Federal Appeals Court Contemplates Overruling Two Fair Debt Collection Practices Act Rulings


Updated: Friday, February 21, 2020

by Ronald S. Canter, Esquire 

The Law Offices of Ronald S. Canter, LLC

The Third Circuit Court of Appeals, in a text only order entered on February 11, 2020, directed parties in a pending appeal (Ricco v. Sentry Credit, Inc., Appeal No. 18-1463, 2018 WL 638748 (D.N.J. Jan. 31, 2018)) to submit supplemental memorandum on the issue of whether if “this Court overrules Graziano v. Harrison, 950 F.2d 107 (3rd Cir. 1991) and Caprio v. Health Care Revenue Group, LLC, 709 F.3d 142 (3rd Cir. 2013), such decision should be applied retroactively”. 

The Third Circuit’s rulings in Graziano and Caprio have generated compliance challenges for debt collectors. In Graziano, the Third Circuit interpreted the FDCPA’s validation of debts provisions (15 U.S.C. §1692g) as requiring all disputes be in writing. This decision conflicts with holdings from several other Federal Circuits that an oral dispute is effective to preclude a collector from assuming the debt valid. See, Camacho v. Bridgeport Fin., Inc., 430 F.3d 1078 (9th Cir. 2005), Hooks v. Forman Holt, Eliades and Ravin, LLC, 717 F.3d 282 (2nd Cir. 2013) and Clark v. Absolute Collection Service, Inc.741 F.3d 487 (4th Cir. 2014).

Several lower courts within the Third Circuit have held that a debt collector’s initial letter, which quotes verbatim the validation of debts disclosure as it appears in the FDPCA, nonetheless violates the law because the notice fails to disclose that all debts must be disputed in writing, as mandated by the Third Circuit’s decision in GrazianoSee, e.g., Guzman v. HOVG, LLC, 340 F.Supp.3d 526 (E.D.Pa. 2018). Guzman is one of many cases where consumer attorneys have leveraged the holding in Graziano against collectors who repeat verbatim the statutory disclosures in §1692g. 

Collectors have also faced compliance challenges in light of Caprio, which, applying Graziano, held that a request for a consumer to “please call” if the consumer believed the debt was not owed was a false representation as prohibited by the FDCPA because this request can lead the least sophisticated consumer to believe a dispute could be made by a call, even though Graziano requires that all disputes be in writing.

The Ricco appeal was argued in September, 2019. The Court’s recent text entry directing the parties to brief the question of whether, if the Court overrules Graziano and Caprio, the decision would be applied retroactively, appears to signal a pending ruling by the Third Circuit overruling these two prior decisions. However, as any seasoned legal practitioner knows, it is a foolhardy endeavor to predict how any court will rule. The Third Circuit has given no indication when it will rule on the Ricco appeal. Nonetheless, it is advisable to pay close attention to rulings issued by the Third Circuit in the event that the Court decides to overrule either Graziano, Caprio or both.