Consumer Rights: Ch. 7: Debt Collection Practices Act

FDCPA SOL

1 year

differences between FDCPA and TDCA

1) TDCA applies to both "debt collectors" and "third-party debt collectors" 2) TDCA has provisions relating to credit bureaus; FDCPA does not 3) TDCA requires that third-party debt collectors and credit bureaus obtain and file with the Secretary of State a $10,000 surety bond before doing business in Texas (indemnifies consumers in case they violate the act) 4) TDCA's prohibition and prescriptions in its list are exclusive (if it is not in the list, it is not a prohibited act); FDCPA's list is not 5) TDCA provides for criminal liability in addition to civil liability; criminal liability is not available under FDCPA

TDCA rules re: credit bureaus

1) can't misrep self as credit bureau 2) furnish credit reports within 45 days of request 3) timely corrections

prohibited practices/restrictions under FDCPA (6)

1) third party communications 2) communication with debtors in certain manors 3) harassment or abuse 4) false or misleading representations 5) unfair or unconscionable practices 6) failure to provide validation of debts

TDCA as tie-in statute

A violation of the TDCA is actionable under the DTPA (P must be "consumer") as a tie-in statute violation. The combination of the two may allow a consumer to recover additional discretionary damages (under DTPA) not otherwise recoverable under TDCA. OJO: when talking about TDCA, also discuss DTPA

strictly prohibited acts under FDCPA

FDCPA prohibits the following acts regardless of whether they are deceptive or misleading: 1) restrictions on time and place: a debt collector should not contact a consumer at any inconvenient/unusual time or place contact made before 8 a.m. or after 9 p.m. is per se inconvenient unless the consumer has consented 2) no communications are permitted with a consumer represented by an attorney, unless the attorney consents 3) the debt collector may not call the consumer's place of employment if he knows or has reason to know that the consumer's employer prohibits the consumer from receiving such communication 4) harassment or abuse: the communication (with anyone) may not amount to harassment or abuse, including, but not limited to, threatening or using violence, using profanity, publishing the consumer's debts as a list to others, or causing the telephone to ring continuously calling a person [guided by gut here]; or failing to disclose info

TDCA standing & coverage

TDCA prohibits conduct by both "debt collectors" and "third-party debt collectors" "debt collector": any person who, directly or indirectly, engaged in debt collection, including a person who represents to be a collection device intended to be used to collect consumer debts; includes one collecting his own debts can include a creditor seeking to collect a debt owed to themselves (i.e. bank) broader coverage than FDCPA "third-party debt collector" is generally the same as "debt collector" under the FDCPA (collecting debts on behalf of another) under the TDCA, attorneys who are representing clients are EXCLUDED from the definition of third-party debt collectors (does include non-attorney employees who regularly engage in debt collection) "Consumer": an individual who has a consumer debt (not business), or a personal, family, or household obligation arising from a transaction creditor: a party, other than a consumer, to a transaction or alleged transaction involving one or more consumers credit bureau: a person or business who, for compensation, gathers, records, and disseminates information relating to creditworthiness, financial responsibility, and paying habits of a person for the purpose of furnishing that info to someone else also provides for public criminal prosecutions

common law tort of unreasonable collection efforts

TX recognizes the common law tort of unreasonable collection efforts, which is defined as: collection efforts that a person of ordinary care and prudence would not have used under the same or similar circumstances this cause of action requires a showing of negligence

TDCA remedies

a PERSON can bring a private cause of action for: 1) actual damages 2) reasonable attorney's fees for successful claim; 3) in some cases, an injunction or restraining order (temporary or permanent); and 4) for certain violations only, a civil penalty of at least $100 per violation (available only upon a finding of actual damages) public remedy: the state (envisioned in the Act as the Texas Attorney General) is empowered to investigate and bring criminal actions against defendants. A conviction under the TDCA is punishable as a misdemeanor and a fine of between $100-500. (must be filed within 1 year of the violation)

third party communications (prohibited under FDCPA)

a debt collector is generally prohibited from contacting third parties for the purposes of collecting a debt without the consent of the consumer the debt collector may contact third parties in order to locate the consumer. in doing so, the debt collector: 1) must properly identify himself (and if expressly requested, identify his employer), but may not state that he is a debt collector, that he is seeking to collect a debt, or that the consumer owes a debt [must ID self and say seeking to get/confirm location info] 2) may not communicate by postcard; nor use any symbol that would communicate that the debt collector is in the debt collection business 3) once the debt collector knows that the consumer is represented by an attorney, the debt collector may not communicate with anyone other than the attorney 4) can't communicate with people more than once (unless so requested or has reason to believe info given the first time was incomplete/false) can communicate with third parties if reasonably necessary to effectuate a post-judgment remedy

mandatory disclosures under FDCPA

a debt collector is required by the FDCPA to provide 2 notices in communications with the consumer (debtor): 1) validation notice: within 5 days of the initial communication (or in the initial communication) with the consumer, a debt collector must tell the consumer in WRITING each of the following: a) the amount owed b) the name of the creditor (that they claim the debt is owed to) c) notice that i) if the consumer disputes the validity of the debt (via writing) (within 30 days of receipt of the notice), the debt collector will stop the collection process and get verification of that debt; and ii) if the consumer does not dispute the debt, the debt collector will assume the debt is valid 2) in the initial communication with the consumer, whether written or oral, the debt collector must inform the consumer: a) he is a debt collector attempting to collect a debt; and b) any information collected will be used for the purpose of debt collection in all subsequent communications, the debt collector must remind the consumer that they are acting as a debt collector attempting to collect a debt any violation=violation of FDCPA

prohibited false or misleading communications (FDCPA)

a debt collector may not use any false, deceptive, or misleading representations or means in connection with the collection of any debt, such as: 1) representing that they are a member or acting with governmental authority 2) implying that the failure to pay the debt is a crime or that the debtor could be sent to jail; 3) misrepresenting the amount or character or nature of any debt (or any services rendered/compensation that may be lawfully received by any debt collector for the collection of a debt); or 4) falsely implying the debt collector is an attorney or that the communication is from an attorney or is working for a law firm

attorneys as debt collectors under FDCPA

an attorney can be a debt collector if the attorney regularly collects or attempts to collect debts on behalf of their clients

FDCPA debt

any (alleged) obligation of a consumer to pay money arising out of a transaction which is primarily for personal, family, or household purposes OJO: business debts are NOT subject to FDCPA

FDCPA debt collector

any [i'm assuming non-natural is ok] person who regularly collects or attempts to collect debts due or asserted to be owed to ANOTHER (or someone who is in business for the principal purpose of collecting debts) [and uses interstate commerce or the mail in doing so] firms, businesses, people collecting debts that are owed to someone else a creditor seeking payment of his own owed debt is NOT included as a debt collector does NOT include: 1) legal process servers 2) a non-profit debt counseling service 3) an official of the government acting in an official capacity 4) an officer or employee of a creditor 5) a bona fide fiduciary

FDCPA consumer:

any natural person obligated to pay a "debt" re: direct communication: consumer includes: spouse, parent (if debtor is minor), guardian, executor, or administrator

other restrictions:

creditor is liable for using a debt collector that it knows uses unlawful practices creditor (someone collecting someone else's debt in this case) or credit bureau must post a $10,000 bond with the TX Secretary of State and provide verification of debts upon request

FDCPA exemption

does not apply to bad checks or certain bad check enforcement programs operated by private entities, generally in cooperation with the state for pre-trial diversion purposes

bona fide error defense TDCA & SOL

essentially the same as under FDCPA 1 year SOL for criminal charges to be filed, generally applies to all actions under TDCA

FDCPA frivolous suits

if the court determines that a lawsuit brought under FDCPA is based on bad faith and for the purposes of harassment, then the court may award the defendant reasonable attorney's fees

TDCA frivolous suits

if the court determines that a lawsuit brought under TDCA is based on bad faith and for the purposes of harassment, then the court shall award the defendant reasonable attorney's fees and costs

FDCPA Bona Fide Error Defense

it is an affirmative defense to a claim under the FDCPA if the debt collector can show by a preponderance of the evidence that: 1) the violation was not intentional; and 2) reasonable procedures had been adopted by the debt collector to ensure the violation would not happen, but it happened despite the procedures

FDCPA venue

legal proceedings for the collection of a debt must occur either in the judicial district where the real property is located, where the consumer signed the contract at issue, where the consumer resides, or at another location upon agreement of the parties

Texas Debt Collection Act

parallels FDCPA; violate FDCPA, may violate TDCA standards for the protection of consumers against debt collectors and for regulation of consumer credit bureaus within TX

FDCPA cause of action

provides redress to a consumer against any debt collector who violates the FDCPA's standards of conduct for debt collection activities related to a debt

Federal Fair Debt Collection Practices Act: purposes and preemption

purposes: enacted to promote fair debt collection practices, to provide a private remedy against debt collectors engaged in abusive debt collection practices, and to promote state law remedies consistent with these purposes preemption: FDCPA does NOT preempt state law remedies unless there is a direct conflict with the federal act in that case, there is only preemption if the state law provides a lesser remedy or lesser protection to the consumer

TDCA mandatory disclosures

same as FDCPA failure to make certain disclosures under the TDCA is a fraudulent or deceptive misrepresentation in the initial communication, the debt collector must state that they are a debt collector attempting to collect a debt and any information will be used for that purpose in subsequent communications, the debt collector must state that the communication is from a debt collector

TDCA prohibited practices and restrictions

similar to FDCPA 1) threats of coercion, violence, or criminal prosecution against any person 2) harassing telephone calls or other types of abuse 3) unfair or unconscionable means (such as charging or collecting interest, fees, or incidental expenses unless it is specifically authorized by the contract made the basis of the debt) 4) fraudulent, deceptive, or misleading representations and deception by debt collector

remedies under the FDCPA

the FDCPA provides redress for violations through public enforcement (by the Federal Trade Commission--can investigate and bring enforcement actions against defendants within 1 year from the date of the alleged violation) and by private parties suing in federal district court remedies under the private cause of action include recovery of: 1) actual damages (what suffered) (no minimum recovery on class actions) 2) a civil penalty of up to $1,000 per cause of action ( book says case) (amount depends on whether the violation was intentional or persistent); and 3) reasonable and necessary attorney's fees (fees mandatory, amount discretionary) get 1 OR 2; and 3 there is no criminal liability under the FDCPA. However, the Federal Trade Commission is empowered to investigate and bring a public enforcement action against defendants within one year from the date of the alleged action

broad areas of prohibited/mandatory things under FDCPA

third-party communications mandatory disclosures strictly prohibited acts prohibited false or misleading communications

FDCPA unfair or unconscionable acts (that are prohibited)

unfair/unconscionable i.e. charging additional expenses (i.e. collect calls) depositing postdated checks taking or threatening to take any non-judicial action