N.D. California: 1692g Validation Notice Not Overshadowed by CFDBPA Disclosure

Since the California Fair Debt Buying Practices Act of 2013 (CFBDPA) went into effect, there has been little guidance on how the requirements of the CFBDPA apply to a third party collection agency collecting on behalf of a debt buyer.  One such requirement is the disclosure a debt buyer must provide a consumer in its initial communication.  This disclosure tells the consumer that they can request certain records, with an instruction in the statute for the debt buyer to “insert debt buyer’s active mailing address and email address, if applicable” for such records. 

At issue in Robinson v. ARS National Services Inc., 3:17-cv-52820, was whether including the debt buyer’s address in the California disclosure, as instructed by the CFBDPA, overshadows the consumer’s FDCPA 1692g validation rights by confusing the consumer in regards to where he or she should send a dispute: to the debt collector or to the debt buyer.

In a short two-paragraph order released on June 19, 2018, the Northern District of California answered unequivocally “no.”

Read the decision here. 

Factual and Procedural Background 

Plaintiff Andrea Robinson, a California resident, incurred a debt on a J.C.Penney account, on which she eventually went delinquent. The debt was sold to Crown Asset Management, LLC. (“CAM”).  CAM placed the account with ARS National Services Inc. (“ARS”) for collection.  Since ARS was collecting on this account on behalf of a debt buyer, ARS included both the FDCPA 1692g validation disclosure as well as the CFBDPA disclosure on the initial letter it sent to Plaintiff.  The FDCPA disclosure was on the front of the letter, instructing the consumer to send any disputes “to this office.”  The CFBDPA disclosure was on the back side of the letter and included CAM’s address as the place to send requests for certain records.

Plaintiff filed a putative class action against ARS in N.D. California with only an FDCPA cause of action. The suit alleged that the CFBDPA disclosure with the debt buyer’s address overshadows the consumer’s FDCPA validation rights by confusing the consumer as to where he or she can send disputes: to ARS’s address on the front of the letter or to the CAM address listed on the back. 

The parties filed cross motions for summary judgment. The court granted ARS’s motion for summary judgment and denied Plaintiff’s motion for summary judgment. 

The Decision 

In its motion for summary judgment, ARS argued that the consumer rights provided in the two statues are separate and there is no confusion based on the letter sent by ARS that a dispute needs to be sent to ARS. The court agreed. 

Simply put, the court found that the letter distinguished well between the two statutory rights. The FDCPA 1692g notice was on the front of the page. All around this paragraph were references that “make clear that this paragraph is referring to ARS and that the customer should contact ARS at the mailing address at the top of the page to verify their debt.” The court found that the footer of the letter, which stated that the consumer should see the reverse side for “important information” does not make the consumer’s 1692g rights unclear. 

Very pointedly, the court states that “[e]ven an ‘uninformed or naïve’ recipient of the letter would understand that the notice on the back of the letter relates to a different kind of request, which would be addressed to Crown Asset Management, LLC.” 

Ultimately the court found that the “least sophisticated debtor would not be misled by the collection letter that ARS sent Robinson.” 

Analysis 

Anytime a new statute comes out, there often is uncertainty on how such statute is practically applied until there are a few court decisions on the issue to provide guidance. This decision is one of those guides to debt collectors collecting on behalf of debt buyers in California.

Additionally, this decision shows the benefit of agencies defending suits on issues of first impression that appear to be far-fetched claims so they do not turn into the “next big thing” for plaintiffs’ attorneys. This issue is now closed, and instead of focusing on endless litigation on the matter we can all move forward with more productive issues.