The U.S. Court of Appeals for the Ninth Circuit, in a case of first impression and the first published circuit court opinion to address the issue, recently held that each and every debt collector -- not just the first one to communicate with a debtor -- must send the debt validation notice required by the federal Fair Debt Collection Practices Act ("FDCPA").
A copy of the opinion is available at: Link to Opinion
A consumer financed the purchase of her automobile, but stopped making payments on the loan. A debt collection company sent her a letter trying to collect the debt, to which the debtor did not respond. The debt collector hired a law firm to collect the debt, which sent the debtor another collection letter.
The debtor filed a putative class action alleging that the law firm violated 15 U.S.C. § 1692g(a) of the FDCPA by not informing the debtor that if she disputed the debt, she had to do so in writing.
As you may recall, section § 1692g(a) requires a "debt collector" to notify a debtor either in the "initial communication" with a consumer incident to collecting a debt or within 5 days thereafter, of the amount of the debt, the name of the creditor, that the consumer can dispute the debt in writing within 30 days after receiving the initial notice, that if the consumer does so, the debt collector will obtain verification of the debt and mail a copy to the debtor, and that if the debtor requests it in writing within the 30-day period, the debtor collector will provide the name and address of the original creditor, if the debt has been sold.
The parties filed cross-motions for summary judgment. The law firm argued that it was not required to comply with § 1692g(a) because its letter was not the "initial communication" with the debtor. The district court agreed and granted summary judgment in its favor. The debtor appealed.
On appeal, the debtor argued that § 1692g(a) requires that each and every debt collector that communicates with a consumer send the "validation notice." The Consumer Financial Protection Bureau ("CFPB"), the agency charged with rulemaking authority under the FDCPA, and the Federal Trade Commission ("FTC"), which has concurrent authority to enforce the FDCPA, filed an amicus curiae brief agreeing with the debtor's interpretation.
The Ninth Circuit began its analysis with the statutory text, explaining that under well-recognized rules of interpretation, "[i]f the operative text is ambiguous when read alongside related statutory provisions, we 'must turn to the broader structure of the Act,' … and to its 'object and policy to ascertain the intent of Congress."
If the plain language of the statute, its structure and purpose clearly reveals Congress' intent, the court's inquiry stops there. However, "if the plain meaning of the statutory text remains unclear after consulting internal indicia of congressional intent, [the court] may then turn to extrinsic indicators, such as legislative history, to help resolve the ambiguity."
The Court found that the text of § 1692g(a) is ambiguous because "Congress did not define the term 'initial communication' or the word 'initial.'" It noted, however, that "Congress did define 'communication' to mean 'the conveying of information regarding a debt directly or indirectly to any person through any medium… [and] [t]his definition … is broad enough to sweep into its ambit both" the initial letter from the debt collector and the second one from the law firm.
After parsing the statutory language and still finding the text ambiguous, the Ninth Circuit turned "to the broader structure of the FDCPA to determine which initial communication triggers the validation notice requirement — the first ever sent or the first sent by any debt collector, whether first or subsequent."
The Court concluded that interpreting the text of § 1692g(a) "in the context of the FDCPA as a whole makes clear that the validation notice requirement applies to each debt collector that tries to collect a given debt", reasoning that its "interpretation is the only one that is consistent with the rest of the statutory text and that avoids creating substantial loopholes around both § 1692g(a)'s validation notice requirement and § 1692g(b)'s debt verification — loopholes that otherwise would undermine the very protections the statute provides."
Having found that Congress intended that "each debt collector send a validation notice with initial communication is clear from the statutory text," the Ninth Circuit reasoned that it was not necessary to consult "external sources to interpret § 1692g(a)," but even if any ambiguity remained, "the external indicia of Congress's intent eliminate it."
In particular, the Ninth Circuit stressed that the "Senate Report's description of the validation notice suggests that Congress intended it to apply to each debt collector's first communication." The Court also highlighted the FDCPA remedial nature and that "the legislative history also shows that Congress's sole goal in enacting § 1692g(a) was consumer protection. … Nothing in this legislative history suggests that Congress thought consumers needed less protection from successive debt collectors or less information as their debts passed from hand to hand."
After applying "the tools of statutory construction", the Ninth Circuit held "that the FDCPA unambiguously requires any debt collector — first or subsequent — to send a § 1692g(a) validation notice within five days of its first communication with a consumer in connection with the collection of any debt."
Accordingly, the Ninth Circuit held that the trial court committed error by determining that because the law firm was not the first debt collector to communicate with the debtor, it did not have to send the validation notice, and the case was reversed and remanded.
Ralph T. Wutscher
Maurice Wutscher LLP
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