The U.S. Court of Appeals for the Ninth Circuit last week handed down a favorable opinion in a case where the plaintiff claimed a violation of the Fair Debt Collection Practices Act (FDCPA) over language in a collection letter she interpreted as demanding any dispute be made in writing.
In siding with the debt collection law firm in Riggs v. Prober & Raphael, the Ninth Circuit Court effectively narrowed the language restrictions regarding dispute disclaimers stemming from one of its own rulings in 2005.
In November 2006, Riggs purchased a car, borrowing $13,361.21 of the purchase price from Fireside Bank. Between September and December 2008, Riggs failed to make her monthly payments. During that time, Fireside Bank repossessed the car and notified Riggs that it would sell the car unless she made the required payments, which she did not. Fireside sold the car, applied the proceeds to Riggs’s debt, and hired Prober & Raphael to collect the $8,191.89 balance.
In a collection letter dated April 19, 2009, the firm included the following language to inform Riggs of her right to dispute the debt:
Please be advised that if you notify my office in writing within 30 days that all or a part of your obligation or judgment to FIRESIDE BANK is disputed, then I will mail to you written verification of the obligation or judgment and the amounts owed to FIRESIDE BANK. In addition, upon your written request within 30 days of receipt of this letter, I will provide you with the name and address of the original creditor, if different from the current creditor.
If I do not hear from you within 30 days, I will assume that your debt to FIRESIDE BANK is valid.
Riggs did not take issue with any other language in the validation notice. In March 2010, she sued Prober & Raphael in federal court claiming that the letter (1) required her to dispute her debt in writing, in violation of section 1692g(a)(3) of the FDCPA and California Civil Code and (2) therefore misrepresented her right to dispute the debt in violation of section 1692e(10) of the FDCPA and California Civil Code.
A district court ruled for the law firm and Riggs appealed to the Ninth Circuit Court, which upheld the decision on June 8, 2012.
In its opinion, the appeals court noted that it had a history with right to dispute language in collection letters. In 2005, the Ninth Circuit Court ruled in favor of a plaintiff in Camacho v. Bridgeport Fin., Inc., finding that a collection letter does violate the FDCPA if “it state[s] that [the debtor’s] disputes must be made in writing.”
But the language in the Camacho case was different, according to the court. “Unlike the validation notice at issue in Camacho, Prober’s notice did not state that Riggs must dispute her debt in writing,” Judge Consuelo M. Callahan wrote in the opinion.
The Camacho letter language read:
“Unless you notify this office in writing within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.”
“In contrast, Prober’s validation notice did not expressly require Riggs to dispute her debt in writing,” wrote Judge Callahan. “Instead, Riggs argues that the notice implicitly required her to do so.”
The opinion noted that while it assumes that “the least sophisticated consumer could understand Prober’s validation notice to imply that any dispute of her debt must be in writing…we conclude that the notice does not violate the FDCPA.”
The Court explained, “Camacho did not decide whether the FDCPA also prohibits debt collectors from implicitly requiring that disputes be in writing. We do not believe the FDCPA can support such a prohibition.”