fails to constitute the notice required under § 1692g; (3) the collection letters fail to adequately convey to the least sophisticated consumer that the required validation information is provided on the reverse side; (4) the required validation notice is overshadowed by the contradictory and misleading statement demanding immediate payment and representation that further contact would only be avoided by making full and immediate payment; and (5) that the Defendant's validation notice violates § 1692g by demanding payment in less than thirty days of the notice.
The FDCPA was enacted "to protect consumers from unscrupulous debt collection practices . . . without imposing unnecessary restrictions on ethical debt collectors." In particular, the legislation was intended "to eliminate the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid." S. Rep. No. 382, 95th Cong., 1st Sess. 1-2, reprinted in 1977 U.S. Code Cong. & Admin. News 1695, 1696. See also, 15 U.S.C. § 1692(a) - (e) (legislative purpose is to eliminate abusive, deceptive and unfair debt collection practices including misrepresentation). Section 1692g(a) of the FDCPA requires that, within five days of the initial communications from a debt collector, the consumer will be provided a written notice containing --
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
If the consumer disputes the debt or requests, in writing, the name of the original creditor, then the collector must halt all collection efforts until it mails verification of the debt or the creditor's name to the consumer. 15 U.S.C. § 1692g(b).
However, absent such dispute or notification during the thirty day validation period, the debt collector may continue its collection efforts. See, Smith v. Financial Collection Agencies, 770 F. Supp. 232, 236 (D.Del. 1991).
Section 1692e of the FDCPA prohibits debt collectors from making certain false or misleading representations or using false or misleading means in connection with the collection of any debt. Subsection 1692e(11) specifically prohibits, except in circumstances not relevant to this case, the failure to disclose clearly, in all communications made to collect a debt, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose.
In this case, Plaintiff claims that Defendant's referral notice and payment information overshadows and contradicts the required validation notice and thereby violates both § 1692g and § 1692e(11). Defendant contends that, since the information required by these two sections of the statute is provided on the reverse side of their form letters, there are no violations.
However, as Defendant itself recognizes, "simply providing the language does not necessarily insure compliance with the FDCPA. Courts will require that the warning and validation language not be given in such manner that the least sophisticated debtor would not be assured of receiving it." Defendant's Trial Memorandum dated November 18, 1992 at p. 5, (citing, Read v. Amana Collection Services, 1991 WL 5155 (W.D.N.Y. 1991) (Elfvin, J.)). "The statute [FDCPA] is not satisfied merely by inclusion of the required debt validation notice; the notice Congress required must be conveyed effectively to the debtor . . . it must be large enough to be easily read and sufficiently prominent to be noticed -- even by the least sophisticated debtor . . . furthermore, to be effective, the notice must not be overshadowed or contradicted by other messages or notices appearing in the initial communications from the collection agency." Swanson v. Southern Oregon Credit Services, Inc., 869 F.2d 1222, 1225 (9th Cir. 1988) (emphasis added); Riveria v. MAB Collections, Inc., 682 F.Supp. 174, 177 (W.D.N.Y. 1988) (Larimer, J.) (strategic placement of § 1692g validation notice on reverse side of initial collection letter without proper reference on front side is, in effect, no notice). Accord, Read, supra. A validation notice satisfies the statute if the information given in the notice is large enough to be easily read and sufficiently prominent to be noticed, even by the least sophisticated consumer. Baker v. G.C. Services Corp., 677 F.2d 775, 778 (9th Cir. 1982).
In Riveria, supra, Judge Larimer also pointed out that the failure to provide appropriate language on the reverse side of a notice, calculated to alert the reader that the information, i.e., a validation notice, was directed to her or him, was also evidence of an intentional violation of the statute. Holdings under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., persuasively suggest that the required disclosures under that statute are not clearly and conspiciously made if a consumer must look in more than one place for them. See, Riveria, supra, at 177 (citing cases). See also, Ost v. Collection Bureau, Inc., 493 F.Supp. 701, 703 (D.N.D. 1980) (communication must not "evade the spirit of the notice statute, and mislead the debtor into disregarding the notice.").
It is clear that the precise notifications required by Congress in the statute must occur in "all communications." Pipiles v. Credit Bureau of Lockport, 886 F.2d 22, 26 (2d Cir. 1989). It is equally clear that, as to a violation of § 1692e and subparagraph (11), both the fact that an attempt to collect a debt is being made and that any information so obtained during the collection procedure will be used for that purpose, must be clearly stated. Pipiles, supra.
Although the FDCPA does not prescribe any particular form sequence, location or typesize, (see, Riveria, supra, at 176), the notice in question must be evaluated against the broad remedial purposes of the statute and the statutory language itself. Pipiles, supra, at 26; Swanson, supra, at 1225; Riveria, supra, at 176. Here, while the required notice under both §§ 1692g and e(11) are contained in the documents, they appear on the reverse side of both form letters sent by Defendant. However, the required information is printed in an odd configuration, centered in the upper two-thirds of the reverse page of the initial communication and follow-up. It is printed in a light grey ink on a light shade of grey computer paper, making it difficult to read. Further, the typesize is barely 7 point (closer to six point by actual measurement), or less than 1/10" in size. The court takes judicial notice that the newsprint type for the local daily newspaper in this community is 9.4. In these circumstances, I conclude that the form used in this case fails to adequately apprise a least sophisticated consumer of the required notices.
Because Defendant's form, unlike the facts in Riveria, does purport to direct a consumer to the reverse side, our analysis cannot end there. The notice on the front side directing the reader to the reverse side of the letter is of a small, albeit dark blue ink, type set as compared with the other information presented. But it is also at the very bottom of the paper, coincidentally within the tear-off portion of the letter to be used by the consumer in electing the credit card payment option. The reader, therefore, is just as likely to go to the reverse side of that portion of the letter which, as described above, contains an eye-catching bold typeset in larger than 12 point lettering giving directions on how to make a credit card payment of the bill. In this circumstance, the suggestion, "See Reverse Side for Important Information," which Defendant argues refers to the validation notice is, at best, ambiguous and, at worst, misleading. In either case, it is inadequate because it is neither prominent nor does it effectively convey to the least sophisticated consumer that important congressionally created rights applicable to his or her situation appear on the reverse side of the letter.
Plaintiff vigorously, and correctly, contends that the format of the document, together with the strong and, by comparison, clear statements on the form, including the large block lettered word IMPORTANT immediately above it, directs the recipient's attention to information concerning the credit-card method of payment. In this circumstance, the form represents ". . . an attempt on the part of the collection agency to evade the spirit of the notice statute and mislead the debtor into disregarding the [required debt validation] notice." Swanson, supra, at 1226 (quoting, Ost, supra). A lawyer would probably have limited difficulty discovering and understanding the validation notice and the statement required by § 1692e(11) as printed on Defendant's form. But the standard is, of course, whether the least sophisticated consumer would discover and understand the required notices. Given the protective purpose of the statute and the substantial deficiencies in the particular combination of form, paper color and quality, layout, print style, and ink color chosen by Defendant, the letter notice fails, by a wide margin, to meet this legal standard.
As noted earlier in this discussion, Plaintiff argued that Defendant's collection letters also violated the FDCPA because the demand for immediate payment overshadowed and contradicted the validation notice. See, Swanson, supra. Both notices sent to Plaintiff run afoul of this judicial construction of the FDCPA's requirements. The first notice of February 12, 1990 states that immediate payment will avoid further contact. This is contradictory to the validation notice rights available to the consumer and a misleading statement as immediate payment is not the only step which may then be taken by Plaintiff to avoid further contact. See, 15 U.S.C. § 1692g(b). The second notice of February 28, 1990 advises that "to avoid further collection measures," the debt must be paid within five days. Assuming that the February 12th letter was received on February 13, 1990 and the second notice received March 1, 1990, Plaintiff still had at least until March 15, 1990, or fifteen days remaining within the thirty day validation period, to contact Defendant and dispute the debt. While continuing efforts to collect the debt may occur within the thirty day period provided under § 1692g, those efforts must terminate for at least that period from the date such validation demand is received by the debt collector, within the thirty day period, until the date the information demanded is provided to the debtor. See, 15 U.S.C. § 1692g(b). Defendant's collection letters, by demanding immediate payment without adequate notice of the Plaintiff's right to dispute the underlying debt, contradicted the validation notice contained in the letter. See, Graziano, supra.
Defendant relied on several cases, including Miller v. Payco-General American Credits, Inc., 943 F.2d 482 (4th Cir. 1991). In that case, the phrase, "Notice: See reverse side for important information", appeared in letters 1/8" high, as here, at the very bottom of the front page of the document. This statement was printed in white against a red background. The reverse side of the document contained four printed paragraphs containing the validation notice, also, as in the case at bar, in grey ink. While the instant case lacks the characteristics of "screaming headlines, bright colors and huge lettering" demanding immediate payment in full which contributed to the court's finding of a violation of the FDCPA in Miller, nevertheless the court's observation in that case that there are "numerous and ingenious ways of circumventing § 1692g under a cover of technical compliance" is applicable to the instant case. Further, the facts in Smith v. Financial Collection Agencies, 770 F. Supp. 232 (D.Del. 1991), also relied upon by Defendant, do not appear to be similar to this case. See, Smith, supra, at 238 (validation notice language on front of letter was "in type which [was] not microscopic, illegible or otherwise onerous to read"). In any event, the test is not whether the required notifications were so deficient as to be "microscopic," "illegible" or "onerous to read." Compare Swanson, supra, Riveria, supra, Ost, supra.
Under 15 U.S.C. § 1692k(a)(1) actual damages may be awarded. As there was no proof of actual damages to the Plaintiff in this case, the court may award additional statutory damages, under 15 U.S.C. § 1692k(a)(2)(A), not to exceed $ 1,000 for each violation, taking into account, among other things, the frequency, persistence and nature of a debt collector's non-compliance and whether such non-compliance was intentional. Although there is no direct evidence of an intentional effort to violate the statutory requirements, this court finds that, despite Defendant's purported attempt to comply with the statute, the deficiencies in its choice of layout, along with its choice of how to convey that information discussed above, justifies the conclusion that there was at least some motive to draw the consumer's attention away from the required statutory notices. The fact that the same collection form used by this Defendant was found to violate the FDCPA in another recent case in this court, (see, Siler v. Management Adjustment Bureau, No. 91-65E, dated February 18, 1992 (Elfvin, J.)), suggests some degree of persistency. Accordingly, I conclude that in order to encourage full compliance with the FDCPA a meaningful damage award is appropriate.
Therefore, Plaintiff is entitled to a judgment on his claims against Defendant pursuant to the FDCPA that Defendant violated 15 U.S.C. §§ 1692e(11) and 1692g. Judgment shall be against Defendant in the amount of $ 500 on each claim, for a total of $ 1,000. The court reserves decision on Plaintiff's request for attorney fees and costs under 15 U.S.C. § 1692k pending receipt of Plaintiff's petition for same.
Based on the foregoing analysis, the court directs that judgment be entered for the Plaintiff and against the Defendant in the amount of $ 1,000. As to attorney's fees and costs, the court reserves decision pending receipt of Plaintiff's application for such fees.
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
DATED: July 2, 1992
Buffalo, New York
[SEE DEFENDANT'S EXHIBIT A IN ORIGINAL]