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Consumers May Now Dispute Debts Verbally

The U.S. Court of Appeals for the Fourth Circuit (which covers North Carolina) has ruled that debt collection notices violate the Fair Debt Collection Practices Act (FDCPA) if they require consumers to submit disputes of debts in writing. 

In Clark v. Absolute Collection Service, Incorporated (4th Circuit, Jan. 31, 2014), the Court ruled that the FDCPA does not require a consumer to dispute the validity of a debt in writing. 

The FDCPA requires that debt collectors send written notices to consumer debtors containing “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.”

However, if the consumer notifies the debt collector that he or she disputes the validity of the debt, the debt collector must stop the collection activity until it has mailed a verification of the debt to the consumer. (This is sometimes used as a delay tactic by consumers and their lawyers.)

The Court ruled that any collection notice sent by a creditor that purports to require a consumer to dispute the validity of the debt in writing is incorrect, and the consumer's oral dispute is all that is necessary to stop collection efforts and trigger the verification requirement.  (Furthermore, an incorrect debt collection notice might be deemed invalid even if the consumer does not orally dispute the validity of the debt.) 

The decision of the Fourth Circuit Court of Appeals in this case is now the law of the land in North Carolina, and creditors and collection agencies in North Carolina will now have to adjust their policies and procedures to accommodate oral disputes from customers.

"Squeezing the Turnip"
Photo credit: Ula Gillion

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