Fair Debt Collection Practices Act

Locating the Consumer: Communication with Third Parties--In General

Generally, a debt collector is not supposed to communicate with third parties (those that are not the consumer, creditor, or debt collector, or their attorneys). However, a debt collector may communicate with other parties: (1) to obtain location information (this means his place of abode, his telephone number, or his place of employment); (2) with the prior direct consent of the consumer; (3) with the express permission of the court; or (4) as reasonably necessary to effectuate a post-judgment judicial remedy.

Locating the Consumer: Communication with the Consumer--Ceasing Communication -> Definition of "Consumer"

For purposes of this rule, the definition of "consumer" includes the consumer's spouse, parent, guardian, executor, or administrator.

Key Statutory Definitions: Debt Collector--In General

"Debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business: (1) the principal purpose of which is the collection of debts owed to others; or (2) who regularly collects or attempts to collect debts owed to another. The term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting such debts.

Key Statutory Definitions: Debt Collector--Exclusions

1) Any employee of a creditor collecting debts in the name of the creditor; 2) Any person while acting as a debt collector for another person, both of whom are related by common ownership, if the persona acting as a debt collector does so only for persons to whom it is so related and if the principal business of such person is not the collection of debts; 3) Any officer or employee of the US or any State to the extent that collecting or attempting to collect any debt is in the performance of official duties; 4) Any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt; 5) Any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; 6) Any person collecting or attempting to collect any debt owed or due, or asserted to be owed or due, another to the extent such activity: (a) is incidental to a bona fide fiduciary obligation or escrow arrangement; (b) concerns a debt which was originated by such person; (c) concerns a debt which was not in default at the time it was obtained by such person; or (d) concerns a debt obtained by a secured party in a commercial credit transaction.

Prohibited Conduct in Debt Collection: Unfair or Unconscionable Practices--Examples of Prohibited Conduct

1) Collection of any amount unless such amount is expressly authorized; 2) Acceptance of a postdated payment by more than five days unless the person who gave the check is notified in writing of the debt collector's intent to deposit the check not more than 10 nor less than three business days prior to such deposit; 3) Solicitation by a debt collector of any postdated payment instrument for the purpose of threatening or instituting criminal prosecution; 4) Depositing or threatening to deposit any postdated check prior to the date on such check; 5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication (e.g., collect calls); 6) Taking or threatening to take any nonjudicial action to effect disposition of property if: (i) there is no present right to possession of the property under a security interest; (ii) there is no present intention to take that action; or (iii) the property is exempt; 7) Communicating with a consumer regarding a debt by post card; or 8) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer.

Prohibited Conduct in Debt Collection: False or Misleading Representations--Examples of Prohibited Conduct

1) False representation that the debt collector is affiliated with the government; 2) False representation of the character, amount, or legal status of any debt; 3) The false representation that any individual is an attorney, or that any communication is from any attorney; 4) The representation that nonpayment of any debt will result in the arrest or imprisonment, seizure, or sale of any property, unless such action is lawful and intended to be taken; 5) threat to take any action that cannot legally be taken or that is not intended to be taken; 6) the false representation or implication that a sale, referral, or other transfer of any interest in a debt will cause the consumer to lose any claim or defense; 7) the false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer; 8) the communication or threat to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed; 9) the use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the US or any state, or which creates a false impression as to its source, authorization, or approval; 10) the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer; 11) the failure to disclose: (a) in the initial communication with the consumer that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose; (b) in all subsequent communications that the communication is from a debt collector (these are sometimes referred to as the "Mini-Miranda" requirements); 12) false representation or implication that accounts have been turned over to innocent purchasers for value; 13) false representation that documents are legal process; 14) use of any business, company, or organization name other than the true name of the debt collector's business; 15) false representation that documents are not legal process forms or do not require action by the consumer; and 16) false representation or implication that a debt collector operates or is employed by a consumer reporting agency.

Prohibited Conduct in Debt Collection: Harassment or Abuse--Examples of Prohibited Conduct

1) Use of threat or use of violence or other criminal means to harm the physical person, reputation, or property of any person; 2) Use of obscene, profane, or abusive language; 3) Publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency; 4) Advertisement for sale of any debt to coerce payment of the debt; 5) Causing a phone to ring or engaging in phone conversation repeatedly with intent to annoy, abuse, or harass any person; and 6) Placement of telephone calls without meaningful disclosure of the caller's identity, except with regard to obtaining location information.

Prohibited Conduct in Debt Collection: Harassment or Abuse--In General

A debt collector cannot harass or abuse any person when collecting debts.

Prohibited Conduct in Debt Collection: False or Misleading Representations--In General

A debt collector may not use any "false, deceptive, or misleading representation or means" in connection with the collection of any debt.

Enforcement: Liability--Individual Suit

A debt collector who violates the Act is liable to any person in an amount equal to the actual damage sustained by that person. The court may award additional damages not to exceed $1,000. Relevant factors in determining the amount of liability: (1) frequency and persistence of the noncompliance; (2) nature of the noncompliance; and (3) whether the noncompliance was intentional.

Enforcement: Liability--Statute of Limitations

A federal debt collection action must be brought within one year from the date on which the violation occurs.

Key Statutory Definitions: Debt Collector--Attorneys

An attorney who regularly engages in debt collection for clients is a "debt collector" under the Act.

Debt Validation: Disputed Debts--Overshadowing Prohibited

Any collection activities and communication activities during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt. Overshadowing may be held to occur if the consumer is demanded to "pay immediately" or take some other action prior to the end of the 30-day required dispute period.

Enforcement: Liability--Statutory Defenses

Bona fide error defense: the debt collector is not liable if the violation was unintentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adopted to avoid any such error. No provision of the Act imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the FTC.

Locating the Consumer: Communication with the Consumer--Ceasing Communication -> Exceptions

Communications allowed after consumer informs debt collector about ceasing communications: 1) to advise the consumer that the debt collector's further efforts are being terminated; 2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; and 3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

Key Statutory Definitions: Consumer

Consumer means any natural person obligated or allegedly obligated to pay any debt.

Key Statutory Definitions: Creditor

Creditor means any person who offers or extends credit creating a debt or to whom a debt is owed.

Locating the Consumer: Communication with Third Parties--Location Information

Debt collectors are permitted to try to locate consumers. Restrictions on contacting third parties for location information: (1) the debt collector must not state that such consumer owes any debts; (2) the debt collector must not communicate with any such person more than once unless requested to do so by such person; (3) the debt collector must not communicate by postcard; (4) the debt collector must not use any language or symbol on any envelope or communication that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and (5) after the debt collector knows the consume is represented by an attorney, the debt collector must only communicate with the attorney unless he becomes non-responsive.

Key Statutory Definitions: Debt

Debt means any obligation of a consumer to pay money arising out of a transaction primarily for personal, family, or household purposes.

HYPO: receives a notice from C in the mail about the existence of a debt he owes to B in the amount of $1,000 with a statement in proper language regarding his right to dispute the debt within 30 days and receive verification of the debt and creditor information. The notice also informs him that unless the makes a payment of at least 10% of the amount due to C within 10 days, he will be reported to the credit reporting agency as refusing to pay a lawful debt. What claim, if any, could O make under the FDCPA?

He can claim that C violated the FDCPA because of overshadowing.

Locating the Consumer: Communication with the Consumer--Ceasing Communication -> In General

If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt.

Enforcement: Liability--Attorneys' Fees and Costs -> Defendant's Recovery

If the action was brought in bad faith or for harassment, the defendant may recover reasonable attorneys' fees.

Debt Validation: Disputed Debts--In General

If the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector must cease collection of the debt until it has responded to the consumer request.

Debt Validation: Notice--Initial Communication Fails to Provide Required Information

If the initial communication does not provide such information, a debt collector must, within five days after the initial communication, send the consumer a written notice that sets forth: (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer, within 30 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; (4) a statement that if the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt and mail it to the consumer; and (5) a statement that, upon the consumer's written request within the 30-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

Enforcement: Liability--Attorneys' Fees and Costs -> Plaintiff's Recovery

In a successful suit, cost and reasonable fees are recoverable by plaintiff.

HYPO: D owes $5,000 to B, who hired C to collect the debt after it went into default. C's first few letters were sent on its regular letterhead bearing the name "C." After these were ignored by D, they sent out another letter, bearing the name "C, Legal Counsel Division," even though no licensed attorneys were employed by C. Is this letter appropriate under the FDCPA?

No. False representation from an attorney is prohibited.

Enforcement: Liability--Relation to State Law

The Act does not exempt anyone from complying with the laws of any state.

Debt Validation: Notice--In General

The Act requires a debt collector to provide a consumer with accurate notice about the existence and amount of a debt.

Prohibited Conduct in Debt Collection: In General

The FDCPA prohibits debt collectors from engaging in harassment or abuse, making false or misleading representations, and engaging in unfair practices.

Debt Validation: Disputed Debts--Consumer's Failure to Dispute Validity

The failure of a consumer to dispute the validity of a debt under this section may not be construed as an admission of liability by the consumer.

FDCPA: In General

The federal FDCPA regulates the collection of consumer debt by third-party debt collectors.

Prohibited Conduct in Debt Collection: Harassment or Abuse--Not Limited to Only the Consumer

The prohibition is not limited to conduct that affects the consumer--it extends to "any person."

Prohibited Conduct in Debt Collection: Unfair or Unconscionable Practices--In General

Unfair or unconscionable acts or practices toward any person (not just the consumer) are also prohibited.

Locating the Consumer: Communication with the Consumer--In General

Without the prior consent of the consumer, or court approval, the debt collector may not communicate with a consumer in connection with the collection of any debt: (1) at any unusual time or place known or which should be known to be inconvenient to the consumer (a debt collector may assume that the convenient time for communicating with a consumer is after 8 am and before 9 pm local time); (2) if the debt collector knows the consumer is represented by an attorney, he must direct communications to that attorney; and (3) at the consumer's place of employment if the employer prohibits the consumer from receiving such communication.