How does a debt collector determine what must be done when a consumer disputes a debt? This
is an important question for both
new and experienced debt collectors.
While it may seem simple at first, the
requirements of federal law add deeper
dimensions to the issue.
Reviewing the nature of what
constitutes a dispute, duties triggered
by disputes and concerns regulators
have about how disputes are handled
are all important considerations
when building effective policies
and procedures for handling and
responding to disputes.
The Fair Debt Collection Practices
Act requires debt collectors to inform
consumers that they have the right to
dispute the validity of the debt. Section
809(a)( 3) specifically states that within
five days of the initial communication,
the debt collector must send a letter
containing, among other things, “a
statement that unless the consumer,
within 30 days after receipt of the
notice, disputes that validity of the
debt, or any portion thereof, the debt
will be assumed to be valid by the debt
collector[.]”
Section 809(a)( 4) states that “if the
consumer notifies the debt collector in
writing within the 30-day period that the
debt or any portion thereof is disputed,
the debt collector will obtain verification
of the debt or a copy of a judgment
against the consumer and a copy of such
verification or judgment will be mailed
to the consumer…” (emphasis added).
Courts have examined the
requirements of these two sections of
the FDCPA and found both verbal
and written disputes are valid forms of
dispute under the act. To this point,
a majority of courts have stated that
disputes do not need to be made in
writing, and can be written or verbal.
While both verbal and written
disputes are permissible, the FDCPA
triggers different duties depending on
the type of dispute. Therefore, it is
important for collectors to be able to
identify and properly respond to both
written and verbal disputes.
Identifying Disputes
In order to effectively respond to
disputes, a collector first needs to know
what constitutes a written or verbal
dispute. Disputes can take different
forms, and some are more easily
identified than others. Sometimes a
dispute will be clear-cut, such as the
consumer directly stating, “I dispute
this debt.” Other times, a dispute
may be more subtle, such as when a
consumer says, “I don’t recall making
this purchase.”
Either statement could be
characterized as a dispute, because in
each instance the consumer is calling
into question the validity of the debt.
Because consumers do not need to
not use the precise word “dispute,”
Handling Consumer Disputes
Accurately documenting disputes, communicating written policies
and procedures, and conducting effective training on how to
handle disputes are essential to demonstrating compliance.
By Laura Dadd