Sending Second Validation Notice Within 30-Day Validation Window May Confuse Consumers, According to Eastern District of Wisconsin

The Eastern District of Wisconsin recently reviewed whether a second validation notice sent within the 30-day validation window of the previous notice has the potential to confuse consumers. In Maloney et al. v. Alliance Collection Agencies, Inc., No. 17-CV-1610 (E.D. Wis. Nov. 6, 2018), the court said yes.

Factual and Procedural Background

The plaintiffs in these case both received two validation letters from Alliance Collection Agencies, Inc. (defendant). The first letter identified the debts owed by the plaintiffs and followed the statutory language to inform the plaintiffs of their validation rights. For each plaintiff, defendant sent a second validation notice within thirty days of sending the first. The second notice included the validation rights language and information about the debts listed in the first notice, but the second notice also listed additional debts owed by the respective plaintiff.

Plaintiffs filed a class action lawsuit against defendant alleging, among other things, that the two notices violated the Fair Debt Collection Practices Act (FDCPA) for being confusing and for misleading consumers about their 1692g validation rights. Both sides filed motions for judgment on the pleading. The below discusses the court’s decision on defendant’s motion.

The Decision

In reviewing a motion for judgment on the pleading, the court is charged with deciding if a judgment is appropriate for the moving party solely based on the information contained in the pleading documents filed with the court.

After reviewing defendant’s motion, the court concluded that it could not grant the motion because it found that a least sophisticated consumer could reasonably be confused by the two notices. Specifically, the court stated that the consumer may be confused about whether the statement of validation rights in the second notice applied only to the new debts listed in the second letter or to all of the debts listed. The court also found that consumers could be mislead into thinking that the validation window for the repeated debts restarted with the second notice when in reality the consumers’ statutory rights began to run with the first notice for those debts.

The court was not persuaded by defendant’s arguments that the letters were not misleading becuase it would have honored the new 30-day validation period. The court stated, “[e]ven if Alliance would voluntarily honor the new 30-day validation period, that would not be apparent to a consumer upon receipt of the letter. In other words, even if the notice were factually true, it could still confuse the consumer.”

Defendants cited case law stating that sending a second validation notice within the 30-day validation window does not violate the FDCPA. However, since this case law was not from the Seventh Circuit, the court declined to follow it.

Based on the above, the court denied defendant’s motion for judgment on the pleadings.

insideARM Perspective

The broader issue exemplified here is that debt collectors that are trying to follow the FDCPA need to alter their practices depending on the jurisdiction they are collecting in. As stated in this decision, some courts may have found that there is nothing wrong with sending a second validation letter, but the Eastern District of Wisconsin is not one of them.

Debt collectors are no strangers to adapting to jurisdiction-specific laws. However, the fact that different federal jurisdictions come to different conclusions on the same law shows just how unclear and subject to interpretation the FDCPA really is. If courts cannot reasonably agree on the same interpretations, then how are debt collectors expected to figure it out? The benefit of the forthcoming third party debt collection rules by the BCFP, due out in March 2019, is that both the industry and the courts will get guidance and more consistent FDCPA court decisions will hopefully come down the pipes.