Alert

NJ District Court Underscores Limits of “Safe Harbor” Protection Under Regulation F

May 17, 2024

On May 7, 2024, the United States District Court for the District of New Jersey issued a decision holding that the use by a debt collector of the Model Form validation notice under Regulation F does not guarantee compliance with the requirements of 15 U.S.C. § 1692g or other sections of the Fair Debt Collection Practices Act (FDCPA).[1] Consequently, the court joined “several other district courts in finding that compliance with Regulation F and the CFPB’s Model Form in and of itself does not provide a ‘safe harbor’ from all alleged violations of the FDCPA.”  

Case Background

In Devoe, a pro se plaintiff brought a putative class action alleging violations of the FDCPA because he received an undated initial collection letter from defendant debt collection company, which stated that plaintiff owed a debt of $10,458.33 related to a credit card account. The letter specified that plaintiff owed such amount “as of 4/18/2021” and provided that “between 4/18/2021 and today,” plaintiff was charged $0.00 in interest and fees. Plaintiff claimed that he was misled as to the status of the debt because the letter was not dated, and as such, he did not know whether $10,458.33 was the current amount owed as of the date he received the letter and could not determine to what date “today” referred.

The debt collector moved to dismiss, arguing that: (1) the Complaint fails to show that the initial collection letter violated any provision of the FDCPA; (2) defendant complied with the FDCPA and its corresponding regulations; (3) defendant is entitled to safe harbor protection under the FDCPA because its letter mirrored the CFPB’s model form letter; and (4) a federal court in California recently dismissed the same claims against defendant based on a letter nearly identical to the one it sent to plaintiff.

Rejecting Safe Harbor

The New Jersey District Court rejected defendant’s arguments that its use of the CFPB’s model form provided a safe harbor from the asserted FDCPA claims. Instead, the court in Devoe reiterated that according to the plain language of 12 C.F.R. § 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. For that reason, the court denied defendant’s motion with respect to plaintiff’s claim under 15 U.S.C. § 1692g(a).

Implications for Debt Collectors

The Devoe holding reminds debt collectors that the courts may require separate proof of compliance with the FDCPA and Regulation F and underscores the importance of implementing procedures for compliance with the statute as well as the regulations issued thereunder in order to minimize risk of exposure.

[1] Devoe v. Frontline Asset Strategies, LLC, 2024 WL 2045642 (D.N.J. May 7, 2024).