the consumer must dispute the validity of the debt in writing.


Specifically, the collection notice stated that “ALL PORTIONS OF THIS CLAIM SHALL BE ASSUMED VALID UNLESS DISPUTED IN WRITING . . .”


The plaintiffs asserted that the imposition of a writing requirement amounted to the use of a “false representation or deceptive means to collect or attempt to collect any debt,” in violation of section 1692e(10) of the FDCPA.


The debt collector moved to dismiss, contending that section 1692g(a)(3) contains an inherent requirement that a consumer must dispute the debt in writing.  The district court granted the motion to dismiss on that basis.  This appeal followed.


The Fourth Circuit disagreed with the lower court’s ruling, and instead held that section 1692g(a)(3) does not contain a requirement that a consumer dispute the debt in writing, and in fact allows for oral disputes. 


As you may recall, section 1692g(a)(3) of the FDCPA provides in pertinent part that a “debt validation” or “1692g” notice must contain “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.”  15 U.S.C. 1692g(a)(3)


In holding that section 1692g(a)(3) allowed oral disputes, the Fourth Circuit compared the language of section 1692g(a)(3) to section 1692g(b), which expressly requires a consumer to notify the debt collector “in writing” that a debt is disputed in order to be entitled to receive verification by the debt collector. 


The Court was not persuaded by the debt collector’s argument that allowing oral disputes under section 1692g(a)(3) would confuse consumers into believing that an oral dispute triggers the further protections of other subsections of 15 U.S.C. 1692g, when in fact those protections are waived if not invoked in writing inconsistent with the other debt dispute mechanisms found in section 1692g(b). 


According to the Fourth Circuit, the plain language of section 1692g(a)(3) does not require the consumer to dispute the debt in writing.  The Court also determined that oral disputes would not lead to absurd results, and rejected the imposition of a writing requirement for disputes under section 1692g(a)(3). 


Thus, the Fourth Circuit vacated the judgment of the district court that dismissed the plaintiff's complaint and remanded for further proceedings consistent with its opinion.





Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
(312) 551-9320
(312) 284-4751
(312) 493-0874


Admitted to practice law in Illinois



          McGinnis Wutscher Beiramee LLP





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