Responding to a Debt Validation Letter
Over the past 10 years or so, consumers have become much better informed about their rights against bill collectors. While its always a good thing for consumers to know and defend their rights, it started costing the collection industry big bucks when every Joe Schmo out there sent a validation letter as soon as the collector contacted him.
The answer to this ever-growing problem was automated validations (You had to see that one coming). Not all collection agencies use a computer program to churn out automated debt validations, but many do. The goal of this, of course, isn't to actually follow the letter of the law and validate the legitimacy of your debt. The goal is to make you give up, tuck your tail between your legs and trudge to the bank to pay off the account.
But we aren't going to do that are we? Didn't think so.
The Automated Debt Validation Letter
The automated debt validation response that you're likely to receive from a collection agency isn't going to give you any details. As a matter of fact, it isn't going to give you much of anything other than how much you owe – a fact any debt collector would have been more than happy to scream at you over the phone. Let's look at an example of the typical automated debt validation response for a defaulted credit card debt, shall we?
Not all validation responses are the same, but this one incorporates what you're most likely to encounter. This debt collector has included the amount you owe (like that's a big secret) and a blank credit card agreement. The debt collector calls the blank credit card agreement a "contract." This is a psychological ploy to make the uninformed consumer believe that the collector has just sent him a copy of his contract with the original creditor and therefore must have adequately validated the debt.
And more often than not, the blank credit card agreement the collection agency sends isn't even the same agreement that you signed. Unless you have the original agreement handy, there's no sure way of knowing, but that would certainly be an interesting fact to bring up in court.
What the Law Says (and doesn't say) about Proper Debt Validation
This is where things get really sticky. I've seen it everywhere that a response from a collection agency isn't a "legitimate" validation unless it contains a copy of the contract the debtor signed with the original creditor (bearing the debtor's signature) and, in the case of credit cards, the signed credit card slip for every purchase made.
I really hate to burst your bubble, but the law does not require a collection agency to find that for you. Here's where the FDCPA fails you: it does not define what constitutes a legitimate debt validation. That is not an oversight on the part of the Federal Trade Commisison. Trust me when I tell you that slip up was intentional. You see, if the FDCPA clearly defined debt validation, then collection agencies would legally have to provide exactly what the FDCPA required. Because most of them can't provide anything even resembling a legitimate validation, their lobbyists work hard to ensure that they never have to.
That does not mean that you're out of luck. While the FDCPA doesn't define validation it does note that the collection agency must provide you with the name and contact information for the original creditor. It's not much, but its a start – especially if the collection agency "validated" your debt without providing you with this information.
FTC Opinion Letter on Debt Validation
Just because the FDCPA does not formally state what a collection agency has to provide you with, that doesn't mean that some of the head knockers over at the FTC don't have their own opinions as to what does and does not constitute validation. This letter from Jeffrey Wollman clearly sides with the consumer on the issue:
FTC Opinion Letter
How Do I Respond When the Collection Agency Validates?
If the collection agency sends you their basic "Here's what you owe" letter and a blank credit card agreement in response to validation, its a good idea to point out that no reasonable person would consider that validation. Here's a sample response for the above situation. Remember, you should always tailor your letters to fit your specific situation.
Even if the collection agency doesn't send validation, you're accomplishing two things with this letter:
1. You're demonstrating that you know your rights and you won't be easily bullied. You'd be surprised how many people manage to avoid lawsuits simply because the collection agency knows they are well informed and thus more likely to pose a threat to the company's bottom line in court.
2. Should the issue end up in a courtroom, your letter will pass through the judge's hands (provided you remember to keep your paper trail!). The letter tells the judge, in no uncertain terms, why the collection agency's validation wasn't a real validation. Sometimes, a simple consumer letter explain your debt validation issue far better than a consumer law attorney ever could.