When debt collector seeks payment, who has burden of proof?

The business world is fond of presenting consumers with Catch-22s. Richard Leza received a real beauty from a debt collector.

“They basically told me I had to prove something that doesn’t even exist,” he said.

Here’s the crux of the problem: Is it the debt collector’s responsibility to prove that money is owed, or the consumer’s responsibility to prove that it isn’t?


State and federal officials are increasingly focusing on such issues as debt collectors turn up the heat after the prolonged economic downturn.

California Atty. Gen. Kamala D. Harris has made overzealous and fraudulent debt collection a priority for her office, as has the Consumer Financial Protection Bureau in Washington.

Leza, 45, lives in Orange County’s upscale Dove Canyon neighborhood in Rancho Santa Margarita. He works as chief financial officer for a division of a major title insurance company.

He is not the sort of guy who skips payments.

Yet Leza was contacted by a debt collector called Enhanced Recovery Co. last summer with news that he owed $374.40 to the phone company Verizon.

Leza didn’t think he owed any money. “I’ve never been late for anything,” he said. “I’m pristine.”

And that’s what Leza told the debt collector. “They never bothered me again,” he said.

In December, though, a different debt collector, Midland Credit Management, or MCM, reached out and touched Leza for the same $374.40. Apparently, the first collector had sold the purported debt to another firm.

“I told them what happened the last time I was contacted about this,” Leza said, hoping the second collector would similarly make itself scarce. “But I also said that if they could show me a valid invoice, I’d pay it.”

MCM responded that Verizon had all the necessary documentation. But when Leza contacted Verizon, a service rep said any documentation would be in the hands of the debt collector.

A fine how-do-you-do.

Leza pressed his point with reps for both Verizon Wireless and Verizon Communications, his land-line company. Surely, he said, their computers would show if he owed any money after about a dozen years as a customer.

“They finally said they had no record that I owed them any money,” Leza said.

Neither Verizon Wireless nor Verizon Communications would discuss Leza’s accounts with me.

The next time MCM called, Leza related what he’d learned from Verizon but reiterated that he’d be happy to pay if the debt collector could provide evidence of money owed.

“That’s when the guy at the collection company said that they didn’t have to prove that I owe anything,” Leza recalled. “He said it’s my responsibility to show that I don’t owe it.”

I shared this with Chris Koegel, assistant director of the Federal Trade Commission’s division of financial practices.

“The debt collector has it all wrong,” he told me.

Koegel cited Section 809 of the Fair Debt Collection Practices Act, which states that if a consumer disputes a debt, “the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt.”

The upshot of the law is clear, he said: “It puts the onus on the collector to prove that it’s a legitimate debt.”

In any case, Koegel added, a debt collector can’t just look at its database and insist that the debt must be real.

“The collector, at a minimum, should look at more of the underlying documentation or go back to the original creditor if necessary,” he said.

MCM apparently never did that. It stuck to its guns, insisting that Leza must owe some money. It even turned the screws by reporting him to the main credit reporting companies.

Leza learned about this in April after applying for a personal loan. His application was rejected. The reason: Leza’s credit files showed that debt-collection proceedings were underway.

I contacted MCM to ask about the situation. A spokeswoman for the company, Julie Reynolds, said by email that the company was prevented by federal law from discussing a specific case.

So I asked instead about the broader question of who’s responsible, the consumer or the collector, for verifying the legitimacy of a debt.

“Midland contacts consumers when its records indicate that the consumer owes the underlying debt,” Reynolds replied. “When a consumer disputes a debt, we respond by investigating, and that process often requires some level of cooperation from the consumer.”

I take that to mean MCM believes the consumer bears at least as much responsibility as the collector for resolving debt issues.

If so, the company needs to think again.

“The responsibility lies primarily with the collector,” said the FTC’s Koegel. “That’s how we interpret the law.”

He said consumers in Leza’s situation should first look to protecting their credit score. Contact the main credit reporting companies — Equifax, Experian and TransUnion — and work with them to clear up any discrepancies.

Koegel also advised lodging a complaint with the FTC. Of roughly 125,000 complaints made last year about debt collectors, he said, almost 10,000 involved collectors failing to verify a loan as per federal law.

Finally, Koegel suggested writing a letter to the collector that cites Section 809 of the Fair Debt Collection Practices Act.

“When a consumer makes clear that he understands his legal rights, that never hurts,” Koegel said.

Leza is already taking action. He’s contacted the credit reporting companies and said they’ve been helpful in removing the collection notice from his files. But he’s not sure how to make MCM go away.

In May, the company offered to settle his account for $224.64. That offer was good until mid-June.

Paul Mankin, a Beverly Hills lawyer specializing in debt issues, said a collector will often go away after receiving a letter from the consumer disputing the obligation and demanding that all phone calls stop. Leza already has sent such a letter to MCM.

If that doesn’t work, Mankin said, the consumer may want to hire an attorney. The federal debt collection law holds the collector liable for any legal costs if a debt is found to be bogus, he said.

Based on what the FTC says, it appears that MCM, not Leza, is the one with the burden of proof here. He should stand his ground until the company can clearly demonstrate that he owes money.

Despite what some debt collectors may want people to think, the law is on the consumers’ side.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to