BUS 263 - Ch. 21 Case Study
The Fair Debt Collection Practices Act attempts to prevent abuses by ____ Specialized ____ and ____ who regularly attempt to collect debts on behalf of someone else are considered debt collectors under the FDCPA. Creditors ____ covered by the act unless they cause debtors to believe they are collection agencies. Rader ____ an attorney who regularly attempts to collect debts on behalf of someone else. Recover Debt ____ set up as a debt-collection agency.
- collection agencies - debt-collection agencies - attorneys - are not - was not - was
If Recover Debt was covered by the FDCPA, it could not legally ____ or intimidate the debtor using ____ language or ____ Recover Debt ____ do this activity. Because of its behavior, Recover Debt likely ____ violate the FDCPA.
- harass - abusive - threats - did - did
Recover Debt ____ covered by the FDCPA, and it could not legally contact the debtor at the debtor's place of employment if the ____ objects, contact the debtor at ____ or unusual times, or contact the debtor's ____ about the payment of a debt without court authorization. Recover Debt ____ do any of these activities.
- was - debtor's employer - inconvenient - neighbor - did not
What If the Facts Were Different? Assume that Rader started his business and bought the checks, then he set up a strict protocol for collecting the checks. Employees were trained to put together a file on each debtor with the information from the checks, information they could find on the Internet and any other information that they could find through public records searches. The employees first would send a letter to the most current address of the debtor, requesting a forwarding address if needed. After two weeks, if no payment had been made based on the letter, the employees would begin to call phone numbers for the debtors, including spouses and parents. These calls were made at dinnertime in order to catch people at home. They also would contact the debtor's most recent place of employment and any financial advisers. These calls were made during the workday and were to cease if the employer objected. Employees
- was - did not - did not - did - did not - did not - did not
Case Problem Analysis: Fair Debt-Collection Practices
Karamo Rader was an employment lawyer looking to make some money without the headaches of practicing law. He formed Recover Debt, Inc., which bought more than 2.2 million uncollectible checks (written on accounts with insufficient funds) with an estimated face value of about $348 million, for a small fraction of their original value. This allowed creditors who had been unable to collect to recover some of the debt owed and not suffer a total loss. This also made Recover Debt the new creditor on those checks, and the company aggressively pursued the debtors. Rader trained Recover Debt's employees to falsely accuse the debtors of being criminals and to threaten them with arrest and prosecution. The employees contacted the debtors' family members and used "saturation phoning"—phoning a debtor numerous times in a short period. They used abusive language, referring to drawers as "deadbeats," "thieves," and "idiots." In approximately two years, Recover Debt netted more than $10.2 million from its efforts. The Federal Trade Commission filed a suit in a federal district court against Recover Debt and Rader, alleging violations of the Fair Debt Practices Act (FDCPA). Was Recover Debt a "debt collector," collecting "debts," within the meaning of the FDCPA, and were its actions legal?
