Compliance Tip: Collection Efforts During the 30-day Validation Period

When Account(s) are placed for collection efforts the collection agency has 5 days of the initial communication with the debtor to send a notice that explains they have 30-days to dispute their debt otherwise it will be considered valid.

(This is referenced in Section 809 of the Fair Debt Collection Practices Act). 

 If the debtor disputes the debt within the 30-day period, the collector must suspend all collection efforts regarding the debt until the collector and client obtains verification of the debt and mails it to the debtor.

If the debtor does not dispute the debt, collectors can continue collection efforts including lawsuits; however, the language of the validation letter must not overshadow or contradict the 30-day validation period.  Collectors need to exercise caution when collecting during the 30-day validation period.  Additionally, the collection agency should consider having their letters reviewed annually to ensure compliance with debt collection laws such as the Fair Debt Collection Practices Act, Fair Credit Reporting Act, State Laws and other governmental bodies.

Summary:

Collectors can continue collection efforts during the validation period; but must exercise care and ensure they are not overshadowing the 30-day validation period.  Some examples of overshadowing include: Making Demands for Payment, Settlement Offers, Use of words “Urgent” or “Immediate”, Credit Reporting, Threats of Legal Action or Filing Suit.

The duty to verify the debt is on the collection agency and client once advised the debt is disputed (Written communication or Orally).

When communicating with the debtor in written communications care must be used when drafting the correspondence, so it does not confuse an unsophisticated consumer as to their validation rights.

Debt collectors should have their notices reviewed by a qualified attorney prior to use.

It is also important (best practice) that our clients are providing the outside collection agency with basic demographic information with each account placed to include: Full Name, Current Address, Prior Address, Social Security Number, Date of Birth, Phone Numbers, Place of Employment and detailed documents supporting and providing proper verification of debt.