Tuesday, January 15, 2013

Challenging Chaudhry v. Gallerizzo From A Collection Agency

If you have been working on repairing your credit and you have sent validation letters to collection agencies, you probably have received or will receive a semi-form letter back saying that they have verified the account and they are correct.  Then they will put in a little modified excerpt from the Chaudrhy v. Gallerizzo case decision to justify their laziness and to deceive you into just accepting their false claim against you.  The modified excerpt looks like this:

"verification of a debt involves nothing more than the debt collector confirming in writing that the debt being demanded is what the creditor is claiming is owed. The debt collector is not required to keep or provide detailed evidence of the alleged debt."

When I see this in a response for one of my clients, I crack up because it just blares out to me that they don't have anything.  You see, the Chaudrhy decision is not about validation with a collection agency!!  They take a small piece of the decision and quote it, but they fail to tell you that it has nothing to do with them, has nothing to do with validation, and further, you didn't request "verification", you requested "Validation" and that is something different.  

Just so you know, the Chaudrhy decision was about legal fees.  The verification of the legal fees was being challenged and the court said that the law firm just had to confirm in writing that the fees they were claiming were the fees that were owed.  Legal fees are not collections, unless it has been assigned or sold to a collector.  Legal fees are fees that the attorney charges for services rendered.  Since when do collectors render services that you "hired" them to perform for you?  I'll answer that for you --> NEVER!!

The best way to challenge this type of letter is to send a follow up letter letting them know that you are not an uninformed idiot and that their feeble attempt at validation doesn't even come close to the legal requirements set forth in the FDCPA and appropriate case law.  I usually use some of that language in my response letters and then I follow up with laws to defend my demand for validation and what is required.  They are in the business of collecting and they are supposed to know the law, yet they are usually fairly ignorant, deceptive to consumers and flagrantly in violation of the law.

Here is a sample of what I put in my letters that you can modify and use against these obnoxious criminals. (Yes, I consider them criminals because they consistently break the law and commit extortion, mail fraud, violation of the RICO Act (racketeering, etc.), and violating both the FDCPA  and FCRA, among other illegal acts.)

 Dear Sirs, (you can put in the name that they may put on their letter or say To Whom it May Concern, what ever is your fancy)

I am in receipt of your letter dated 01/01/13 in which you claim you have verified the account which I am disputing and in which you attempt to quote a portion of the Chaudrhy case decision to justify your response or to attempt to deceive me, or both.  Please understand, your feeble attempt at validation is a joke.  In fact, you claim you verified when I didn't request verification, as we both know that verification is merely requesting that you have the right name, address, account number and original creditor.  Further, your verification doesn't meet the criteria as defined in Black's Law Dictionary which includes being able to testify to the verification under oath.  I Demanded Validation, which you did not provide.

Since  you are supposedly professional collectors, you should be aware that if you fail to validate, you are barred from "verifying" with the bureaus as that is collection activity, which is barred until full validation has been accomplished.  The Chaudrhy case is not about debt collectors and validation, it is about attorneys' fees.  Maybe your incompetence and laziness has prevented you from actually reading the entire case and the entire court decision.

I am requesting from you AGAIN, Validation.  Here is what I want from you:  The alleged contract with both my wet ink signature and your employee's signature establishing that we have agreed to do business together.  Provide proof that at least the four main elements of a contract have been met.  Provide me with the alleged contract between the alleged original creditor and me, and proof that at least the four main elements of a contract have been met.  Provide me with proof that you have the legal right to collect this alleged debt.  Provide a full accounting for the alleged account - all charges, payments, interest accrued, all fees, and the corresponding dates for which every event occurred.  (Spears v. Brennan).  Prove also that this alleged debt is not time barred, or in simpler terms for feeble minds, outside of my state's statute of limitations.

Please be aware that because you put on the bottom of your letter that it was an attempt to collect a debt, you are already in violation of the FDCPA, and until you validate, you are guilty of mail fraud, racketeering, extortion, and a slew of other felony violations of the law.  So, until you fully and legally validate as I have requested, or rather, have demanded from you, you are required by law to cease all collection activity.  Should you fail to validate within ____ days, you are to delete any and all references and reportings of this fraudulent and alleged debt from every credit bureau and or repository to which you have reported it to and you are banned from ever selling or assigning this alleged debt to another collector, as that would be another violation of law by conspiring to harass and extort again, along with other violations of law.

I then go on to quote some samples of collection activity, give them a certain number of days in which to comply with my demand for validation and usually put in a limited cease and desist.  Sometimes I add some more case law to back up my requirements for validation.  I also usually put in there that I am not requesting verification but am demanding validation pursuant to the FDCPA 15 USC 1692g Sec. 809 (b).  Then I end it with a Sincerely, and my client's name.

So, don't be afraid to send another letter challenging their arrogance and deception.  You don't have to be sweet and nice, because, when are they?  And why would you be nice to law breakers?  I don't care if the original debt was actually yours. It doesn't matter anymore.  You don't owe it to the original creditor anymore because they charged it off and got tax credits, got reimbursed from the insurance that they had on it, and they made profit by selling it.  They made money 3 times just in those ways, but they also made money from every dime you paid on it since it was created out of thin air and they never actually lent any real money to you in the first place.

So, fight, fight, fight, and challenge, dispute and challenge some more.  Its your legal right and like I always say,  "just like when you're a defendant in court, the burden of proof is not on you, it is on them."  Make them prove it.  Oh, one last thing.  They can't legally prove it!  If you want to know why, read some of my other posts regarding AmJur and "Subrogation."  You will be pleased with what you learn!

If you have any questions or comments, please hit the comment button below. (I love questions and comments).   I will respond to you.  If you have questions that you don't want to post on here, you can email me.  The link to that is up at the top right of this blog!

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  1. Anonymous commented that they wanted to know how to subscribe to this blog. I don't have a "subscribe" button but I do have a little blue button to the right and up a bit that says "Join this Site". I think that is like a "follow" or "subscribe" button. I'll see if I can find one more noticeable that I can add.

    (sorry his/her comments aren't showing up. I think I hit some wrong tab when I went to moderate and publish the comment. It published but didn't have the comment!)

  2. Where can I get the validation letter from or is it a letter that I write myself.

  3. Hi Erica, yes it is a letter that you write yourself. I can help you if you call me. I can tell you what to put on it. My phone number is up at the top and I do answer my phone.

  4. If people who cite Chaudhry are idiots, why do courts like in Dunham and Clark and Mahon and Haddad spend extensive time discussing the ruling? Why do FTC lawyers reiterate that verification is pretty much just validation re-sent? Why did Haddad explicitly reject a dictionary approach to the word "verification"? Why did the Senate report underlying that provision say verification was only meant to ensure that identity of the debtor was on point?

    1. Hi Joshua, thanks for your comments. First, I think you need to re-read the post because I did not say people who cite Chaudhry are idiots but rather when you send a follow up letter to their response, you are showing that you are not an idiot.

      Chaudhry is about verification, not validation. Verification should be received in the form of a sworn affidavit under penalty of perjury. The only persons who can produce verification are those with first hand knowledge and anything short of that is hearsay.

      3rd party collectors cannot meet the challenge of verification because they have no first hand knowledge. Verification must also be supported by the documentation, which is the validation, in order for it to rise above the level of hearsay. That has repeatedly been upheld in courts across the country.

      I don't know that the courts you state above are actively spending extensive time discussing the ruling unless they are arguing about the over and misuse of it by debt collectors. If FTC lawyers reiterate that verification is pretty much just validation resent, (oh, and I haven't read that anywhere), I think I might agree with that, provided the validation is accompanied by sworn testimony.

      Regarding the Senate report, I don't know which one you are referring and as I haven't read all of their reports, I can't confirm or deny they said that. What I do know is we have a lot of stupid senators and most of them are totally ignorant of the game collectors and bureaus play with consumers. I think the Senate gets things wrong much of the time and I think they are persuaded to get id wrong often because they've been compromised by lobbyists for the banking, bureau, and collection industries.

      So I'm wondering Joshua, are you a debt collector, paralegal, intern at a law firm, or just a student of the law? I enjoyed your questions as they gave me an opportunity to respond and for others to learn from the exchange.

  5. I wish I read this sooner. I have five medical bills and just paid three of them (smaller amounts). However, I still have two others in collections with this company, and the amounts are too large for me to pay right now. Would I still be able to do everything listed above? Any assistance would be appreciated.

    1. Hi Jaclyn,

      You have the right to dispute information you believe to be inaccurate - at any time! So, since a collection agency has no contract with you, you can dispute these last two collections with the credit bureaus first. Tell them you have no contract with this company and owe them nothing. Please delete.

      They will most likely come back as verified. Now you can write a letter directly to that collection company demanding validation. Tell them that they definitely better have a contract with you for these two alleged accounts and they need to send a copy of that for each one, plus other items you need for validation such as a full accounting, proof they have been authorized to communicate with you by sending you a copy of their assignment from the OC or a bill of sale, disclosing also the amount paid for each account.

      You will also want to receive a full chain of assignment from the OC through every other collection agency before it got to them. You also want proof that it is not outside the SOL, and proof they are licensed to perform any collection activity in your state. (if your state requires licensing and bonding).

      They will probably send you a bill from the medical facility or doctor, whatever the bill is for, but they will not send you a signed contract because they have none.

      Continue rejecting their claim of validation and tell them you will never accept that they have any interest to protect as they have never lent anything nor provided any services to you that you requested, until they provide a valid contract showing you have agreed to do business with them.

      You may have to do this repeatedly and may even need to file a small claims lawsuit against them for failing to validate and send a copy of the contract showing you agreed to do business with them, they provided services or lent you something and you need to REPAY them.

    2. Jaclyn - I think Shannon covered this at one point in time with medical collections, but may be relevant to replies your are about to receive from the medical collection agency.

      If they reply with your bills, they normally come with a procedure code, which means they just shared your private medical records and are in serious violations of HIPAA, ARRA, HITECH Act.

      I had a collection agent from a physical theorpist send medical records to me in an attempt to validate a debt, to which I responded that they were in violation of
      -Level 3 HIPAA with financial penalties and up to 10 yr in jail.
      -Subtitle D of ARRA Sec. 13401
      -Subtitle D of ARRA Sec. 13407(1)
      -Held liable for penalties outlined in the HITECH Act for their willful violation of Subtitle D of ARRA Sec. 13401 & 13407.

      They overnighted an apology letter to me via FedEx and deleted all files.

  6. Hi Shannon! I have two open collection/chargedoff accounts on my report from 2013. They are from
    a doctors appointment with labs that my insurance did not pay. I have read about disputing with the bureaus by citing "NO CONTRACT". I was told this can get those bad marks removed. Is this correct?

    1. Hi Emily,

      It is correct but then again, not necessarily so simple to remove with just that bureau dispute. Many times the bureaus will just respond saying that the furnisher verified the information.

      You will need to be prepared to also fight these with demands for validation. That validation letter needs to tell them that one of the items they must send you is a copy of a valid contract between their company specifically and you.


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