Court Rules Verification Docs Fulfill “Least Sophisticated Consumer” Standard

Last week a federal court in Michigan ruled that “verification documents” provided to a consumer by Portfolio Recovery Associates, LLC (PRA) met the Fair Debt Collection Practices Act (FDCPA) verification of debt requirements. The case is Cooper v. Portfolio Recovery Associates, LLC (Case No. 16-12969, U.S.D.C. Eastern District of Michigan, Southern Division). 

A copy of the court’s Memorandum and Order Granting Summary Judgment to PRA can be found here. 

Background 

The court’s order is 20 pages. The background facts are quite convoluted. In the interest of brevity, insideARM will summarize. For a more thorough review of the facts, interested parties should read the complete opinion.

On July 13, 2015, Cooper received a debt collection letter from PRA indicating that Cooper owed $3,177.19 to PRA. The letter named U.S. Bank National Association (“U.S. Bank”) as the original creditor. 

In response to that letter Cooper wrote to PRA requesting that PRA verify the debt through various means, including by providing a copy of the written agreement that created the obligation between Cooper and U.S. Bank. 

On August 10, 2015, PRA responded to Cooper by letter with verification information including: 

• Cooper’s first and last name, middle initial, and suffix “2”;
• The last four digits of Cooper’s social security number;
• Account number ending in 0104;
• Name of the original creditor as U.S. Bank;
• Date the account was opened with U.S. Bank as January 1, 2008;
• Date of sale of the account from U.S. Bank to PRA as June 17, 2015;
• Balance at time of sale as $3,177.19; and
• A statement that no interest or fees had been charged since the date of sale. 

The letter stated that Cooper should contact PRA if he wanted to receive a history of payments that had been made since PRA acquired the account. The letter did not include a copy of the original agreement between Cooper and U.S. Bank as Cooper requested in his first response letter. It did, however, include an identity theft affidavit that Cooper could have completed and returned in order to dispute that the debt belonged to him. Cooper says he did not return this affidavit because he did not want to provide personal information to PRA without further assurance of PRA’s trustworthiness and the validity of the debt. 

Cooper then sent a second letter to PRA requesting verification of the debt. In that second request Cooper listed the methods by which PRA should verify the debt, many of which were the same as in Cooper’s first response letter except that he bolded and underlined requests for a copy of the original U.S. Bank agreement and a copy of the last billing statement that U.S. Bank sent to him.

PRA sent a letter to Cooper three days later, stating that the investigation of the dispute was complete and enclosing three Comerica Bank credit card statements as additional verification of the debt. The first statement, dated April 2013, displayed a payment of $52.00. The second statement, dated January 2014, displayed a total balance of $3,177.19. The third statement, dated February 2014, displayed that the account was being charged off. PRA’s letter did not explain the connection between Comerica Bank and U.S. Bank. 

On August 20, 2015, PRA sent Cooper two letters. The first was a verification letter identical to the verification letter PRA sent on August 10, 2015. The second was a letter stating that because PRA had already responded to “a previous dispute substantially the same as your present dispute,” it would conduct no further investigation into Cooper’s dispute. 

Cooper then sent PRA a third verification request. In that letter, he stated that the information PRA had previously provided was insufficient to prove the validity of the debt and emphasized that, for him, the only sufficient proof would be a copy of the original contract between him and U.S. Bank. 

In response to this third verification request, PRA sent a letter identical to their August 20, 2015 letter stating that PRA would not respond to a dispute that it had already resolved.  

Cooper filed his complaint on August 15, 2016 suing PRA for attempting to collect a debt from him in a manner that violated the FDCPA. The complaint contained additional allegations of violation of the Michigan Collection Practices Act and fraud under Michigan tort law. 

PRA moved for summary judgment or dismissal, to which Cooper responded and cross-motioned for summary judgment on liability.

Editor’s Note: A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

The Court’s Decision 

First, the court discussed 15 U.S.C. § 1692g(b), the relevant FDCPA provision. That provision provides: 

If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains [and mails to the consumer] verification of the debt or a copy of a judgment, or the name and address of the original creditor. 

PRA argued that its response fulfilled the statutory requirements. Cooper argued that PRA did not fulfill the statutory requirements which means that the collection activities PRA undertook after sending it response violated the FDCPA verification provisions. 

The court’s order was written by the Honorable Avern Cohn, United States District Court Judge. Judge Cohn wrote:

“Under the plainest reading of Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC, 758 F.3d 777, 783 (6th Cir. 2014)), a debt collector must only provide information regarding “how and when the debt was originally incurred or other sufficient notice from which the consumer could sufficiently dispute the payment obligation.” Haddad, 758 F.3d at 786. Exactly what is “sufficient” will depend on the facts of each case. 

PRA says that it met this standard by providing Cooper with the amount of the debt owed, the name of the original creditor, and the name, address, and telephone number of the current creditor.

Since Cooper claims that the debt never existed, PRA could meet the Haddad standard by giving Cooper information about how and when the debt came into existence. PRA’s first verification letter from August 10, 2015 did just that by notifying Cooper that an account in his name had been opened with U.S. Bank on January 1, 2008. The letter also listed the account number and the last four digits of Cooper’s social security number, and later provided billing statements from the account. This information was sufficient to allow Cooper to dispute the debt. Not only that, but PRA also expressly gave Cooper an opportunity to dispute the debt by enclosing an identity theft affidavit in two of its verification letters. There is no question that Cooper had the information necessary to complete these affidavits. PRA was therefore not required to provide a copy of an original contract because Cooper would not have needed an original contract in order to sufficiently dispute the debt. 

Because PRA’s letters and identity theft affidavits clearly communicated to Cooper that he could dispute the validity of the debt, they were sufficient under the FDCPA.”

The court also granted PRA’s summary judgment motion as to the fraud claims. 

insideARM Perspective 

This is an interesting case on the issue of what is a valid response to a request for verification. However, its review should be limited to that issue AND the specific facts in this case. It is interesting the court did not require that PRA respond to the consumer’s request for copies of original documents. Instead, the court held that PRA was simply required to meet the minimum obligation under the FDCPA. 

The court never really discussed the issue regarding how U.S. Bank became owner of an account opened with Comerica Bank and what, if any impact that might have on PRA’s ability to collect the amount allegedly owed. All that happened is a summary judgment in favor of PRA on the plaintiff’s claims. Had the case been a counterclaim on a collection action the court might have gone into greater discussion on the U.S. Bank/Comerica Bank question and Cooper’s obligations on the account. 

Finally, there was an interesting footnote to the opinion. It raised an issue that was readily apparent after reading Judge Cohn’s description of the facts in the case. Judge Cohn noted: “That PRA called Cooper before sending the first verification letter might well be a violation of the FDCPA. However, Cooper does not raise that claim in his complaint or motion for summary judgment.”