July's Top Ethics Complaint: Failure to Provide a Validation Notice

Published: Monday, August 21, 2006

The top ethics complaint received by ACA's Ethics Department in July concerned debt collectors' failure to provide a validation notice to the consumer. Section 809(a) of the Fair Debt Collection Practices Act (FDCPA) requires a debt collector to provide a consumer with notice of certain rights afforded to the consumer under the FDCPA, commonly referred to as the validation notice.

The Federal Trade Commission (FTC) staff has stated that if the debt collector's first communication with the consumer is oral (e.g., a telephone conversation), the debt collector may make the required disclosure at that time and the debt collector need not send a written notice. If such disclosure is made orally, the collector must be able to document that such disclosure was provided, should the collector ever be asked to prove the disclosure was, in fact, made.

If the notice is not included in the initial communication with the consumer, the notification must be provided in writing within five days after the initial communication with the consumer. The FDCPA requires only that such validation notice be sent by the debt collector. A debt collector need not establish actual receipt by the consumer. Once a debt collector is able to establish proper and timely mailing of the validation notice, the court will presume that it was received shortly thereafter unless the consumer can produce evidence to the contrary. Without any evidence that the notice was returned, the inference would be that the validation notice was not returned, thereby establishing receipt of the notice by the consumer.

If, however, the validation notice is returned to the debt collector as undeliverable, the presumption that the consumer received the notice is defeated. If the agency is not able to obtain a new address from the consumer or by using various skiptracing techniques, the agency will need to cease its collection efforts on that account. The accepted procedure is to close the account and send it back to the creditor, noting the agency was unable to locate the consumer.

This article is provided by ACA International's Legal and Government Affairs Department .