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Recent Case Provides Disputes Do Not Have to be in Writing

I started the week discussing case law that did not have a favorable result for consumers so I figure it a good idea to following it up with a recent appellate decision that ends on a positive note.  In the case of Hooks v. Forman, Holt Eliades Ravin LLC, plaintiffs Karen Hooks and Geraldine Moore filed suit against a collection agency alleging violations of the Fair Debt Collection Practices Act ("FDCPA") when a collector sent a notice to the consumers stating they could only dispute the validity of the debt in writing, violating Sections 1692a(6) and 1692g.  Initially, the case was dismissed, but on appeal the order of dismissal was vacated and the case was reinstated . 

The facts of the case begin in December of 2009 when the plaintiffs, Karen Hooks ("Hooks") and Geraldine Moore ("Moore"), visited Atlantic City, New Jersey and attended a time share presentation with Wyndham Vacation Resorts, Inc. ("Wyndham").  At the end of the presentation Hooks and Moore signed an agreement with Wyndham to purchase a timeshare but did not realize that the document they were signing was a mortgage application.  Hooks and Moore never made a single payment on the timeshare.  After not receiving payment, Wyndham hired Forman Holt Eliades Ravin LLC ("Forman") to collect the timeshare debt from Hooks and Moore.  On April 5, 2011, Forman sent an initial collection letter to the Plaintiffs at their home address.  The letter read as follows: 

UNLESS YOU NOTIFY U.S. IN WRITING WITHIN THIRTY (30) DAYS AFTER RECEIPT OF THIS LETTER THAT THE DEBT, OR ANY PART OF IT, IS DISPUTED, WE WILL ASSUME THAT THE DEBT IS VALID. IF YOU DO NOTIFY U.S. OF A DISPUTE, WE WILL OBTAIN VERIFICATION OF THE DEBT AND MAIL IT TO YOU. ALSO UPON YOUR WRITTEN REQUEST WITHIN THIRTY (30) DAYS, WE WILL PROVIDE YOU WITH THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR IF DIFFERENT FROM WYNDHAM.

After receiving the collection letter Hooks and Moore filed suit in the District Court for the Southern District of New York, alleging that the collection letter failed to comply with 15 U.S.C. § 1692g.  This section requires a debt collector to send written notice to consumers within 5 days of verbal communication.  Section 1692g(a)(3) requires that this notice contain "a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector."  Hooks and Moore argued that the notice violated § 1692g(a)(3) because it indicated that a request for validation of the debt must be made in writing and cannot be verbal.

Forman filed a motion to dismiss the complaint and its motion was granted when the court stated the collection agency did not violate the FDCPA by stating disputes must be made in writing.  Hooks and Moore appealed the decision and in May of 2013, the appeals court vacated the dismissal.  In its opinion, the appeals court stated the language of the statute does not have a written requirement as it does in other sections of the same statute.  "The right to dispute a debt is the most fundamental of those set forth in § 1692g(a), and it was reasonable to ensure that it could be exercised by consumer debtors who may have some difficulty with making a timely written challenge."  The Court went on to state, "[d]ebtors can protect certain basic rights through an oral dispute, but can trigger a broader set of rights by disputing a debt in writing."

If you are having issues with debt collection or need more information on your rights, contact SmithMarco P.C. for a completely free case review.

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