Greenwald Davidson Radbil PLLC obtains pro-consumer ruling in the Ninth Circuit Court of Appeals on an important issue of first impression under the Fair Debt Collection Practices ActJuly 20, 2016
In an opinion issued on July 20, 2016, Greenwald Davidson Radbil PLLC obtained a favorable order on an important consumer protection issue under the Fair Debt Collection Practices Act. Specifically, the FDCPA provides that a debt collector must send a consumer a notice containing important information about the consumer’s debt and rights either in “the initial communication” or “[w]ithin five days after the initial communication with a consumer in connection with the collection of any debt.” Consumers have 30 days after receiving such a notice to dispute the debt and to request information about the original creditor. At issue was whether all debt collectors must comply with these provisions, or whether only the first debt collector to attempt to collect a particular debt must so comply.
Previously, the Federal Trade Commission joined the Consumer Financial Protection Bureau in filing an amicus brief in the matter in support of Greenwald Davidson Radbil PLLC's position.
In reversing the district court, the Ninth Circuit explained:
The Fair Debt Collection Practices Act (“FDCPA”) requires that within five days of “the initial communication” with a consumer about the collection of a debt, a debt collector must send the consumer a notice containing specified disclosures. 15 U.S.C. § 1692g(a). The question presented here is whether the phrase “the initial communication” as used in the FDCPA means the first communication from the initial debt collector that tries to collect, or whether it means the first communication a consumer receives from any collector about a debt, including subsequent collectors that communicate about the same debt.
Applying well-established tools of statutory interpretation and construing the language in § 1692g(a) in light of the context and purpose of the FDCPA, we hold that the phrase “the initial communication” refers to the first communication sent by any debt collector, including collectors that contact the debtor after another collector already did. In other words, if there are multiple debt collectors that try to collect a debt, each one must send the required notice after its first communication with the alleged debtor about the debt. Because the district court held otherwise, we reverse and remand for further proceedings.
* * *Interpreting “the initial communication” to refer to the first communication by any debt collector is also more in keeping with the FDCPA’s declared purpose of protecting consumers from abusive debt collection practices. Congress enacted the FDCPA in 1977 against a backdrop of “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. § 1692(a). As the Act itself states, Congress’s goal was “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). As a “broad remedial statute,” Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1060 (9th Cir. 2011), the FDCPA must be liberally construed in favor of the consumer in order to effectuate this goal of eliminating abuse. See Clark, 460 F.3d at 1176; accord Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002) (“Because the FDCPA . . . is a remedial statute, it should be construed liberally in favor of the consumer.”).
Contrary to WZP’s arguments, the remedial purpose of the FDCPA is furthered by giving consumers updated information about their debts and renewed opportunities to verify them as the debts change hands. Each time a debt is resold between collectors, information about the debt may be lost and misinformation introduced. See Fed. Trade Comm’n, The Structure and Practices of the Debt Buying Industry 42 (2013) (“[T]he information that collectors have about these debts may become less accurate over time, making it more likely that collectors will seek to recover from the wrong consumer, recover the wrong amount, or both.”). Records of consumers’ disputes are among the information that may be lost in transfer. See Gov’t Accountability Office, Credit Cards—Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology 44 (2009) (explaining that “important account information—such as results of disputed account investigations . . . —may not always be transferred to debt buyers”). As a consequence, the likelihood that a debt collector will seek to collect from the wrong consumer or in the wrong amount increases as the debt is resold. And the corresponding need for collectors to inform consumers of their validation rights and to respond to requests for verification becomes more acute as the debt changes hands. WZP is therefore incorrect when it argues that there is no salutary benefit to be gained by requiring each successive debt collector to send a new validation notice with its first communication.
Restricting the validation notice obligation to the first communication by the first debt collector would also restrict consumers’ ability under § 1692g(b) to dispute the validity of their debts, obtain information to verify them, and protect themselves against the collection of invalid debts. This is because the rights provided under § 1692g(b) can only be exercised during the thirty-day period provided under § 1692g(a) and linked to “the initial communication” as used in that provision. See 15 U.S.C. § 1692g(b) (setting forth the consumer’s rights upon notifying “the debt collector in writing within the thirty-day period described in subsection (a)”). WZP’s interpretation would consequently restrict consumers to a single window of opportunity to halt collection efforts in order to verify their debts. That window would be of no assistance to a consumer who later suspects she is being improperly dunned by a misinformed successive collector.
We decline to read the Act in a way that is antithetical to Congress’s express intent to protect consumers from abusive debt collection practices.
The full opinion is available below.
For more information about this case, please contact Aaron D. Radbil at firstname.lastname@example.org