Validation Notice Attached to Foreclosure Action Results in FDCPA Class Action

The Fair Debt Collection Practices Act (FDCPA) mandates that as part of noticing a debt, a debt collector must send the consumer a written notice containing -- along with other information – “the name of the creditor to whom the debt is owed.”   This requirement is sometimes referred to as the “Debt Validation Notice.”  In addition, the Act prohibits a “debt collector” from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.”
Surprisingly, many well established law firms have a fundamental misunderstanding of the application of this statutory requirement.   A random survey of foreclosure actions filed throughout the State of Florida would reveal that a 1692(g) Validation Notice is routinely attached to mortgage foreclosure complaints.  However, a “pleading,” such as a complaint in a lawsuit, can never be an “initial communication” that triggers the notice requirement under 1692(g).  Moreover, sending such a notice can be deceptive and misleading to the “least sophisticated consumer.”

A recent case filed in United States District Court in Orlando, Florida, alleges that Shapiro, Fishman & Gache, LLP, acting as counsel for PHH Mortgage Corporation, filed a complaint in Seminole County, Florida, to foreclose on Linda Karp’s mortgage and to enforce a promissory note.   Attached to the state court complaint and summons was a document entitled “Notice Required by the FDCPA, 15 U.S.C. Section 1692g.”  The Notice was presumably served to inform Linda Karp of her rights concerning validation of the debt and provide her with 30 days to request validation of the debt.   The summons issued by the court along with the foreclosure complaint informed Karp that she had 20 days to file a response with the court.   Karp sued Shapiro, Fishman & Gache, LLP under the FDCPA alleging that the firm violated the Act because the Notice attached to the state court Complaint was deceptive and misleading to the “least sophisticated consumer.”  The lawsuit alleges that the  “least sophisticated consumer” could be deceived or confused when the summons sets out a 20-day deadline to respond to the lawsuit and the attached notice provides for a 30-day deadline to request validation of the debt.  Karp further alleged that hundreds of other consumers received the identical notice in connection with their mortgage foreclosure lawsuit.
Karp v. Shapiro, Fishman & Gache, LLP, Case Number: 6-14-Civ-Orl-000046-28TB

Validation Notice Attached to Complaint Results in FDCPA Lawsuit

An attempted validation notice pursuant to 15 U.S.C. §1692(g) attached to a Complaint in a lawsuit may be considered as deceptive and misleading to the “least sophisticated consumer” under the Fair Debt Collection Practices Act. In Battle v. Gladstone Law Group, P.A., law firm, acting as counsel for Bank of America, N.A., filed a complaint in Florida State Court to foreclose on Gina Battle’s mortgage and to enforce a promissory note. Attached to the State Court complaint and summons was a document entitled “Notice Required by the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692g.” The Notice was presumably served to inform Gina Battle of her rights concerning validation of the debt and provide her with 30 days to request validation of the debt. The summons issued by the State Court along with the State Court complaint informed Battle that she had 20 days to file a response with the court. Battle sued the law firm, Gladstone Law Group, and attorney Ron Gladstone, under the Fair Debt Collection Practices Act alleging that they violated the FDCPA because the Notice attached to the state court Complaint was deceptive and misleading to the “least sophisticated consumer.” The federal lawsuit was converted into a Class Action alleging that that the class was so large that joinder of all members of the Class was impractical and that the class was in excess of 100. The District Judge ruled that an FDCPA notice incorporated into a mortgage foreclosure summons and complaint, such as the one used by the Gladstone Law Group, does not necessarily effectively convey notice of the rights to the “least sophisticated consumer.” The Court went on to say that the “least sophisticated consumer” could be deceived or confused when the summons sets out a 20-day deadline to respond to the lawsuit and the attached notice provides for a 30-day deadline to request validation of the debt.
Battle v. Gladstone Law Group, P.A., Case Number: 12-14458-Civ-Martinez-Lynch.

"Least Sophisticated Consumer" Standard Under the FDCPA

The Eleventh Circuit and the majority of federal circuit courts have adopted the “least-sophisticated consumer” standard in analyzing claims brought under the Fair Debt Collection Practices Act (FDCPA).   The least-sophisticated consumer standard is consistent with FDCPA’s goal of expanding the consumer protections originally provided by the Federal Trade Commission Act.   The purpose of the least-sophisticated-consumer standard, here as in other areas of consumer law, is to ensure that the FDCPA protects the gullible as well as the shrewd.   No requirement of proof of actual deception of the consumer is necessary.
Courts apply this objective standard in order to implement the FDCPA’s dual purpose: to protect consumers against deceptive debt collection practices and to protect debt collectors from unreasonable constructions of their communications to consumer.    The least sophisticated consumer will be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care.    However the test also has an objective component in that while protecting naive consumers, the standard also prevents liability for bizarre or idiosyncratic interpretations of collection communications by preserving a quotient of reasonableness.