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DISCLAIMER: This article is based on a complaint. The defendant has not responded to the complaint to present its side of the case. The claims mentioned are accusations and should be considered as such until and unless proven otherwise.
The back of the Model Validation Notice is a blank canvas that collectors can use to provide some of the many additional disclosures that are required under different state laws. It’s also a spot to put information that the collector believes may be relevant and important for the consumer to know and understand. But the back of the MVN is also a minefield of potential litigation and one collector has found itself to be the subject of a Fair Debt Collection Practices Act class-action lawsuit for including a note on the back of the MVN that the debt in question may be reported to the credit reporting agencies, which, the plaintiff claims, is not possible based on the type of debt that was trying to be collected.
A copy of the complaint, filed in the District Court for the Western District of Wisconsin, can be accessed using case number 23-cv-00333 or by clicking here.
The plaintiff received a Model Validation Notice from the defendant, informing the plaintiff about an unpaid debt owed for auto insurance premiums. On the back of the notice was the following disclaimer:
A negative credit report reflecting on your credit record may be submitted to a credit reporting agency if you fail to fulfill the terms of your credit obligation. We will not submit a negative credit report until after 45 days have passes from the date of this letter and will not submit such a report if we receive notice that you dispute the obligation.
Other than a notification that the defendant was licensed by the Division of Banking in the Wisconsin Department of Financial Institutions, the rest of the back of the notice was blank.
The plaintiff claims that an overdue insurance premium cannot be reported to the credit reporting agencies because they are not extensions of credit, meaning that the disclosure on the back of the MVN was false and misleading.
The suit seeks to include anyone who received an initial collection letter (the lawsuit’s word, not mine, because I know it’s a notice and not a letter 😁) seeking to collect on an insurance premium that included a similar disclosure. It accuses the defendant of violating Sections 1692e, 1692e(2)(A), 1692e(5), 1692e(8), 1692e(10), and 1692f of the FDCPA.
Many auto insurance companies offer a one-time payment in full option or a payment plan (for an additional fee). If the plaintiff(s) opted for the payment plan, they are, in essence, asking for an extension of credit. In my opinion, the defendant did nothing wrong, and the plaintiff has no standing in this case.