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SETTLING UP

VIEWS: 10 PAGES: 6

In this case, the Eastern District of New York held a collection letter that stated "IMMEDIATE ATTENTION" in bold and demanded payment or a call to arrange a settlement to obtain the collector's "cooperation" overshadowed the validation notice. The court determined the aforementioned phrase implicitly threatened the consumer that if he does not either remit full payment or contact the collector to arrange for a settlement, he will not receive "cooperation" from the collector.A few courts examining this issue have held a settlement offer presented as a one time, take-it-or-leave-it offer is false and misleading under the FDCPA when such an offer could be accepted beyond the original settlement date. In one case before the Northern District of Illinois, the consumer received a letter offering a "one-time settlement," which further stated "[i]f settlement amount is not received by the date indicated above, the offer will be null and void and the entire balance outstanding will be due."The Seventh Circuit reviewed the issue of settlement offers and provided safe harbor language for such offers. The court opined issues related to the expiration of settlement offers can be addressed by including the phrase "We are not obligated to renew this offer" in settlement offer letters. The court stated, "The word 'obligated' is strong and even the unsophisticated consumer will realize that there is a renewal possibility but that it is not assured." However, the court noted failure to provide this language is not a per se violation of the FDCPA.

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									26 I November 2008 Collector
   n certain situations, asset buyers may     manner so as to avoid liability for          if the consumer has not disputed the
   wish to present a settlement offer to a    violating the Act.                           debt and the settlement letter did not
   consumer. While such settlements                                                        state “immediate” payment was due nor
may be advantageous for both the              OFFERS DURING THE VALIDATION PERIOD          did the offer imply the consumer must
agency and the consumer, the asset                A settlement offer presented in the      dispute the debt in less than 30 days.
buyer should first examine the Fair           initial communication with a consumer        Finding the least sophisticated
Debt Collection Practices Act (FDCPA)         may overshadow the consumer’s right to       consumer would not construe the
and relevant case law to determine the        dispute the debt and/or obtain               discount offer as overshadowing or
legality of the settlement offer and any      verification. While courts addressing        contradicting the validation notice, the
compliance issues it may present.             this issue are not in agreement on the       court granted the collector’s motion to
   Section 807(10) of the FDCPA               matter, at least one court has held that a   dismiss.
prohibits a debt collector from using         settlement offer provided with the               Similarly, a district court in
any “false representation or deceptive        validation notice overshadowed the           Delaware determined a collection
means to collect or attempt to collect        validation period.                           notice titled “IMMEDIATE
   any debt.” As such, settlement offers          In this case, the Eastern District of    SETTLEMENT NOTICE,” which
           may not overshadow the             New York held a collection letter that       informed the consumer “your account
                   validation notice or be    stated “IMMEDIATE ATTENTION”                 must be settled now,” merely
                           presented in a     in bold and demanded payment or a call       encouraged payment and did not
                                  deceitful   to arrange a settlement to obtain the        overshadow the consumer’s verification
                                              collector’s “cooperation” overshadowed       rights.
                                              the validation notice. The court                 Finally, a court in the Northern
                                              determined the aforementioned phrase         District of California held an initial
                                              implicitly threatened the consumer that      collection letter, which contained the
                                              if he does not either remit full payment     validation notice and stated “if you wish
                                              or contact the collector to arrange for a    to make settlement arrangem
								
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