Do we have to use the CFPB's model validation notice?

The model notice is optional; a debt collector who uses it has complied with the validation information content and form requirements. That protection covers only content and format: a collector that uses the model notice but discloses an incorrect amount still violates the prohibition against providing false or misleading information.

Can we change the model form and keep the safe harbor?

Only within limits the regulation sets. A collector keeps the safe harbor by adding or omitting the optional content described in the regulation, making specified changes such as putting certain content on a separate page, or making changes that leave the notice “substantially similar” to the model. Adding other disclosures can cost the collector the safe harbor for the entire notice, not just the added language.

Can we give the validation information by phone instead of sending a notice?

Only in the initial communication, and without the model-form safe harbor. A debt collector may provide the validation information orally in the initial communication. A collector that does so cannot use the model validation notice, so it does not receive the safe harbor that comes with it.

Can we send the validation notice by email?

Yes, but the E-SIGN Act requirements apply unless the notice goes out in the initial communication. Email that only points the consumer to the notice is risky, as Lavallee v. Med-1 Solutions, LLC shows: the Seventh Circuit held that the emails did not satisfy the requirements for electronic delivery within an initial communication because they did not “contain” the validation notice information.

Who receives the notice if the consumer has died?

A named person authorized to act for the estate, but only if the collector knows or should know of the death and has not already given the information to the consumer. In that case the collector must give the information to an individual it identifies by name who is authorized to act for the estate.

What happens if the notice comes back undeliverable?

A returned notice means the collector has not yet sent it in a manner reasonably expected to provide actual notice. If the collector resends because the consumer did not receive the original and has not otherwise received the validation information, it must calculate the end of the validation period from the date the consumer receives, or is assumed to receive, the new notice.

FinancialLegal test

Validation notice

Berkeley Robinson, Managing Attorney at Robinson Law Firm PLLC

Author

Berkeley Robinson, Esq.

Managing Attorney, Robinson Law Firm PLLC

Berkeley has served as the go-to counsel for many scaling businesses in a transactional and litigation management capacity. Before becoming an attorney, Berkeley grew sales teams, ran online marketing campaigns, and did everything else an entrepreneur does—and still does today as the founder of two online businesses.

Definition

In debt collection, a validation notice is a written or electronic notice that provides the validation information required by paragraph (c) of this section. Source: 12 C.F.R. § 1006.34 That validation information consists of information about the debt, information about the consumer’s protections and rights during collection of the debt, and information that helps the consumer exercise those rights. Source: CFPB, Debt Collection Rule Small Entity Compliance Guide § 12.1 Collectors and others also call it a “g notice,” after section 809(a) of the Fair Debt Collection Practices Act (FDCPA). Source: CFPB, Debt Collection Practices (Regulation F), December 2020 Final Rule, discussion of § 1006.34(b)(4)

Key legal rules

A validation notice is a required disclosure, so the rules cover when it goes out, what it says, the validation period, and how it is delivered. Seven rules put that to work:

A debt collector must provide the consumer with “validation information” in a clear and conspicuous form—readily understandable, and for written and electronic notices readily noticeable and legible—in the initial communication or within five days of the initial communication. Source: FFIEC-approved FDCPA examination procedures, Validation of Debts – 12 CFR 1006.34 and 1006.38 A collector who otherwise would have to send the notice within five days need not do so if the consumer has paid the debt before that deadline. Source: 12 C.F.R. § 1006.34
The validation information must include a debt collector communication disclosure, certain information about the debt, an itemization of certain information related to the debt, information about consumer protections, and consumer response information. Source: CFPB, Debt Collection Rule Small Entity Compliance Guide § 12.1
The validation period starts when the collector provides the validation information and ends 30 days after the consumer receives, or is assumed to receive, it; the notice must state that end date and that a written dispute on or before that date requires the collector to cease collection of the debt, or the disputed portion, until it sends verification or a copy of a judgment. Source: 12 C.F.R. § 1006.34
During the validation period, the debt collector must not engage in any collection activities or communications that overshadow or are inconsistent with the disclosure of the consumer’s rights to dispute the debt and to request the name and address of the original creditor. Source: FFIEC-approved FDCPA examination procedures, Validation of Debts – 12 CFR 1006.34 and 1006.38
If, within 30 days of receiving the validation notice, the consumer disputes any portion of the debt in writing or requests the name and address of the original creditor, the collector must stop all collection efforts until it sends the consumer a copy of a judgment or verification of the debt, or the original creditor’s name and address, as applicable. Source: FFIEC-approved FDCPA examination procedures, Validation of Debts – 12 CFR 1006.34 and 1006.38
A debt collector who sends required disclosures in writing or electronically must do so in a manner reasonably expected to provide actual notice, and in a form the consumer may keep and access later; electronic delivery after the initial communication must also comply with the E-SIGN Act. Source: 12 C.F.R. § 1006.42(a)(1)
Using the model notice is not required, but a debt collector who uses it has complied with the validation information content and form requirements. Source: FFIEC-approved FDCPA examination procedures, Validation of Debts – 12 CFR 1006.34 and 1006.38 That safe harbor does not cover the notice’s delivery method and timing requirements. Source: CFPB, Executive Summary of the December 2020 Debt Collection Rule

For the sake of space, this page lists only the primary rules related to this term that most businesses should follow. More may apply to your situation, and your unique facts affect how they apply.

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Why these rules exist

The notice exists to stop collectors from pursuing the wrong person or debts that are already paid: Congress treated the requirement as a “significant feature” of the FDCPA and meant it to “eliminate the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid.” Source: Brief of Amicus Curiae Consumer Financial Protection Bureau, Wiley v. Notte & Kreyling, P.C., Statement § A It works through recognition: a consumer who cannot tell from the first contact whose debt it is or how much is claimed cannot decide whether to dispute it, so the required content is meant to help consumers “recognize debts that they owe and raise concerns about debts that are unfamiliar.” Source: CFPB, Debt Collection Practices (Regulation F), Notice of Proposed Rulemaking, discussion of § 1006.34

The model form and its safe harbor address the collector’s side of the same problem. Collectors that use the model notice or a substantially similar form, the CFPB reasoned, “will face significantly reduced litigation risk when providing validation notices because they will receive the safe harbor.” Source: CFPB, Debt Collection Practices (Regulation F), December 2020 Final Rule, § 1022(b) analysis

Enforcement examples

FTC v. Vantage Point Services, LLC (telephone debt collection)

Complaint for Permanent Injunction and Other Equitable Relief (W.D.N.Y., Jan. 5, 2015)

Count VI of the FTC and New York complaint alleged that, in numerous instances, the defendants failed to provide consumers, either in the initial communication or in a written notice sent within five days afterward, with statutorily required information about the debt and the right to dispute it, in violation of section 809(a) of the FDCPA. Source: Complaint, FTC and People of the State of New York v. Vantage Point Services, LLC (W.D.N.Y. Jan. 5, 2015)

Outcome. The complaint asked the court to enter a permanent injunction to prevent future violations by the defendants. Source: Complaint, FTC and People of the State of New York v. Vantage Point Services, LLC (W.D.N.Y. Jan. 5, 2015) It also sought relief to redress consumer injury, including restitution and the refund of monies paid. Source: Complaint, FTC and People of the State of New York v. Vantage Point Services, LLC (W.D.N.Y. Jan. 5, 2015)

Lavallee v. Med-1 Solutions, LLC (medical debt collection by email)

Lavallee v. Med-1 Solutions, LLC, 932 F.3d 1049 (7th Cir. 2019)

The debt collector tried to meet the written-notice requirement by emailing the consumer a link to an Internet-connected server from which she could purportedly obtain the validation notice. Source: CFPB, Lavallee v. Med-1 Solutions, LLC (case summary)

Outcome. In September 2017 the district court granted summary judgment to the consumer, holding that Med-1 had not “sent” validation notices to her. Source: Brief of CFPB as Amicus Curiae, Lavallee v. Med-1 Solutions, LLC (7th Cir.), Statement § D The court awarded $1000 in statutory damages plus costs and a reasonable attorney’s fee. Source: Brief of CFPB as Amicus Curiae, Lavallee v. Med-1 Solutions, LLC (7th Cir.), Statement § D The Seventh Circuit later held that the emails did not meet the requirements for electronic delivery within an initial communication, because they did not “contain” the validation notice information. Source: CFPB, Debt Collection Practices (Regulation F), Final Rule, discussion of 12 C.F.R. § 1006.42

Wiley v. Notte & Kreyling, P.C. (utility debt collection letter)

Brief of Amicus Curiae Consumer Financial Protection Bureau in Support of Plaintiff-Appellant and Reversal

In June 2017 a debt collection law firm sent the consumer a collection letter about a debt she allegedly owed to Georgia Power Company. Source: Brief of Amicus Curiae Consumer Financial Protection Bureau, Wiley v. Notte & Kreyling, P.C., Statement § B The letter’s validation notice directed her to raise any dispute with the creditor rather than with the debt collector. Source: Brief of Amicus Curiae Consumer Financial Protection Bureau, Wiley v. Notte & Kreyling, P.C., Statement § B

Outcome. The district court granted the law firm’s motion to dismiss on October 15, 2018. Source: Brief of Amicus Curiae Consumer Financial Protection Bureau, Wiley v. Notte & Kreyling, P.C., Statement § B On appeal, the CFPB argued as amicus that the letter violated the express requirement in 15 U.S.C. § 1692g(a) that validation notices must tell consumers to notify the debt collector to properly dispute a debt. Source: Brief of Amicus Curiae Consumer Financial Protection Bureau in Support of Plaintiff-Appellant and Reversal, Summary of Argument

In re Phoenix Financial Services, LLC (medical debt collection)

In re Phoenix Financial Services, LLC, Consent Order, 2023-CFPB-0004

In at least hundreds of instances, Phoenix sent consumers a debt collection letter after receiving a written dispute within 30 days of the consumer’s receipt of a debt validation notice, but before obtaining verification of the debt or a copy of a judgment and mailing it to the consumer. Source: In re Phoenix Financial Services, LLC, Consent Order, 2023-CFPB-0004

Outcome. The order required Phoenix to refund all amounts paid on an unverified debt between January 1, 2017 and the date of the order by consumers who received an unlawful letter after disputing the debt. Source: CFPB, Phoenix Financial Services, LLC (enforcement action summary, June 8, 2023) It also required a civil money penalty of $1,675,000. Source: In re Phoenix Financial Services, LLC, Consent Order, 2023-CFPB-0004

In re Discover Bank (defaulted student loans)

Consent Order in the Matter of Discover Bank and The Student Loan Corporation

Some of the student loans the respondent acquired were already in charged-off status when it bought them. Source: Consent Order in the Matter of Discover Bank and The Student Loan Corporation (CFPB) It went on to collect on about 252 of those loans itself, making an initial communication with the borrowers by phone. Source: Consent Order in the Matter of Discover Bank and The Student Loan Corporation (CFPB) In that first contact it did not give those consumers the validation information. Source: Consent Order in the Matter of Discover Bank and The Student Loan Corporation (CFPB)

Outcome. The order found that the respondent violated the FDCPA, 15 U.S.C. § 1692g, in its initial collection activity on the defaulted loans. Source: Consent Order in the Matter of Discover Bank and The Student Loan Corporation (CFPB)

Exposure

A collector that fails to give a compliant validation notice can lose money to the people it contacted and to regulators. Under the Fair Debt Collection Practices Act, a debt collector who fails to comply with any provision is liable to the affected person, including, in an individual action, for additional damages the court may allow, but not exceeding $1,000. Source: Fair Debt Collection Practices Act §§ 813–814, 15 U.S.C. §§ 1692k, 1692l (text reproduced in Attachment A to the Credit Smart stipulated order) The FTC can enforce the same law, because a violation is deemed an unfair or deceptive act or practice under the FTC Act. Source: Fair Debt Collection Practices Act §§ 813–814, 15 U.S.C. §§ 1692k, 1692l (text reproduced in Attachment A to the Credit Smart stipulated order) A collector escapes liability only if it shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding procedures reasonably adapted to avoid it. Source: Fair Debt Collection Practices Act §§ 813–814, 15 U.S.C. §§ 1692k, 1692l (text reproduced in Attachment A to the Credit Smart stipulated order)

The CFPB’s orders attach money and conduct remedies to failures in the validation period. In Phoenix Financial Services, the order required a $1,675,000 civil money penalty and refunds of payments on unverified debts. Source: CFPB, Phoenix Financial Services, LLC (enforcement action summary, June 8, 2023) In Commonwealth Financial Systems, the order permanently banned the company from participating in or assisting others in debt collection, debt buying, debt selling, and consumer reporting activities. Source: CFPB, Commonwealth Financial Systems, Inc. (enforcement action summary, Dec. 15, 2023) It also required a $95,000 civil money penalty. Source: CFPB, Commonwealth Financial Systems, Inc. (enforcement action summary, Dec. 15, 2023)

Supervision exposure is lower-stakes but real. Examiners found that one or more debt collectors failed to send the prescribed validation notice within five days of the initial communication, and the collectors responded by revising their policies and procedures, monitoring and audit programs, and training. Source: CFPB, Supervisory Highlights, Issue 21 (Feb. 2020), § 2.1.2

FAQs

1.1006.34. 12 C.F.R. § 1006.34
2.Debt Collection Rule Small Entity Compliance Guide. CFPB, Debt Collection Rule Small Entity Compliance Guide § 12.1
3.Debt Collection December 2020 Final Rule (Regulation F). CFPB, Debt Collection Practices (Regulation F), December 2020 Final Rule, discussion of § 1006.34(b)(4)