NJ District Court Underlines the Limits of “Safe Harbor” Protection Under Regulation F | McGlinchey Stafford

On May 7, 2024, the United States District Court for the District of New Jersey issued a decision holding that a debt collector’s use of the Model Form Validation Notice under Regulation F does not ensure compliance with the requirements of 15 USC § 1692g or otherwise sections of the Fair Debt Collection Practices Act (FDCPA).(1) Accordingly, the court joined “several other district courts in concluding that compliance with Regulation F and the CFPB’s model form does not, by itself, provide a ‘safe harbor.’ against all alleged violations of the FDCPA.”

Background to the case

In Devoe, a pro-plaintiff filed a putative class action for violation of the FDCPA because he received an undated first demand letter from defendant’s collection agency stating that plaintiff owed $10,458.33 on a credit card account. The letter specified that the plaintiff owed such amount “as of 04/18/2021” and that the plaintiff was charged $0.00 in interest and fees “between 04/18/2021 and today.” Plaintiff alleged that he was misled as to the status of the debt because the letter was undated, and as such did not know whether $10,458.33 was the current amount owed on the date he received the letter, and he could not determine as to which date “today” means.

The debt collector moved to dismiss, arguing that: (1) the complaint does not demonstrate that the initial collection letter violated any provision of the FDCPA; (2) defendant has complied with the FDCPA and its regulations; (3) Defendant is entitled to safe harbor protection under the FDCPA because his letter reflected the CFPB’s model letter; and (4) a federal court in California recently dismissed the same claims against the defendant based on a letter virtually identical to the one he sent to the plaintiff.

Reject safe haven

The New Jersey court rejected defendant’s arguments that use of the CFPB’s model form provided a safe harbor for the asserted FDCPA claims. Instead, the court enters Devoe reiterated that under the plain language of 12 CFR § 1006.34(d)(2)(i), the safe harbor provision applies only to alleged violations of Regulation F, but not necessarily to alleged violations of the FDCPA. Therefore, the court denied defendant’s motion with respect to plaintiff’s claim under 15 USC § 1692g(a).

Consequences for collection agencies

The Devoe holding company reminds debt collectors that the courts may require separate proof of compliance with the FDCPA and Regulation F and underlines the importance of implementing compliance procedures with the law and resulting regulations to minimize the risk of exposure.

(1) Devoe v. Frontline Asset Strategies, LLC2024 WL 2045642 (DNJ May 7, 2024).