On June 26, 2014, in McLaughlin v. Phelan Hallinan & Schmieg, LLP, the Third Circuit held that a consumer is not required to seek validation of a debt he believes is inaccurately described in a debt collection communication before filing suit under the Fair Debt Collection Practices Act (FDCPA).
The FDCPA provides that if the consumer “notifies the debt collector in writing . . . that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt” and mail a copy to the consumer. 15 U.S.C. § 1692g(a)(4). Although the plaintiff in McLaughlin believed the debt collection communication he received was inaccurate, he did not seek validation of the debt. Instead, he filed suit against the debt collector. The District Court dismissed the complaint, concluding that the plaintiff could not bring an FDCPA claim without first disputing the debt and seeking validation from the collector.
The Third Circuit reversed, holding that to require the consumer to seek validation of the debt prior to filing suit under the FDCPA would be inconsistent with the text and purpose of the statute. The Court observed that the FDCPA lists various consequences “if” the consumer disputes a debt, suggesting that the validation provisions are optional, rather than mandatory. The Court further explained that imposing a validation prerequisite would frustrate the protective purpose of the FDCPA, and immunize misconduct by debt collectors based on a procedural nuance that many consumers would fail to understand. Finally, the Third Circuit downplayed the concern raised by other courts (which held that the validation procedures were mandatory) that the lack of a validation prerequisite would discourage the use of the statute’s validation procedures. The Court explained that debtors will still have an incentive to utilize the validation procedures in order to facilitate the quick and inexpensive resolution of debt disputes.