In Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC, — F.3d —-, 2014 WL 3440174 (6th Cir. 2014), the Court of Appeals for the 6th Circuit purported to set a “baseline” of what the FDCPA requires as far as debt validation in response to a consumer dispute, but said that what validation is required depends on the circumstances.
These cases suggest that the “baseline” for verification is to enable the consumer to “sufficiently dispute the payment obligation .” Although the answer to that question depends on the facts of a particular situation, the cases reflect that an itemized accounting detailing the transactions in an account that have led to the debt is often the best means of accomplishing that objective. Intuitively, such a practice makes good sense. In fact, it would likely lead to faster resolutions of disputes with those consumers who act in good faith, because it will either show a valid debt that a consumer acting in good faith will actually pay, uncover an error in the record of the debt leading to the cancellation of the debt, or reveal the underlying dispute between the parties that can then be resolved. Finally, such an approach is consonant with the congressional purpose of the verification provision. In the present case, the Firm actually attempted to send an itemized accounting. When presented with a collection attempt in October 2008, Haddad disputed the debt. The Firm responded by sending the first accounting ledger on December 3, 2008. After he received this accounting, Haddad disputed a portion of the debt—the carryover balance of $75. The Firm sent a further accounting on January 20, 2009, but it once again included a carryover balance of $50 with no explanation as to the nature of the debt other than it was “the $50 remaining balance that existed on your account when Kramer–Triad took over management of the Association in August 2006.” Haddad once again disputed this now-$50 carryover portion of the debt. The Firm did not respond with any explanation such as a date or description of the nature of the charge. Instead, it filed a lien against Haddad’s condominium; the lien encumbered Haddad’s property rights for nine months. Because Haddad never received an accounting from the debt collector that showed why he was alleged to owe the original $50 charge, from which all subsequent late fees, fines, and attorney’s fees flowed, he was unable to “sufficiently dispute the payment obligation.” Dunham, 663 F.3d at 1004. Therefore, he was put to a choice. As he could not dispute the debt owed based on the information the Firm provided, he could either pay an amount he did not believe he owed or face the encumbrance of his property rights. Such verification cannot be enough under the FDCPA, a statute intended to protect consumers. The verification provision must be interpreted to provide the consumer with notice of how and when the debt was originally incurred or other sufficient notice from which the consumer could sufficiently dispute the payment obligation. This information does not have to be extensive. It should provide the date and nature of the transaction that led to the debt, such as a purchase on a particular date, a missed rental payment for a specific month, a fee for a particular service provided at a specified time, or a fine for a particular offense assessed on a certain date. Such a notice requirement has the advantage of providing a clear standard that courts are accustomed to enforcing and can apply easily. Moreover, in today’s world of computerized records management, it would not be a significant burden to debt collectors or creditors to provide such a record. After all, that is precisely what the debt collector did in Clark in 2006, in Mahon and Chaudhry, both cases from 1999, and even in Graziano, a case from 1991. Here too, the Firm attempted to do just that by sending two different statements of account. Haddad, however, disputed a portion of the debt-the carryover portion that was unexplained on these statements and which actually led to the rest of the charges. The Firm failed to verify this portion of the debt yet continued its efforts to collect this portion as well as the entirety by sending a letter demanding payment and placing a lien on Haddad’s condominium. In doing so, the firm violated 15 U.S.C. § 1692g(b). On the question whether the Firm properly verified the debt, we reverse the grant of summary judgment for the Firm and grant summary judgment for Haddad.