No Need to Dispute Debt to Receive FDCPA Protections

By William Peacock, Esq. on August 29, 2014 | Last updated on March 21, 2019

Dianne Russell owned $501 for an unpaid hospital debt. The hospital sicced Absolute Debt Collection Services on her. They sent a threatening letter. She paid the hospital directly. ADC continued to bug her, even after she told them about her payment to the hospital.

She, predictably, sued under the Fair Debt Collection Practices Act, as well as state law. ADC argued that the FDCPA didn't apply, as she never disputed the debt under § 1692g.

The problem is, § 1692g (debt validation) is an optional tool for debtors, not a prerequisite to protection against abusive debt collection practices.

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She Ain't a Liar

Under ADC's interpretation, Russell would have to dispute the debt's validity before the FDCPA's protections applied.

But, as Judge Henry Floyd noted, "Russell had no reason to challenge the validity of the debt within the first thirty days of receiving the initial collection letter because the debt was indeed valid. Instead, she paid the bill and notified Absolute Collection of her payment."

"It would be inconsistent with the FDCPA's remedial scheme to hold that a plaintiff's ability to state a claim under the FDCPA is extinguished because the plaintiff failed to dispute the validity of the debt when he or she had no reason to seek validation in the first place," Judge Floyd concluded.

Not a Prerequisite for Protection

The panel cited a nearly identical case that was recently decided by the Third Circuit. That court, addressing the same argument made by ADC here, wrote:

"The language of § 1692g indicates that disputing a debt is optional. The statute lists consequences "if the consumer" disputes a debt, 15 U.S.C. § 1692g(b) (emphasis added), and it makes clear that failure to dispute a debt cannot be construed as an admission of liability. Thus, the statute protects a prospective litigant from being penalized in a lawsuit if he or she chooses not to seek validation."

The Fourth Circuit opinion also emphasized the purpose of the statute: preventing abusive debt collection practices, which has little to do with the debt validation procedure.

"Requiring debtors to dispute their debts as a condition to filing suit would produce consequences squarely at odds with the FDCPA's essential purpose of preventing 'abusive, deceptive, and unfair debt collection practices,' Judge Floyd wrote. "Under Absolute Collection's construction of the statute, a debt collector would have free rein to make false or deceptive representations about the status of a debt if the debtor failed to dispute its validity within thirty days of receiving the initial collection letter."

So mark one for debtors everybody. Debtors: 1, Debt Collectors: 1 jillion.

Related Resources:

Russell v. Absolute Collection Services (Fourth Circuit)
Fourth Circuit Reads FDCPA's Plain Text, Joins Circuit Split (FindLaw's Fourth Circuit Blog)
Class Actions, Loan Servicing, Acceleration Dates, Oh My! (FindLaw's Fourth Circuit Blog)