VIEWS: 10 PAGES: 6 CATEGORY: Business & Economics POSTED ON: 6/3/2010
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.
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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