10. Fair Debt Collection Practices Act
First Collection Company is collecting a debt from Loretta Pierce. Ms. Pierce informs the company that she has hired an attorney to represent her. She gives the collector the attorney's name and address. The collector calls the attorney and leaves three messages with the attorney's secretary over a two-day time period. Each time the secretary states that the attorney will call that day. He also sends a letter requesting that the attorney call him. Four days pass and he hears nothing. What can the collector do? a. He can call Ms. Pierce directly about the debt. b. He must make at least one more attempt to contact the attorney by phone; three phone calls over a two-day time period are not enough. c. He should send a registered letter to the attorney stating that if the attorney does not contact the company, the collector will call Ms. Pierce directly. d. He should visit the attorney in person if the attorney is in the same city.
A. He can call Ms. Pierce directly about the debt. 15 USC 16926 and 1692c Outline II A(1)(b) The act provides that the collector may contact the debtor if the attorney does not respond within a reasonable time period. Three phone calls over a two-day time period to an attorney who is in town, along with a letter that goes unanswered, should represent a reasonable response time. The collector can but is not required to take the extraordinary measures mentioned in the other choices.
Which of the following actions is most likely to be prohibited under the Fair Debt Collection Practices Act? a. Pursuant to a corporate policy, individual collectors using an alias when contacting consumers b. Calling a consumer's neighbors to leave messages when the consumer has a telephone c. Telling a consumer that a lawsuit would cause the consumer inconvenience and embarrassment d. Referring to the fact that a consumer could be subjected to criminal prosecution for issuing bad checks
B. Calling a consumer's neighbors to leave messages when the consumer has a telephone 15 USC 1692d Outline II A(2) A collector cannot make unnecessary calls to third parties. Calling a consumer's neighbor and leaving messages when the consumer has a telephone is considered to be harassment. Although a collector may not fail to meaningfully disclose his or her identity, the use of personal aliases as a corporate policy is acceptable provided the collector is not using a false name for the business. Also, stating that a lawsuit will cause embarrassment and inconvenience is not false or misleading. Properly making a reference to criminal prosecution of issuing a bad check is also not abusive provided the offense is one that can be subject to such prosecution.
Which of the following is the correct response to consumer written requests that they not be contacted again by debt collectors? a. Collectors may send final demand letters. b. Collectors may send letters explaining that defaulted obligations are being turned over to attorneys for legal action. c. Collectors may call and ask for verification of requests to cease communications. d. Collectors may send letters that remind debtors of their legal obligations under the credit contracts.
B. Collectors may send letters explaining that defaulted obligations are being turned over to attorneys for legal action. 15 USC 1692c Outline II A(1)(d) There are only three types of communication that may be sent to a consumer who has given a written notice to a debt collector to cease communications: (1) that further collection efforts will cease; (2) that the collector may invoke a specific remedy ordinarily invoked by that collector; or (3) that the collector intends to invoke a specific remedy.
When is a bank NOT required to comply with the Fair Debt Collection Practices Act? a. When it uses a name other than its own in the collection of its debts b. When it uses the U.S. mail to contact defaulted loan customers of its correspondent banks c. When it uses its own name to collect its debts and those of affiliated institutions d. When it collects debts regularly for other institutions under a reciprocity agreement
C. When it uses its own name to collect its debts and those of affiliated institutions 15 USC 1692a Outline I B(1) and (2)
Which of the following communications would NOT be considered a deceptive communication under the Fair Debt Collection Practices Act? a. Reporting a disputed debt to a credit bureau without reporting it as disputed b. Giving the consumer a disclosure that this is an attempt to collect a debt and any information used will be used for that purpose c. Sending the consumer a letter that appears to be a telegram from a debt collection service regarding his or her thirty-day-past-due account that requests payment d. Sending the consumer a letter stating that the account will be sent to an attorney for legal action within 10 days, when no such action is actually intended
B. Giving the consumer a disclosure that this is an attempt to collect a debt and any information used will be used for that purpose 15 USC 1692e Outline II A(4) A collector must send notice that a debt is disputed at the time of the report. The collector must disclose in the first communication that the debt collector is trying to collect a debt. Using communication formats that misrepresent the nature of the message or convey a false sense of urgency is an abusive practice. Stating that certain remedies will be taken when there is no present intention to do so is a violation of the act.
A collector for First Collection Company, located in Chicago, makes calls to consumers all over the country. He is responsible for 50 past-due accounts. Each day he begins calling all his accounts on a rotating basis. What time constraints should he follow? a. He should not call consumers anywhere in the country before 8:00 A.M.Chicago time. b. He should not call any consumer before 8:00 A.M. at the consumer's location. c. He should not call any consumer before 9:00 A.M. at the consumer's location. d. He can use any time zone in the continental United States as the basis for the time restrictions, and he should not call any consumer before it is 8:00 A.M. in the chosen time zone.
B. He should not call any consumer before 8:00 A.M. at the consumer's location. 15 USC 1692c Outline II A(l)(a) The collector may contact a consumer only between the hours of 8:00 A.M. and 9:00 P.M., local time, at the consumer's location.
A collector at First Collection Company has not been able to reach John, a consumer, at home. The collector obtains John's work telephone number and calls him at work. John tells the collector not to call him at work again because personal calls are prohibited by his employer. What should the collector do? a. Tell John that he must provide such a prohibition in writing before it will be effective b. Refrain from calling John at work c. Tell John that calls to him at work will cease if he can be reached at another place d. Ask John to have his employer's representative call the collector to verify the statement
B. Refrain from calling John at work 15 USC 1692c Outline II A(l)(c) If a debt collector knows or has reason to know that a consumer's employer prohibits the consumer receiving communications from the collector at work, the collector must refrain from communicating with the consumer there. A clear statement from the consumer would give the collector the necessary knowledge that such communications are prohibited.
Which of the following actions is allowed under the Fair Debt Collection Practices Act? a. Sending a communication that looks like a telegram to a consumer by regular mail b. Sending a postcard to a consumer asking for payment of the past due balance c. Accepting certain postdated checks d. Requiring consumers to pay collection fees not authorized by the contract when they pay the balance of their accounts
C. Accepting certain postdated checks 15 USC 1692e and 1692f Outline II B(2) A collector may accept postdated checks but if the check is postdated by more than five days, the collector must give the consumer at least three days but not more than 10 days notice before depositing. The collector also cannot deposit or threaten to deposit the check before its date. Sending postcards regarding the consumer's debt is prohibited. Also sending a communication that simulates a telegram by regular mail is deceptive. Requiring the consumer to pay any fees or interest not expressly authorized by the contract is prohibited.
Which of the following actions is NOT considered abuse or harassment under the Fair Debt Collections Practice Act? a. Publishing a list of consumers who allegedly refuse to pay debts b. Using obscene, profane, or abusive language when calling a consumer c. Providing a toll-free number for the consumer to call to inquire about the debt d. Calling a consumer every hour on the hour
C. Providing a toll-free number for the consumer to call to inquire about the debt 15 USC 1692d Outline II A(3)
Which of the following activities of First National Bank would most likely be covered by the Fair Debt Collection Practices Act? a. Collection of consumer credit accounts that the bank originated in its consumer lending department b. Servicing of mortgage loans originated by First National and sold to investors c. Servicing of a consumer loan portfolio under contract to an investor who purchased an entire portfolio of consumer loans from a failed bank d. Collection of consumer credit contracts purchased from automobile dealers
C. Servicing of a consumer loan portfolio under a contract to an investor who purchased an entire portfolio of consumer loans from a failed bank 15 USC 1692a Outline I B(2)(a-d) The act excludes the collection of a creditor's own debts, so the activities of First National's own consumer loan department would be excluded, as would the action of collecting on dealer paper if the obligation is now owned by the bank. The act also excludes the collection of debts originated by the collector; therefore, activities of the bank's mortgage servicing department would be excluded if the bank originated the loans. First National's loan servicing activities are covered by the act to the extent that the loans were in default when they were obtained. If an investor purchases an entire portfolio of loans, it is likely that some will be in default at the time of purchase and the act will apply to those loans.
When may a debt collector communicate with third parties about the consumer? a. If the consumer has defaulted on the credit obligation b. To determine the consumer's employment c. If the collector identifies himself or herself as a debt collector d. To determine the consumer's location
D. To determine the consumer's location 15 USC 16926 Outline II A(2)(a-g) A debt collector may communicate with third parties about a consumer only to determine the location of the consumer. The debt collector may only identify himself or herself and should not identify his or her employer unless expressly requested to do so.
