FTC Opinion Letter Regarding Verification

The FTC's opinion:

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

Division of Credit Practices
Bureau of Consumer Protection


Jeffrey S. Wollman
Vice President and Controller
Retrieval Masters Creditors Bureau, Inc.
1261 Broadway
New York, New York 10001

Dear Mr. Wollman:

This is in response to your letter of February 9, 1993 to David Medine regarding the type of verification required by Section 809(b) of the Fair Debt Collection Practices Act. You ask whether a collection agency for a medical provider will fulfill the requirements of that Section if it produces "an itemized statement of services rendered to a patient on its own computer from information provided by the medical institution . . .” in response to a request for verification of the debt. You also ask who is responsible for mailing the verification to the consumer.

The statute requires that the debt collector obtain verification of the debt and mail it to the consumer (emphasis mine). Because one of the principal purposes of this Section is to help consumers who have been misidentified by the debt collector or who dispute the amount of the debt, it is important that the verification of the identity of the consumer and the amount of the debt be obtained directly from the creditor. Mere itemization of what the debt collector already has does not accomplish this purpose. As stated above, the statute requires the debt collector, not the creditor, to mail the verification to the consumer.

Your interest in writing is appreciated. Please be aware that since this is only the opinion of Commission staff, the Commission itself is not bound by it.

Sincerely,

John F. LeFevre
Attorney
Division of Credit Practices


________________________________________________

a printout is NOT sufficient evidence of a debt and the burden of proof is on the collector, we're getting somewhere.

why doesnt or hasnt someone written to the FTC asking for the proper definition of "verification" as written in the FDCPA?

just read the Bush administration put a halt on the FTC issuing opinion letters. GREAT!

Originally Posted by droog79

a printout is NOT sufficient evidence of a debt and the burden of proof is on the collector, we're getting somewhere.

why doesnt or hasnt someone written to the FTC asking for the proper definition of "verification" as written in the FDCPA?

Droog I've been meaning to do this but there just isn't enough hours in a day! (LOL) In any event, that Johnson v. MBNA case that I posted on this board should be very helpful because MBNA got slapped with a $90,000 judgment because, among other things, it didn't notify the CRAs when MBNA discovered that it didn't have the original loan document (i.e. loan application) in it's possession . . . . . . . The court said MBNA should have told the CRAs that it couldn't sufficiently prove that the alleged debtor was obligated to pay back the credit card or, alternatively, MBNA could not sufficient verify the debt. At that point, the court cited the relevant provision of the FCRA and said that the CRAs should have promptly deleted this account from her credit files.

I recognize that Johnson doesn't explain how to verify a debt under the FDCPA but the same rule applies to debt collectors (or any 3rd party collecting a debt on behalf of a creditor) because, when we demand verification from the debt collector, it must return the file back to the creditor and the creditor must verify the debt . . . . . . .

[Livefire]

This case in Indiana, Spears v Brennan gives a defination of validation involviing an FDCPA claim.....

http://www.state.in.us/judiciary/opi...60101.ewn.html

Finally, we address Spears’ claim that Brennan violated 15 U.S.C. § 1692g(b) when he failed to cease collection of the debt after receiving Spears’ written notification, within the thirty-day debt validation period, that Spears was disputing the debt. 15 U.S.C. § 1692g(b) reads:
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

15 U.S.C. § 1692g(b) (emphasis added). On November 12, 1996, nineteen days after the date of Brennan’s debt collection letter, Spears’ counsel Shepard sent Brennan a letter declaring that Spears “disputes your debt collection-related allegations, denies the same, and demands strict proof and verification thereof.” Record at 21. As such, Brennan should have ceased his debt collection efforts immediately upon receiving that letter. Instead, Brennan proceeded to obtain a default judgment against Spears on the debt collection claim before he had mailed Spears the necessary verification and, thus, violated 15 U.S.C. § 1692g(b).
Brennan maintains, however, that there was no violation of the FDCPA because he “sent adequate verification of the debt [to Spears] in the October 30, 1996 notice of claim.” Brief of Appellee at 13. Specifically, Brennan claims that a copy of the consumer credit contract between Spears and American General attached to the notice of claim provided sufficient verification of the debt within the meaning of 15 U.S.C. § 1692g(b). We cannot agree.
The contract in no way provides sufficient verification of the debt. A review of the document reveals that it identifies only the terms of Spears’ loan, including a 17.99% annual interest rate and the original loan amount of $2,561.59. The loan agreement contains no accounting of any payments made by Spears, the dates on which those payments were made, the interest which had accrued, or any late fees which had been assessed once Spears stopped making the required payments. Indeed, the existing unpaid contract balance at the time Brennan sent the debt collection notice was at least $350.00 more than the original loan amount. Therefore, Brennan violated 15 U.S.C. § 1692g(b) when he failed to cease collection of the debt by obtaining a default judgment against Spears after Spears had notified Brennan in writing that he was disputing the debt but before Brennan had mailed verification of the debt to Spears. See footnote We reverse the trial court’s entry of summary judgment in favor of Brennan on this issue.

Originally Posted by Livefire

This case in Indiana, Spears v Brennan gives a defination of validation involviing an FDCPA claim.....

http://www.state.in.us/judiciary/opi...60101.ewn.html

Finally, we address Spears’ claim that Brennan violated 15 U.S.C. § 1692g(b) when he failed to cease collection of the debt after receiving Spears’ written notification, within the thirty-day debt validation period, that Spears was disputing the debt. 15 U.S.C. § 1692g(b) reads:
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

15 U.S.C. § 1692g(b) (emphasis added). On November 12, 1996, nineteen days after the date of Brennan’s debt collection letter, Spears’ counsel Shepard sent Brennan a letter declaring that Spears “disputes your debt collection-related allegations, denies the same, and demands strict proof and verification thereof.” Record at 21. As such, Brennan should have ceased his debt collection efforts immediately upon receiving that letter. Instead, Brennan proceeded to obtain a default judgment against Spears on the debt collection claim before he had mailed Spears the necessary verification and, thus, violated 15 U.S.C. § 1692g(b).
Brennan maintains, however, that there was no violation of the FDCPA because he “sent adequate verification of the debt [to Spears] in the October 30, 1996 notice of claim.” Brief of Appellee at 13. Specifically, Brennan claims that a copy of the consumer credit contract between Spears and American General attached to the notice of claim provided sufficient verification of the debt within the meaning of 15 U.S.C. § 1692g(b). We cannot agree.
The contract in no way provides sufficient verification of the debt. A review of the document reveals that it identifies only the terms of Spears’ loan, including a 17.99% annual interest rate and the original loan amount of $2,561.59. The loan agreement contains no accounting of any payments made by Spears, the dates on which those payments were made, the interest which had accrued, or any late fees which had been assessed once Spears stopped making the required payments. Indeed, the existing unpaid contract balance at the time Brennan sent the debt collection notice was at least $350.00 more than the original loan amount. Therefore, Brennan violated 15 U.S.C. § 1692g(b) when he failed to cease collection of the debt by obtaining a default judgment against Spears after Spears had notified Brennan in writing that he was disputing the debt but before Brennan had mailed verification of the debt to Spears. See footnote We reverse the trial court’s entry of summary judgment in favor of Brennan on this issue.

Yeah which is why I believe Spears v. Brennan is our enemy! It defies the very meaning of the word *verification* - not to mention Johnson v. MBNA. In fact, one could argue that Johnson overturns Spears . . . . . . . .

[Jerseee]

THen maybe we should stop asking for certified verification and demand to see the original agreement period.

Originally Posted by Jerseee

THen maybe we should stop asking for certified verification and demand to see the original agreement period.

many of the letters i've sent includes this:

1. Please evidence your authorization under 15 USC 1692(e) and 15 USC 1692(f) in this alleged matter.
2. What is your authorization of law for your collection of information?
3. What is your authorization of law for your collection of this alleged debt?
4. Please evidence your authorization to do business or operate in this state.

5. Please evidence proof of the alleged debt, including specifically the alleged original contract or other instrument bearing my signature.

6. Please provide a complete account history, including any charges added for collection activity.

the only time i received something back is when some sent a partial account history and old monthly statements.

Originally Posted by Jerseee

THen maybe we should stop asking for certified verification and demand to see the original agreement period.

I do ask for the original as part of my demand for Certified Verification. My *beef* is that the original loan agreement is legally invalid.

Originally Posted by PJT04

many of the letters i've sent includes this:

1. Please evidence your authorization under 15 USC 1692(e) and 15 USC 1692(f) in this alleged matter.
2. What is your authorization of law for your collection of information?
3. What is your authorization of law for your collection of this alleged debt?
4. Please evidence your authorization to do business or operate in this state.

5. Please evidence proof of the alleged debt, including specifically the alleged original contract or other instrument bearing my signature.

6. Please provide a complete account history, including any charges added for collection activity.

the only time i received something back is when some sent a partial account history and old monthly statements.

Yeah PJ I do something similar with respect to items 1,2, and 3 but I actually tell them the governing law and explain it to them to make sure a) we're on the same page, b) to let them know that I'm an informed consumer who knows her legal rights, and c) to remind the court if in the event I need to submit that letter as evidence. There's no sense in doing the legal research twice so I just get it outta the way and put it in the letter.

I don't ask them for proof of incorporation and what not. Instead, I cc a copy of that letter to the appropriate regulatory agency who will be all over their asses if in the event their illegally doing business in the state.

Item 5 goes to the heart of our demand for verifications. We're basically saying *I don't owe that debt because the contract is based on fraud and is void from the start . . .* Some of you may disagree with me but this is the true meaning of a *validity dispute!* Yes we are contesting our obligation on this bogus loan account! You would be crazy NOT to challenge it!

The reason why the contract is void from the start is because the banks negleted to tell us that we are funding our own *loans*, that the bank is nothing more than a moneychanger, that the bank is robbing us blind by making us pay back all of the money plus interest, that the bank is basically comitting extortion by threating to ruin our credit histories and confiscate our real and personal properties if we don't pay up, that they usually get paid twice because they take our future earnings AND negotiate or sell the Prom Note to a broker or investor for face value - sometimes more, etc. In other words, the contract fails becuase there's no full disclosure under the Truth in Lending Act and other federal laws (I have the full list somewhere).

Of course you would never come right out and accuse them of this without proof, which is why we demand Certified Verification. The burden is on the bogus creditor to prove the validity of its claim - not us! Therefore, once you demand verification and ask to see the original contract, statement of accouting (they must give you the full statement within 14 days according to Article 9 of the UCC and it must be authenticated or notarized), and make them explain to you what happened on the day of the loan closing - you've got them by the balls because there's no way in hell they can prove anything without exposing the scheme.

I just sent out my first VOD letter to a creditor today and it will be very interesting to see the outcome.

The Fourth Circuit has held that "verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt." Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999); Stonehart v. Rosenthal, 01 Civ. 651, 2001 WL 910771 (S.D.N.Y., Aug. 13, 2001).

YUCK!

Originally Posted by droog79

The Fourth Circuit has held that "verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt." Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999); Stonehart v. Rosenthal, 01 Civ. 651, 2001 WL 910771 (S.D.N.Y., Aug. 13, 2001).

YUCK!

Yeah but this ruiling is trumped by a more recent decision from the 4th Cir. Court of Appeals (February 2004 to be exact) that says the creditor must have the original to verify the debt to the CRAs and to a debtor. See Johnson v. MBNA. Same rule applies to debt collectors since they must get verification from the creditor . . . .