Change to Legal Status of Demands for Verification

The following is an excerpt from a recent case in the United States Court of Appeals for the Fourth Circuit (covers S.C. through Md.). Note the third full paragraph beginning with, "Contrary to...", in particular.


2. Gallerizzo's Failure to Cease Collection Efforts
on Allegedly Unverified Inspection Fees and Legal Fees

Appellants allege that Defendants violated § 1692g(b)6 by (1) failing to verify [F.3d 406] the inspection fees portion of the debt asserted in the Demand Letter (Count II); (2) failing to verify the legal fees portion of the debt (Count III); and (3) failing to cease his collection efforts with respect to the foregoing disputed portions of the debt (Count IV).

With respect to Count II, the district court determined that Appellants' counsel, in a telephone conversation with Gallerizzo where he stated that the verification that was needed related to legal fees, waived whatever claim that the Chaudhrys might make in regard to the alleged failure to verify the inspection fees. Assuming that there had been no waiver, however, the court determined that Gallerizzo adequately verified the amount of inspection fees and then sent the Chaudhrys' counsel a letter . . . including written verification of these fees. The court found no duty for Gallerizzo to have assembled supporting documentation.

Contrary to Appellants' contention, verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. See Azar v. Hayter, 874 F. Supp. 1314, 1317 (N.D. Fla.), aff'd, 66 F.3d 342 (11th Cir. 1995), cert. denied, 516 U.S. 1048 (1996). Consistent with the legislative history, verification is only intended to eliminate the . . . problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid. S. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1699. There is no concomitant obligation to forward copies of bills or other detailed evidence of the debt.

In the present case, Gallerizzo, after receiving assurances from NationsBank that the sums were owed, verified the debt amounts in his January 18th letter to Plaintiffs' counsel and forwarded a copy of the bank's computerized summary of the Chaudhrys' loan transactions. The summary included a running account of the debt amount, a description of every transaction, and the date on which the transaction occurred. See Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir. 1991) (holding that computer printouts which confirmed amounts of debts, the services provided, and the dates on which the debts were incurred constituted sufficient verification). Thereafter, in a January 19th letter to counsel, Gallerizzo restated the amount of the inspection fees and indicated that the amounts were correct. Nothing more is required.

On Count III, the district court held that Gallerizzo was not required to provide the degree of detail that was contained in the time sheets and that Defendants' actions in redacting the legal fees was proper. The court ruled that [v]erification only requires a debt collector to confirm with his client that a particular amount is actually being claimed, not to vouch for the validity of the underlying debt. For the same reasons stated above in support of the court's ruling on Count II, we agree with the court's determination on Count III.

Moreover, Gallerizzo cannot be liable for having redacted privileged information contained in the bills. Otherwise, a consumer would be able to prevent the legitimate collection of a debt by simply demanding the release of time entries from an attorney, serving as a collector, who has an ethical obligation to protect privileged information. Surely, the fdcpa does not require an attorney to violate that obligation.

[F.3d 407] In Count IV, Appellants allege that Gallerizzo's January 24, 1996 letter responding to a request from Diane Fox, the Chaudhrys' settlement attorney, was an attempt to collect the debt prior to the verification of the inspection fees or the attorneys' fees. Because the district court properly held that Gallerizzo verified the inspection fees and legal fees, Count IV must also fail. Even assuming that Gallerizzo failed to verify the fees, however, the court was correct in finding that Gallerizzo's letter was not an act to collect debt, but rather was sent to Fox, at her request, so that she could have an accurate payoff figure at a separate meeting to refinance the Chaudhrys' loan.

In sum, we find no error with respect to the district court's conclusion that Defendants did not violate § 1692g(b).

Chaudhry v. Gallerizzo, 174 F.3d 394, 405-407 (4th Cir. 1999)