A District Court judge in Mississippi has approved a settlement in a Fair Debt Collection Practices Act class action that will see the defendant pay $14,000 to the plaintiffs and their attorneys. The settlement stems from allegations that the defendant failed to include a validation disclosure in debt collection letters sent to the plaintiff in 2021.
The background: The case was filed after the plaintiff received two collection letters from the defendant that did not include the legally required validation notice.
- The first letter appears to be a reminder that a payment on the debt was due in about 10 days, and the second letter was sent a month later, saying that a payment was not received and that the individual should contact the defendant to make arrangements for a payment to be made, or the defendant would have “no alternative but to recommend additional collection action.”
- The plaintiff sought class certification on behalf of all consumers who received similar letters from the defendant during the specified period. The lawsuit aimed to hold the defendant accountable for systemic non-compliance with federal regulations, arguing that such practices undermine consumer protections.
- The defendant did not respond to the lawsuit and a default judgment was awarded to the plaintiff, who then sought certification of the class, which was approved back in 2022.
The ruling: Judge Sharion Aycock of the District Court for the Northern District of Mississippi approved the settlement, finding that it adequately addressed the alleged harm caused by the defendant’s omission. The $14,000 settlement includes $8,000 in compensation for the class members and $6,000 to cover attorney fees.
While the defendant did not admit liability as part of the settlement, the case serves as a reminder for debt collectors to thoroughly review their compliance processes to avoid similar litigation.
