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SM Law Overshadows Right to Dispute Debt FDCPA Class Action

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Congress passed the Fair Debt Collection Practices Act (FDCPA) because abusive debt collection practices are not only wrong; they also contribute to the number of personal bankruptcies, marital instability, the loss of jobs, and invasions of privacy. The complaint for this class action alleges that SM Law, PC violated the FDCPA by overshadowing a required notice of the consumers’ right to dispute the debt.

Plaintiff Biniam Debesay is alleged to have incurred a debt, for personal, family, or household purposes. Debesay disputes the validity of the debt.

The debt was eventually placed with SM Law for collection. SM Law sent Debesay a collection letter dated July 18, 2019. This was its initial communication with him. The FDCPA requires that certain things be included in such a communication or provided within five days thereafter. 

One of the things required is a notice of the consumer’s right to dispute the debt, or any part of it. This includes a statement that “unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector.” The letter did provide such a notice. However, the complaint alleges that it was overshadowed or weakened in the manner in which it was conveyed. 

The paragraph in question reads, “Unless you dispute the validity of this debt or any portion thereof in writing, within thirty days of your receipt of this letter, the debt will be assumed to be valid.” 

The complaint claims, “the notice requires a dispute to be in writing in order to dispute the validity of the debt when no such requirement exists under the FDCPA.” The complaint alleges that this makes the statements in the letter false, deceptive, or misleading, “because the statements were likely to confuse or mislead the least sophisticated debtor regarding the means by which he or she could dispute the debt.”

The “least sophisticated consumer” is the standard by which statements in debt collection letters are judged: Would the least sophisticated consumer understand the statements without confusion or ambiguity? Or would such a person find the statements confusing or be misled by them? 

In addition, Debesay lives in Arizona, and the complaint claims that SM Law is not a licensed debt collector with the Arizona Department of Financial Institutions.

The class for this action is all persons with addresses in the US to whom SM Law has sent a debt collection communication, between January 14, 2019 and January 14, 2020, which contains language substantially similar to that in the communication received by Debesay in this case.

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