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What is validation? How does it apply to me? Why is it important? Isn’t it risky? What constitutes validation?
These are questions that are asked many times a week, and are very important ones to understand the answers to. I will attempt to answer each of them individually.
What is validation?
In a nutshell, validation of a debt is competent evidence that the party requesting payment is the correct party to pay, that the amount is accurate and legal, and that you’re the correct person they’re looking for.
How does it apply to me?
Validation applies to ANYONE that’s ever received a letter from a collection agency asking for payment. There are many collection agencies that break the law while attempting to collect debts (approximately as many as there are collectors). Validation is a right afforded to you under the FDCPA section 809. That section also states that if a request for validation is received within 30 days of initial contact, the collector MUST cease all collection activities until validation is provided. Continued collection activities include, but isn’t limited to, reporting the alleged debt to the CRAs, sending dunning letters, phone calls asking for payment, or reducing the debt to a judgment (suing you).
If you request validation AFTER the initial 30 days, the collector MAY continue collection activities under that section; however, if they report it to the CRAs, they may be in violation of the FCRA for reporting a debt that they know, or should know, to be inaccurate, incomplete, or unverifiable. They also MUST mark the item as “consumer disputes” on your CRAs if they report it. Just marking it as “in dispute” doesn’t get around reporting information that’s known, or should be known, to be inaccurate, incomplete, or unverifiable. It would just add an additional violation if they DON’T report it as in dispute. This would also include if they verify the information with a CRA. Another possible violation of FDCPA would be if they sent a dunning letter AFTER you have requested validation beyond the initial 30 day period, as they’d then be misrepresenting the status or nature of the alleged debt.
Please refer to the FDCPA for further clarification. It can be found here:
http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm
Why is it important?
Let’s say you get a letter from ABC Collection Agency, saying that you owe $5698.45 for your old Big Bad Bank account. You MAY recall having an account with Big Bad Bank a few years ago, but never with that kind of balance or limit. Are you just going to pay it, or are you going to ask what they’re talking about? Would you send ME money if I sent you a letter stating that you owed me? If you’d pay ABC, but not me, then why? Because you never owed me anything? If that’s the case, then ask yourself when you opened your account with ABC. If the answer is never, then you need to find out what it is they’re talking about. How do you know that ABC actually is the party to pay? What if XYZ Collectors bought the account from Big Bad Bank, and assigned it to ABC, only to pull it back a week earlier? That HAS and DOES happen regularly.
Isn’t it risky?
Breathing is risky. Some people believe that a CA that receives a validation letter from a consumer will immediately file suit against that consumer. If they do that, then they were going to sue you anyway, and they’ll STILL be required to produce validation, only this time in front of a judge, and if they don’t have it handy, it makes for an easy dismissal. Keep in mind that CAs that sue are looking for easy pickings, those consumers that won’t show up for court and get an easy default judgment.. If you send a properly worded validation letter, they’ll know that you’re NOT going to roll over, and they’ll move on to easier pickings. Granted, they MAY sue you, but if they do so, you can show a judge that you attempted to settle this alleged debt prior to the CA wasting his time in court, when all they had to do was provide what you requested, and you would have been happy to enter into an agreement.
What constitutes validation?
This is a question for the ages. The simple answer is that there IS no answer. There has never been any caselaw stating exactly what IS validation, only what it ISN’T. In a case often quoted, Chaudry V. Gallerizo, collectors claim it states that validation of a debt consists merely of an itemization of the account. In this scenario, a collector will receive a validation letter from you, and refer to this case with something like:
Dear X,
I have enclosed an affidavit of debt for the verification of debt you requested for the above account. The court case of Chaudhry v. Gallerizzo, 174 F. 3d 974 (4th Cir. 1999) states this is sufficient for account verification:
“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 debt.”
Please contact Customer Service at [telephone number] if you have any questions.
This is an attempt to collect a debt. Any information obtained will be used for that purpose.
One thing that the collector fails to mention is that Chaudry specifically requested an itemization of the attorney fees. The collector provided that, and Chaudry then stated that the itemization he was given wasn’t sufficient. The collector argued that if further itemization was provided, it may reveal privileged information. The courts ruled in the collector's favor. The courts also ruled that since it was “responsive to the consumer’s request” that it WAS sufficient. Further, Chaudry also requested for itemization of FUTURE attorneys fees.
As you can see, Chaudry isn’t as cut and dried as the collector might want you to believe.
Also implied in this decision is the concept that if the collector actually answers all the requests of the consumer, that it could be considered validation.
As for the general term “validation”, it could most easily be defined as competent evidence that a disinterested third party would reasonably see as proof that the amount, status, and nature of the debt is accurate, that the collector is the legal person to pay the debt to, and that the consumer is the correct party that should pay it.
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