5240 Mendenhall Park Place, Memphis, TN 38115
Settlement offers provided with the validation letter may overshadow the consumer’s validation rights. Courts are not in agreement on this subject and at least one court has held a settlement offer provided with the validation notice overshadowed the validation period. This court found that a validation letter that contained language to suggest that the consumer should call to arrange a settlement to gain the collector’s cooperation circumvented the FDCPA and overshadowed the validation notice. Another court held that a settlement offer that expired before the validation period did not overshadow the validation notice as it did not demand immediate payment nor did it state the consumer has less than thirty days to dispute the debt. One time offers can sometimes be considered false or misleading; especially, if the collector can offer the discount at any time or can offer more of a discount than is presented. One district court determined that successive settlement offers that included end dates were not false or misleading under the FDCPA. The court concluded “a settlement offer that states the proposed discount and the length of the offer, but does not expressly nor implicitly indicate no other offer will be made” does not violate the Act even though more favorable terms in the future are likely.
Debt collectors should avoid presenting settlement offers as one-time only opportunities when such offers may be presented in the future. A debt collector also should not misrepresent the settlement authority granted by the creditor.
Debt collectors should not offer settlements in an amount greater than that authorized by the client. If the client authorizes a onetime, take-it-or-leave-it settlement offer, the debt collector should only make such offers once to avoid allegations of false or misleading practices. Debt collectors should be careful making settlement offers on debts that are beyond the statute of limitations as some courts have ruled such offers could mislead consumers into believing the debt is judicially enforceable when it is not.