The court determined the settlement
offers in question were not false, as it
was undisputed the collector was willing
to settle for the offered amount during
the deadline periods presented.
Similarly, two other courts in California
granted each defendant’s motion to
dismiss, holding the settlement offers
were not false and misleading in
violation of the FDCPA.
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.
SAFE HARBOR
The Seventh Circuit reviewed the
issue of settlement offers and provided
safe harbor language for such offers.
The court opined issues related to the
KEY POINTS
In light of these decisions, there are
particular factors to keep in mind when
creating settlement offers:
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• Settlement parameters should be
clearly documented and an asset
buyer should comply with the terms
of the settlement as documented.
• Caution should be taken prior to
offering a settlement offer that
expires during the validation period,
as the inclusion of such an offer in
the initial notice may support a
claim the settlement offer
overshadows the consumer’s right
to dispute the debt and request
verification.
• If the asset buyer’s policies and
procedures do not limit the ability
to make settlement offers, artificial
time restraints should not be placed
on the offers. If an asset buyer
wishes to make limited-time
settlement offers, policies and
procedures should be revised to
permit such offers.
• If polices and procedures limit the
time within many settlement offers
may be accepted, the asset buyer
should adhere to these limits and
not exceed or restrict such limits.
• If the policies and procedures
authorize a one-time, take-it-or-leave-it settlement offer, the asset
buyer should only make such offer
once to avoid allegations of false or
misleading practices under the
FDCPA.
Asset buyers should avoid presenting
a settlement offer as a “one-time only”
offer when such offers may be presented
in the future. Asset buyers may further
want to discuss settlement offers with
their own counsel or a qualified ACA
Members’ Attorney Program attorney
for assistance in developing written
policies and procedures regarding
permissible settlement offers. cm
Innovation Compliance Integrity
Amanda Swanson is a paralegal in ACA’s
Compliance Department.
