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The
Fair Debt Collection Practices Act(FDCPA) was enacted in 1977 to curb abusive
practices by debt collectors. This law provides for stiff penalties for
collectors who break this law. Both the agency and the collector can be
held liable for damages under the FDCPA. In short the FDCPA
provides that collectors may not call you before 8 am or after 9pm, they
may not use abusive language, make threats of physical harm or of any
action which they do not intend to take. We have other
articles relating to this in our articles section.
While I am not an attorney, I was a collector for 10 years. If you have any
questions, please feel free to
email me or post a message in our community forum
or blog and I will do my best to give you the answers or
point you to a source of information.
Section 801 names the statute the "Fair Debt Collection
Practices Act."
The Fair Debt Collection Practices Act (FDCPA) is Title
VIII of the Consumer Credit Protection Act, which also includes other federal
statutes relating to consumer credit, such as the Truth in Lending Act (Title
I), the Fair Credit Reporting Act (Title VI), and the Equal Credit Opportunity
Act (Title VII).
TOP
SECTION 803 -- DEFINITIONS
Section 803(1) defines "Commission" as the Federal Trade
Commission.
1. General. The definition includes only the Federal
Trade Commission, not necessarily the staff acting on its behalf.
Section 803(2) defines "communication" as the "conveying
of information regarding a debt directly or indirectly to any person through any
medium."
1. General. The definition includes oral and written transmission of messages
which refer to a debt.
2. Exclusions. The term does not include formal legal
action (e.g., filing of a lawsuit or other petition/pleadings with a court;
service of a complaint or other legal papers in connection with a lawsuit, or
activities directly related to such service). Similarly, it does not include a
notice that is required by law as a prerequisite to enforcing a contractual
obligation between creditor and debtor, by judicial or nonjudicial legal
process.
The term does not include situations in which the debt
collector does not convey information regarding the debt, such as:
A request to a third party for a consumer to return a
telephone call to the debt collector, if the debt collector does not refer to
the debt or the caller's status as (or affiliation with) a debt collector.
A request to a third party for information about the
consumer's assets, if the debt collector does not reveal the existence of a
debt.
A request to a third party in connection with litigation
(e.g., requesting a third party to complete a military affidavit that must be
filed as a prerequisite to enforcing a default judgment, if the debt collector
does not reveal the existence of the debt).
Section 803(3) defines "consumer" as "any natural person
obligated or allegedly obligated to pay any debt."
1. General. The definition includes only a "natural
person" and not an artificial person such as a corporation or other entity
created by statute.
Section 803(4) defines "creditor" as "any person who
offers or extends credit creating a debt or to whom a debt is owed." However,
the definition excludes a party who "receives an assignment or transfer of a
debt in default solely for the purpose of facilitating collection of such debt
for another."
1. General. The definition includes the party that
actually extended credit or became the obligee on an account in the normal
course of business, and excludes [53 Fed. Reg. 50102] a party that was assigned
a delinquent debt only for collection purposes.
Section 803(5) defines "debt" as a consumer's
"obligation . . . to pay money arising out of a transaction in which the money,
property, insurance, or services (being purchased) are primarily for personal,
family, or household purposes . . .."
1. Examples. The term includes:
Overdue obligations such as medical bills that were
originally payable in full within a certain time period (e.g., 30 days).
A dishonored check that was tendered in payment for
goods or services acquired or used primarily for personal, family, or household
purposes.
A student loan, because the consumer is purchasing
"services" (education) for personal use.
2. Exclusions. The term does not include:
Unpaid taxes, fines, alimony, or tort claims, because
they are not debts incurred from a "transaction (involving purchase of) property
. . . or services . . . for personal, family or household purposes."
A credit card that a cardholder retains after the card
issuer has demanded its return. The cardholder's account balance is the debt.
A non-pecuniary obligation of the consumer such as the
responsibility to maintain adequate insurance on the collateral, because it does
not involve an "obligation . . . to pay money."
Section 803(6) defines "debt collector" as a party "who
uses any instrumentality of interstate commerce or the mails in . . . collection
of . . . debts owed . . . another."
1. Examples. The term includes:
Employees of a debt collection business, including a
corporation, partnership, or other entity whose business is the collection of
debts owed another. A firm that regularly collects overdue rent on behalf of
real estate owners, or periodic assessments on behalf of condominium
associations, because it "regularly collects . . . debts owed or due another."
A party based in the United States who collects debts
owed by consumers residing outside the United States, because he "uses . . . the
mails" in the collection business. The residence of the debtor is irrelevant.
A firm that collects debts in its own name for a
creditor solely by mechanical techniques, such as (1) placing phone calls with
pre-recorded messages and recording consumer responses, or (2) making
computer-generated mailings.
An attorney or law firm whose efforts to collect
consumer debts on behalf of its clients regularly include activities
traditionally associated with debt collection, such as sending demand letters
(dunning notices) or making collection telephone calls to the consumer. However,
an attorney is not considered to be a debt collector simply because he responds
to an inquiry from the consumer following the filing of a lawsuit.
2. Exclusions. The term does not include:
Any person who collects debts (or attempts to do so)
only in isolated instances, because the definition includes only those who
"regularly" collect debts.
A credit card issuer that collects its cardholder's
account, even when the account is based upon purchases from participating
merchants, because the issuer is collecting its own debts, not those "owed or
due another."
An attorney whose practice is limited to legal
activities (e.g., the filing and prosecution of lawsuits to reduce debts to
judgment).
3. Application of definition to creditor using another
name. Creditors are generally excluded from the definition of "debt collector"
to the extent that they collect their own debts in their own name. However, the
term specifically applies to "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" involved in the collection.
A creditor is a debt collector for purposes of this act
if:
He uses a name other than his own to collect his debts,
including a fictitious name.
His salaried attorney employees who collect debts use
stationery that indicates that attorneys are employed by someone other than the
creditor or are independent or separate from the creditor (e.g., ABC Corp. sends
collection letters on stationery of "John Jones, Attorney-at-Law").
He regularly collects debts for another creditor;
however, he is a debt collector only for purposes of collecting these debts, not
when he collects his own debt in his own name.
The creditor's collection division or related corporate
collector is not clearly designated as being affiliated with the creditor;
however, the creditor is not a debt collector if the creditor's correspondence
is clearly labeled as being from the "collection unit of the (creditor's name),"
since the creditor is not using a "name other than his own" in that instance.
Relation to other sections. A creditor who is covered by
the FDCPA because he uses a "name other than his own" also may violate section
807(14), which prohibits using a false business name. When he falsely uses an
attorney's name, he violates section 807(3).
4. Specific exemptions from definition of debt
collector.
(a) Creditor employees. Section 803(6)(A) provides that
"debt collector" does not include "any officer or employee of a creditor while,
in the name of the creditor, collecting debts for such creditor."
The exemption includes a collection agency employee, who
works for a creditor to collect in the creditor's name at the creditor's office
under the creditor's supervision, because he has become the de facto employee of
the creditor.
The exemption includes a creditor's salaried attorney
(or other) employee who collects debts on behalf of, and in the name of, that
creditor.
The exemption does not include a creditor's former
employee who continues to collect accounts on the creditor's behalf, if he acts
under his own name rather than the creditor's.
(b) Creditor-controlled collector. Section 803(6)(B)
provides that "debt collector" does not include a party collecting for another,
where they are both "related by common ownership or affiliated by corporate
control, if the (party collects) only for persons to whom it is so related or
affiliated and if the principal business of such person is not the collection of
debts."
The exemption applies where the collector and creditor
have "common ownership or . . . corporate control." For example, a company is
exempt when it attempts to collect debts of another company after the two
entities have merged.
The exemption does not apply to a party related to a
creditor if it also collects debts for others in addition to the related
creditors.
(c) State and federal officials. Section 803(6)(C)
provides that "debt collector" does not include any state or federal employee
"to the extent that collecting or attempting to collect any debt is in the
performance of his official duties."
The exemption applies only to such governmental
employees in the performance of their "official duties" and, therefore, does not
apply to an attorney employed by a county government who also collects bad
checks for local merchants where that activity is outside his official duties.
[53 Fed. Reg. 50103]
The exemption includes a state educational agency that
is engaged in the collection of student loans.
(d) Process servers. Section 803(6)(D) provides that
"debt collector" does not include "any person while serving or attempting to
serve legal process on any other person in connection with the judicial
enforcement of any debt."
The exemption covers marshals, sheriffs, and any other
process servers while conducting their normal duties relating to serving legal
papers.
(e) Non-profit counselors. Section 803(6)(E) provides
that "debt collector" does not include "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."
This exemption applies only to non-profit
organizations; it does not apply to for-profit credit counseling services that
accept fees from debtors and regularly transmit such funds to creditors.
(f) Miscellaneous. Section 803(6)(F) provides that
"debt collector" does not include collection activity by a party about a debt
that "(i) is incidental to a bona fide fiduciary obligation or . . . escrow
arrangement; (ii) . . . was originated by such person; (iii) . . . was not in
default at the time it was obtained by such person; or (iv) [was] obtained by
such person as a secured party in a commercial credit transaction involving the
creditor."
The exemption (i) for bona fide fiduciary obligations or
escrow arrangements applies to entities such as trust departments of banks, and
escrow companies. It does not include a party who is named as a debtor's trustee
solely for the purpose of conducting a foreclosure sale (i.e., exercising a
power of sale in the event of default on a loan).
The exemption (ii) for a party that originated the debt
applies to the original creditor collecting his own debts in his own name. It
also applies when a creditor assigns a debt originally owed to him, but retains
the authority to collect the obligation on behalf of the assignee to whom the
debt becomes owed. For example, the exemption applies to a creditor who makes a
mortgage or school loan and continues to handle the account after assigning it
to a third party. However, it does not apply to a party that takes assignment of
retail installment contracts from the original creditor and then reassigns them
to another creditor but continues to collect the debt arising from the
contracts, because the debt was not "originated by" the collector/first
assignee.
The exception (iii) for debts not in default when
obtained applies to parties such as mortgage service companies whose business is
servicing current accounts.
The exemption (iv) for a secured party in a commercial
transaction applies to a commercial lender who acquires a consumer account that
was used as collateral, following default on a loan from the commercial lender
to the original creditor.
(g) Attorneys. A provision of the FDCPA, as enacted in
1977 (former section 803(6)(F)), providing that "debt collector" does not
include "any attorney-at-law collecting a debt as an attorney on behalf of and
in the name of a client," was repealed by Pub. L. 99-361, which became effective
in July 1986. Therefore, an attorney who meets the definition set forth in
section 803(6) is now covered by the FDCPA.
Section 803(7) defines "location information" as "a
consumer's place of abode and his telephone number at such place, or his place
of employment."
This definition includes only residence, home phone number, and place of
employment. It does not cover work phone numbers, names of supervisors and their
telephone numbers, salaries or dates of paydays.
Section 803(8) defines "state" as "any State, territory,
or possession of the United States, the District of Columbia, the Commonwealth
of Puerto Rico, or any political subdivision of any of the foregoing."
SECTION 804 -- ACQUISITION OF LOCATION INFORMATION
Section 804 requires a debt collector, when
communicating with third parties for the purpose of acquiring information about
the consumer's location to (1) "identify himself, state that he is confirming or
correcting location information concerning the consumer, and, only if expressly
requested, identify his employer"; (2) not refer to the debt, (3) usually make
only a single contact with each third party, (4) not communicate by post card,
(5) not indicate the collection nature of his business purpose in any written
communication, and (6) limit communications to the consumer's attorney, where
the collector knows of the attorney, unless the attorney fails to respond to the
communication.
1. General. Although the FDCPA generally protects the
consumer's privacy by limiting debt collector communications about personal
affairs to third parties, it recognizes the need for some third party contact by
collectors to seek the whereabouts of the consumer.
2. Identification of debt collector (Section 804(1)).
An individual employed by a debt collector seeking location information must
identify himself, but must not identify his employer unless asked. When asked,
however, he must give the true and full name of the employer, to comply with
this provision and avoid a violation of section 807(14).
An individual debt collector may use an alias if it is
used consistently and if it does not interfere with another party's ability to
identify him (e.g., the true identity can be ascertained by the employer).
3. Referral to debt (Section 804(2)). A debt collector
may not refer to the consumer's debt in any third party communication seeking
location information, including those with other creditors.
4. Reference to debt collector's business (Section
804(5)). A debt collector may not use his actual name in his letterhead or
elsewhere in a written communication seeking location information, if the name
indicates collection activity (such as a name containing the word "debt,"
"collector," or "collection"), except when the person contacted has expressly
requested that the debt collector identify himself. 5. Communication with consumer's attorney (Section
804(6)). Once a debt collector learns a consumer is represented by an attorney
in connection with the debt, he must confine his request for location
information to the attorney. (See also comments on section 805(a)(2).)
SECTION 805 -- COMMUNICATION IN CONNECTION WITH DEBT
COLLECTION
Section 805(a) -- Communication with the consumer.
Unless the consumer has consented or a court order permits, a debt collector may
not communicate with a consumer to collect a debt (1) at any time or place which
is unusual or known to be inconvenient to the consumer (8AM-9PM is presumed to
be convenient), (2) where he knows the consumer is represented by an attorney
with respect to the debt, unless the attorney fails to respond to the
communication in a reasonable time period, or (3) at work if he knows the
consumer's employer prohibits such contacts.
1. Scope. For purposes of this section, the term
"communicate" is given its commonly accepted meaning. Thus, the section applies
to contacts with the consumer related to the collection of the debt, whether or
not the debt is specifically mentioned. [53 Fed. Reg. 50104]
2. Inconvenient or unusual times or places (Section
805(a)(1)). A debt collector may not call the consumer at any time, or on any
particular day, if he has credible information (from the consumer or elsewhere)
that it is inconvenient. If the debt collector does not have such information, a
call on Sunday is not per se illegal.
3. Consumer represented by attorney (Section
805(a)(2)). If a debt collector learns that a consumer is represented by an
attorney in connection with the debt, even if not formally notified of this
fact, the debt collector must contact only the attorney and must not contact the
consumer.
A debt collector who knows a consumer is represented by
counsel with respect to a debt is not required to assume similar representation
on other debts; however, if a consumer notifies the debt collector that the
attorney has been retained to represent him for other debts placed with the debt
collector, the debt collector must deal only with that attorney with respect to
such debts.
The creditor's knowledge that the consumer has an
attorney is not automatically imputed to the debt collector.
4. Calls at work (Section 805(a)(3)). A debt collector
may not call the consumer at work if he has reason to know the employer forbids
such communication (e.g., if the consumer has so informed the debt collector).
Section 805(b) -- Communication with third parties.
Unless the consumer consents, or a court order or section 804 permits, "or as
reasonably necessary to effectuate a postjudgment judicial remedy," a debt
collector "may not communicate, in connection with the collection of any debt,
with any person other than the consumer, his attorney, a consumer reporting
agency if otherwise permitted by law, the creditor, the attorney of the
creditor, or the attorney of the debt collector."
1. Consumer consent to the third party contact. The
consumer's consent need not be in writing. For example, if a third party
volunteers that a consumer has authorized him to pay the consumer's account, the
debt collector may normally presume the consumer's consent, and may accept the
payment and provide a receipt to the party that makes the payment. However,
consent may not be inferred only from a consumer's inaction when the debt
collector requests such consent.
2. Location information. Although a debt collector's
search for information concerning the consumer's location (provided in section
804) is expressly excepted from the ban on third party contacts, a debt
collector may not call third parties under the pretense of gaining information
already in his possession.
3. Incidental contacts with telephone operator or
telegraph clerk. A debt collector may contact an employee of a telephone or
telegraph company in order to contact the consumer, without violating the
prohibition on communication to third parties, if the only information given is
that necessary to enable the collector to transmit the message to, or make the
contact with, the consumer.
4. Accessibility by third party. A debt collector may
not send a written message that is easily accessible to third parties. For
example, he may not use a computerized billing statement that can be seen on the
envelope itself.
A debt collector may use an "in care of" letter only if
the consumer lives at, or accepts mail at, the other party's address.
A debt collector does not violate this provision when an
eavesdropper overhears a conversation with the consumer, unless the debt
collector has reason to anticipate the conversation will be overhead.
5. Non-excepted parties. A debt collector may discuss
the debt only with the parties specified in this section (consumer, creditor, a
party's attorney, or credit bureau). For example, unless the consumer has
authorized the communication, a collector may not discuss the debt (such as a
dishonored check) with a bank, or make a report on a consumer to a non-profit
counseling service.
6. Judicial remedy. The words "as reasonably necessary
to effectuate a postjudgment judicial remedy" mean a communication necessary for
execution or enforcement of the remedy. A debt collector may not send a copy of
the judgment to an employer, except as part of a formal service of papers to
achieve a garnishment or other remedy.
7. Audits or inquiries. A debt collector may disclose
his files to a government official or an auditor, to respond to an inquiry or
conduct an audit, because the disclosure would not be "in connection with the
collection of any debt."
8. Communications by attorney debt collectors. An
attorney who represents either a creditor or debt collector that has previously
tried to collect an account may communicate his efforts to collect the account
to the debt collector. Because the section permits a debt collector to
communicate with "the attorney of the creditor, or the attorney of the debt
collector," communications between these parties (even if the attorney is also a
debt collector) are not forbidden.
An attorney may communicate with a potential witness in
connection with a lawsuit he has filed (e.g., in order to establish the
existence of a debt), because the section was not intended to prohibit
communications by attorneys that are necessary to conduct lawsuits on behalf of
their clients.
Section 805(c) -- Ceasing communication. Once a debt
collector receives written notice from a consumer that he or she refuses to pay
the debt or wants the collector to stop further collection efforts, the debt
collector must cease any further communication with the consumer except "(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; or (3) where applicable, to notify the consumer that the debt
collector or creditor intends to invoke a specified remedy."
1. Scope. For purposes of this section, the term
"communicate" is given its commonly accepted meaning. Thus, the section applies
to any contact with the consumer related to the collection of the debt, whether
or not the debt is specifically mentioned.
2. Request for payment. A debt collector's response to a
"cease communication" notice from the consumer may not include a demand for
payment, but is limited to the three statutory exceptions.
Section 805(d) -- "consumer" definition. For section 805
purposes, the term "consumer" includes the "consumer's spouse, parent (if the
consumer is a minor), guardian, executor, or administrator."
1. Broad "consumer" definition. Because of the broad
statutory definition of "consumer" for the purposes of this section, many of its
protections extend to parties close to the consumer. For example, the debt
collector may not call the consumer's spouse at a time or place known to be
inconvenient to the spouse. Conversely, he may call the spouse (guardian,
executor, etc.) at any time or place that would be in accord with the
limitations of section 805(a).
Section 806 prohibits a debt collector from any conduct
that would "Harass, oppress, or abuse any person in connection with the
collection of a debt." It provides six examples of harassment or abuse.
1. Scope. Prohibited actions are not limited to the six
subsections listed as [53 Fed. Reg. 50105] examples of activities that violate
this provision.
2. Unnecessary calls to third parties. A debt collector
may not leave telephone messages with neighbors when the debt collector knows
the consumer's name and telephone number and could have reached him directly.
3. Multiple contacts with consumer. A debt collector may
not engage in repeated personal contacts with a consumer with such frequency as
to harass him. Subsection (5) deals specifically with harassment by multiple
phone calls.
4. Abusive conduct. A debt collector may not pose a
lengthy series of questions or comments to the consumer without giving the
consumer a chance to reply. Subsection (2) deals specifically with harassment
involving obscene, profane, or abusive language.
Section 806(1) prohibits the "use or threat of use of
violence or other criminal means to harm . . . any person."
1. Implied threat. A debt collector may violate this
section by an implied threat of violence. For example, a debt collector may not
pressure a consumer with statements such as "We're not playing around here--we
can play tough" or "We're going to send somebody to collect for us one way or
the other."
Section 806(2) prohibits the use of obscene, profane, or
abusive language.
1. Abusive language. Abusive language includes
religious slurs, profanity, obscenity, calling the consumer a liar or a
deadbeat, and the use of racial or sexual epithets.
Section 806(3) prohibits the "publication of a list of
consumers who allegedly refuse to pay debts," except to report the items to a
"consumer reporting agency," as defined in the Fair Credit Reporting Act or to a
party otherwise authorized to receive it under that Act.
Section 806(4) prohibits the "advertisement for sale of
any debt to coerce payment of the debt."
1. Shaming prohibited. These provisions are designed to
prohibit debt collectors from "shaming" a customer into payment, by publicizing
the debt.
2. Exchange of lists. Debt collectors may not exchange
lists of consumers who allegedly refuse to pay their debts.
3. Information to creditor subscribers. A debt collector
may not distribute a list of alleged debtors to its creditor subscribers.
4. Coded lists. A debt collector that publishes a list
of consumers who have had bad debts, coded to avoid generally disclosing the
consumer's identity (e.g., showing only the drivers license number and first
three letters of each consumer's name) does not violate this provision, because
such publication is permitted under the Fair Credit Reporting Act.
5. List for use by investigator. A debtor collector does
not violate these provisions by providing a list of consumers against whom
judgments have been entered to a private investigator in order to locate such
individuals, because section 805(b) specifically permits contacts "reasonably
necessary to effectuate a post-judgment judicial remedy."
6. Public notice required by law. A debt collector does
not violate these provisions by providing public notices that are required by
law as a prerequisite to enforcement of a security interest in connection with a
debt.
Section 806(5) prohibits contacting the consumer by
telephone "repeatedly or continuously with intent to annoy, abuse, or harass any
person at the called number."
1. Multiple phone calls. "Continuously" means making a
series of telephone calls, one right after the other. "Repeatedly" means calling
with excessive frequency under the circumstances.
Section 806(6) prohibits, except where section 804
applies, "the placement of telephone calls without meaningful disclosure of the
caller's identity."
1. Aliases. A debt collector employee's use of an alias
that permits identification of the debt collector (i.e., where he uses the alias
consistently, and his true identity can be ascertained by the employer)
constitutes a "meaningful disclosure of the caller's identity."
2. Identification of caller. An individual debt
collector must disclose his employer's identity, when discussing the debt on the
telephone with consumers or third parties permitted by section 805(b).
3. Relation to other sections. A debt collector who uses
a false business name in a phone call to conceal his identity violates section
807(14), as well as this section.
SECTION 807 -- FALSE OR MISLEADING REPRESENTATIONS
Section 807 prohibits a debt collector from using any
"false, deceptive, or misleading representation or means in connection with the
collection of any debt." It provides sixteen examples of false or misleading
representations.
1. Scope. Prohibited actions are not limited to the
sixteen subsections listed as examples of activities that violate this
provision. In addition, section 807(10), which prohibits the "use of any false
representation or deceptive means" by a debt collector, is particularly broad
and encompasses virtually every violation, including those not covered by the
other subsections.
Section 807(1) prohibits "the false representation or
implication that the debt collector is vouched for, bonded by, or affiliated
with the United States or any State . . ."
1. Symbol on dunning notice. A debt collector may not
use a symbol in correspondence that makes him appear to be a government
official. For example, a collection letter depicting a police badge, a judge, or
the scales of justice, normally violates this section.
Section 807(2) prohibits falsely representing either
"(A) the character, amount, or legal status of any debt; or (B) any services
rendered or compensation which may be lawfully received by" the collector.
1. Legal status of debt. A debt collector may not
falsely imply that legal action has begun.
2. Amount of debt. A debt collector may not claim an
amount more than actually owed, or falsely assert that the debt has matured or
that it is immediately due and payable, when it is not.
3. Judgment. When a debt collector provides the
validation notice required by section 809(a)(4), the notice may include the
words "copy of a judgment" whether or not a judgment exists, because section
809(a)(4) provides for a statement including these words. Compliance with
section 809(a)(4) in this manner will not be considered a violation of section
807(2)(A).
Section 807(3) prohibits falsely representing or
implying that "any individual is an attorney or that any communication is from
an attorney."
1. Form of legal correspondence. A debt collector may
not send a collection letter from a "Pre-Legal Department," where no legal
department exists. An attorney may use a computer service to send letters on his
own behalf, but a debt collector may not send a computer-generated letter
deceptively using an attorney's name.
2. Named individual. A debt collector may not falsely
represent that a person named in a letter is his attorney.
3. Relation to other sections. If a creditor falsely
uses an attorney's name rather than his own in his collection communications, he
both loses his exemption from the FDCPA's definition of "debt collector"
(Section 803(6)) and violates this provision.
Section 807(4) prohibits falsely representing or
implying to the consumer that nonpayment "will result in the arrest or
imprisonment of any [53 Fed. Reg. 50106] person or the seizure, garnishment,
attachment, or sale of any property or wages of any person . . ."
Section 807(5) prohibits the "threat to take any action
that cannot legally be taken or that is not intended to be taken."
1. Debt collector's statement of his own definite
action. A debt collector may not state that he will take any action unless he
intends to take the action when the statement is made, or ordinarily takes the
action in similar circumstances.
2. Debt collector's statement of definite action by
third party. A debt collector may not state that a third party will take any
action unless he has reason to believe, at the time the statement is made, that
such action will be taken.
3. Statement of possible action. A debt collector may
not state or imply that he or any third party may take any action unless such
action is legal and there is a reasonable likelihood, at the time the statement
is made, that such action will be taken. A debt collector may state that certain
action is possible, if it is true that such action is legal and is frequently
taken by the collector or creditor with respect to similar debts; however, if
the debt collector has reason to know there are facts that make the action
unlikely in the particular case, a statement that the action was possible would
be misleading.
4. Threat of criminal action. A debt collector may not
threaten to report a dishonored check or other fact to the police, unless he
actually intends to take this action.
5. Threat of attachment. A debt collector may not
threaten to attach a consumer's tax refund, when he has no authority to do so.
6. Threat of legal or other action. Section 807(5)
refers not only to a false threat of legal action, but also a false threat by a
debt collector that he will report a debt to a credit bureau, assess a
collection fee, or undertake any other action if the debt is not paid. A debt
collector may also not misrepresent the imminence of such action.
A debt collector's implication, as well as a direct
statement, of planned legal action may be an unlawful deception. For example,
reference to an attorney or to legal proceedings may mislead the debtor as to
the likelihood or imminence of legal action.
A debt collector's statement that legal action has been
recommended is a representation that legal action may be taken, since such a
recommendation implies that the creditor will act on it at least some of the
time.
Lack of intent may be inferred when the amount of the
debt is so small as to make the action totally unfeasible or when the debt
collector is unable to take the action because the creditor has not authorized
him to do so.
7. Illegality of threatened act. A debt collector may
not threaten that he will illegally contact an employer, or other third party,
or take some other "action that cannot legally be taken" (such as advising the
creditor to sue where such advice would violate state rules governing the
unauthorized practice of law). If state law forbids a debt collector from suing
in his own name (or from doing so without first obtaining a formal assignment
and that has not been done), the debt collector may not represent that he will
sue in that state.
Section 807(6) prohibits falsely representing or
implying that a transfer of the debt will cause the consumer to (A) lose any
claim or defense, or (B) become subject to any practice prohibited by the FDCPA.
1. Referral to creditor. A debt collector may not
falsely state that the consumer's account will be referred back to the original
creditor, who would take action the FDCPA prohibits the debt collector to take.
Section 807(7) prohibits falsely representing or
implying that the "consumer committed any crime or other conduct in order to
disgrace the consumer."
1. False allegation of fraud. A debt collector may not
falsely allege that the consumer has committed fraud.
2. Misrepresentation of criminal law. A debt collector
may not make a misleading statement of law, falsely implying that the consumer
has committed a crime, or mischaracterize what constitutes an offense by
misstating or omitting significant elements of the offense. For example, a debt
collector may not tell the consumer that he has committed a crime by issuing a
check that is dishonored, when the statute applies only where there is a "scheme
to defraud."
Section 807(8) prohibits "Communicating or threatening
to communicate to any person [false] credit information . . ., including the
failure to communicate that a disputed debt is disputed."
1. Disputed debt. If a debt collector knows that a debt
is disputed by the consumer, either from receipt of written notice (section 809)
or other means, and reports it to a credit bureau, he must report it as
disputed.
2. Post-report dispute. When a debt collector learns of
a dispute after reporting the debt to a credit bureau, the dispute need not also
be reported.
Section 807(9) prohibits the use of any document
designed to falsely imply that it issued from a state or federal source, or
"which creates a false impression as to its source, authorization, or approval."
1. Relation to other sections. Most of the violations of
this section involve simulated legal process, which is more specifically covered
by section 807(13). However, this subsection is broader in that it also covers
documents that fraudulently appear to be official government documents, or
otherwise mislead the recipient as to their authorship.
Section 807(10) prohibits the "use of any false
representation or deceptive means to collect or attempt to collect any debt or
to obtain information concerning a consumer."
1. Relation to other sections. The prohibition is so
comprehensive that violation of any part of section 807 will usually also
violate subsection (10). Actions that violate more specific provisions are
discussed in those sections.
2. Communication format. A debt collector may not
communicate by a format or envelope that misrepresents the nature, purpose, or
urgency of the message. It is a violation to send any communication that conveys
to the consumer a false sense of urgency. However, it is usually permissible to
send a letter generated by a machine, such as a computer or other printing
device. A bona fide contest entry form, which provides a clearly optional
location to enter employment information, enclosed with request for payment, is
not deceptive.
3. False statement or implications. A debt collector may
not falsely state or imply that a consumer is required to assign his wages to
his creditor when he is not, that the debt collector has counseled the creditor
to sue when he has not, that adverse credit information has been entered on the
consumer's credit record when it has not, that the entire amount is due when it
is not, or that he cannot accept partial payments when in fact he is authorized
to accept them.
4. Misrepresentation of law. A debt collector may not
mislead the consumer as to the legal consequences of the consumer's actions
(e.g., by falsely implying that a failure to respond is an admission of
liability).
A debt collector may not state that federal law requires
a notice of the debt collector's intent to contact third parties.
5. Misleading letterhead. A debt collector's employee
who is an attorney may not use "attorney-at-law" [53 Fed. Reg. 50107] stationery
without referring to his employer, so as to falsely imply to the consumer that
the debt collector had retained a private attorney to bring suit on the account.
Section 807(11) requires the debt collector to "disclose
clearly in all communications made to collect a debt or to obtain information
about a consumer, that the debt collector is attempting to collect a debt and
that any information obtained will be used for that purpose," except where
section 804 provides otherwise.
1. Oral communications. A debt collector must make the
required disclosures in both oral and written communications.
2. Disclosure to consumers. When a debt collector
contacts a consumer and clearly discloses that he is seeking payment of a debt,
he need not state that all information will be used to collect a debt, since
that should be apparent to the consumer. The debt collector need not repeat the
required disclosure in subsequent contacts.
A debt collector may not send the consumer a note saying
only "please call me right away" unless there has been prior contact between the
parties and the collector is thus known to the consumer.
3. Disclosures to third parties. Except when seeking
location information, the debt collector must state in the first communication
with a third party that he is attempting to collect the debt and that
information will be used for that purpose, but need not do so in subsequent
communications with that party.
Section 807(12) prohibits falsely representing or
implying that "accounts have been turned over to innocent purchasers for value."
1. Relation to other sections. Section 807(6)(A)
prohibits a false statement or implication that threatening to affect the
consumer's rights may be affected by transferring the account; this subsection
forbids falsely stating or implying that a transfer to certain parties has
occurred.
Section 807(13) prohibits falsely representing or
implying that "documents are legal process."
1. Simulated legal process. A debt collector may not
send written communications that deceptively resemble legal process forms. He
may not send a form or a dunning letter that, taken as a whole, appears to
simulate legal process. However, one legal phrase (such as "notice of legal
action" or "show just cause why") alone will not result in a violation of this
section unless it contributes to an erroneous impression that the document is a
legal form.
Section 807(14) prohibits the "use of any business,
company, or organization name other than the [collector's] true name."
1. Permissible business name. A debt collector may use a
name that does not misrepresent his identity or deceive the consumer. Thus, a
collector may use its full business name, the name under which it usually
transacts business, or a commonly-used acronym. When the collector uses multiple
names in its various affairs, it does not violate this subsection if it
consistently uses the same name when dealing with a particular consumer.
2. Creditor misrepresentation of identity. A creditor
may not use any name that would falsely imply that a third party is involved in
the collection. The in-house collection unit of "ABC Corp." may use the name
"ABC Collection Division," but not the name "XYZ Collection Agency" or some
other unrelated name.
A creditor violates this section if he uses the name of
a collection bureau as a conduit for a collection process that the creditor
controls in collecting his own accounts. Similarly, a creditor may not use a
fictitious name or letterhead, or a "post office box address" name that implies
someone else is collecting his debts.
A creditor does not violate this provision where an
affiliated (and differently named) debt collector undertakes collection
activity, if the debt collector does business separately from the creditor
(e.g., where the debt collector in fact has other clients that he treats
similarly to the creditor, has his own employees, deals at arms length with the
creditor, and controls the process himself).
3. All collection activities covered. A debt collection
business must use its real business name, commonly-used name, or acronym in both
written and oral communications.
4. Relation to other sections. If a creditor uses a
false business name, he both loses his exemption from the FDCPA's definition of
"debt collector" (section 803(6)) and violates this provision. If a debt
collector falsely uses the name of an attorney rather than his true business
name, he violates section 807(3) as well as this section. When a debt collector
uses a false business name in a phone call, he violates section 806(6) as well
as this section.
When using the mails to obtain location information, a
debt collector may not (unless expressly requested by the recipient to identify
the firm) use a name that indicates he is in the debt collection business, or he
will violate section 804(5). When a debt collector's employee who is seeking
location information replies to an inquiry about his employer's identity under
section 804(1), he must give the true name of his employer.
Section 807(15) prohibits falsely representing or
implying that documents are not legal process forms or do not require action by
the consumer.
1. Disguised legal process. A debt collector may not
deceive a consumer into failing to respond to legal process by concealing the
import of the papers, thereby subjecting the consumer to a default judgment.
Section 807(16) prohibits falsely representing or implying that a debt collector operates or is employed by a "consumer reporting
agency" as defined in the Fair Credit Reporting Act.
1. Dual agencies. The FDCPA does not prohibit a debt
collector from operating a consumer reporting agency.
2. Misleading names. Only a bona fide consumer reporting
agency may use names such as "Credit Bureau," "Credit Bureau Collection Agency,"
"General Credit Control," "Credit Bureau Rating, Inc.," or "National Debtors
Rating." A debt collector's disclaimer in the text of a letter that the debt
collector is not affiliated with (or employed by) a consumer reporting agency
will not necessarily avoid a violation if the collector uses a name that
indicates otherwise.
3. Factual issue. Whether a debt collector that has
called itself a credit bureau actually qualifies as such is a factual issue, to
be decided according to the debt collector's actual operation.
TOP
Section 808 prohibits a debt collector from using
"unfair or unconscionable means" in his debt collection activity. It provides
eight examples of unfair practices.
1. Scope. Prohibited actions are not limited to the
eight subsections listed as examples of activities that violate this provision.
2. Elements of unfairness. A debt collector's act in
collecting a debt may be "unfair" if it causes injury to the consumer that is
(1) substantial, (2) not outweighed by countervailing benefits to consumers or
competition, and (3) not reasonably avoidable by the consumer.
Section 808(1) prohibits collecting any amount unless
the amount is expressly authorized by the agreement creating the debt or is
permitted by law.
1. Kinds of amounts covered. For purposes of this
section, "amount" includes not only the debt, but also any incidental charges,
such as collection [53 Fed. Reg. 50108] charges, interest, service charges, late
fees, and bad check handling charges.
2. Legality of charges. A debt collector may attempt to
collect a fee or charge in addition to the debt if either (a) the charge is
expressly provided for in the contract creating the debt and the charge is not
prohibited by state law, or (b) the contract is silent but the charge is
otherwise expressly permitted by state law. Conversely, a debt collector may not
collect an additional amount if either (a) state law expressly prohibits
collection of the amount or (b) the contract does not provide for collection of
the amount and state law is silent.
3. Legality of fee under state law. If state law permits
collection of reasonable fees, the reasonableness (and consequential legality)
of these fees is determined by state law.
4. Agreement not in writing. A debt collector may
establish an "agreement" without a written contract. For example, he may collect
a service charge on a dishonored check based on a posted sign on the merchant's
premises allowing such a charge, if he can demonstrate that the consumer knew of
the charge.
Section 808(2) prohibits accepting a check postdated by
more than five days unless timely written notice is given to the consumer prior
to deposit.
Section 808(3) prohibits soliciting any postdated check
for purposes of threatening or instituting criminal prosecution.
Section 808(4) prohibits depositing a postdated check
prior to its date.
1. Postdated checks. These provisions do not totally
prohibit debt collectors from accepting postdated checks from consumers, but
rather prohibit debt collectors from misusing such instruments.
Section 808(5) prohibits causing any person to incur
telephone or telegram charges by concealing the true purpose of the
communication.
1. Long distance calls to the debt collector. A debt
collector may not call the consumer collect or ask a consumer to call him long
distance without disclosing the debt collector's identity and the
communication's purpose.
2. Relation to other section. A debt collector who
conceals his purpose in asking consumers to call long distance may also violate
section 807(11), which requires the debt collector to disclose his purpose in
some communications.
Section 808(6) prohibits taking nonjudicial action to
enforce a security interest on property, or threatening to do so, where (A)
there is not present right to the collateral, (B) there is no present intent to
exercise such rights, or (C) the property is exempt by law.
1. Security enforcers. Because the FDCPA's definition of
"debt collection" includes parties whose principal business is enforcing
security interests only for section 808(6) purposes, such parties (if they do
not otherwise fall within the definition) are subject only to this provision and
not to the rest of the FDCPA.
Section 808(7) prohibits "Communicating with a consumer
regarding a debt by post card."
1. Debt. A debt collector does not violate this section
if he sends a post card to a consumer that does not communicate the existence of
the debt. However, if he had not previously disclosed that he is attempting to
collect a debt, he would violate section 807(11), which requires this
disclosure.
Section 808(8) prohibits showing anything other than the
debt collector's address, on any envelope in any written communication to the
consumer, except that a debt collector may use his business name if it does not
indicate that he is in the debt collection business.
1. Business names prohibited on envelopes. A debt
collector may not put on his envelope any business name with "debt" or
"collector" in it, or any other name that indicates he is in the debt collection
business. A debt collector may not use the American Collectors Association logo
on an envelope.
2. Collector's name. Whether a debt collector/consumer
reporting agency's use of his own "credit bureau" or other name indicates that
he is in the collection business, and thus violates the section, is a factual
issue to be determined in each individual case.
3. Harmless words or symbols. A debt collector does not
violate this section by using an envelope printed with words or notations that
do not suggest the purpose of the communication. For example, a collector may
communicate via an actual telegram or similar service that uses a Western Union
(or other provider) logo and the word "telegram" (or similar word) on the
envelope, or a letter with the word "Personal" or "Confidential" on the
envelope.
4. Transparent envelopes. A debt collector may not use a
transparent envelope, which reveals language or symbols indicating his debt
collection business, because it is the equivalent of putting information on an
envelope.
SECTION 809 -- VALIDATION OF DEBTS
Section 809(a) requires a collector, within 5 days of
the first communication, to provide the consumer a written notice (if not
provided in that communication) containing (1) the amount of the debt and (2)
the name of the creditor, along with a statement that he will (3) assume the
debt's validity unless the consumer disputes it within 30 days, (4) send a
verification or copy of the judgment if the consumer timely disputes the debt,
and (5) identify the original creditor upon written request.
1. Who must provide notice. If the employer debt
collection agency gives the required notice, employee debt collectors need not
also provide it. A debt collector's agent may give the notice, as long as it is
clear that the information is being provided on behalf of the debt collector.
2. Single notice required. The debt collector is not
required to provide more than one notice for each debt. A notice need not offer
to identify the original creditor unless the name and address of the original
creditor are different from the current creditor.
3. Form of notices. The FDCPA imposes no requirements as
to the form, sequence, location, or typesize of the notice. However, an
illegible notice does not comply with this provision.
4. Alternate terminology. A debt collector may condense
and combine the required disclosures, as long as he provides all required
information.
5. Oral notice. If a debt collector's first
communication with the consumer is oral, he may make the disclosures orally at
that time in which case he need not send a written notice.
6. Legal action. A debt collector's institution of
formal legal action against a consumer (including the filing of a complaint or
service of legal papers by an attorney in connection with a lawsuit to collect a
debt) or transmission of a notice to a consumer that is required by law as a
prerequisite to enforcing a contractual obligation is not a "communication in
connection with collection of any debt," and thus does not confer section 809
notice-and-validation rights on the consumer.
7. Collection activities by attorneys. An attorney who
regularly attempts to collect debts by means other than litigation, such as
writing the consumer demand letters (dunning notices) or calling the consumer on
the phone about the obligation (except in response to a consumer's call to him
after suit has been commenced), must provide the required notice, even if a
previous debt collector (or creditor) has given such a notice.
8. Effect of including proof with first notice. A debt
collector must verify a disputed debt even if he has included proof of the debt
with the first communication, because the section is intended to assist the
consumer when a debt collector inadvertently contacts the [53 Fed. Reg. 50109]
wrong consumer at the start of his collection efforts.
Section 809(b) requires that, if the consumer disputes
the debt or requests identification of the original creditor in writing, the
collector must cease collection efforts until he verifies the debt and mails a
response. Section 809(c) states that a consumer's failure to dispute the
validity of a debt under this section may not be interpreted by a court as an
admission of liability.
1. Pre-notice collection. A debt collector need not
cease normal collection activities within the consumer's 30-day period to give
notice of a dispute until he receives a notice from the consumer. An attorney
debt collector may take legal action within 30 days of sending the notice,
regardless of whether the consumer disputes the debt. If the consumer disputes
the debt, the attorney may still take legal action but must cease collection
efforts until verification is obtained and mailed to the consumer.
A debt collector may report a debt to a credit bureau
within the 30-day notice period, before he receives a request for validation or
a dispute notice from the consumer.
Section 810 provides: "If any consumer owes multiple
debts and makes any single payment to any debt collector with respect to such
debts, such debt collector may not apply such payment to any debt which is
disputed by the consumer and, where applicable, shall apply such payment in
accordance with the consumer's directions."
SECTION 811 -- LEGAL ACTIONS BY DEBT COLLECTORS
Section 811 provides that a debt collector may sue a
consumer only in the judicial district where the consumer resides or signed the
contract sued upon, except that an action to enforce a security interest in real
property which secures the obligation must be brought where the property is
located.
1. Waiver. Any waiver by the consumer must be provided
directly to the debt collector (not to the creditor in the contract establishing
the debt), because the forum restriction applies to actions brought by the debt
collector.
2. Multiple defendants. Since a debt collector may sue
only where the consumer (1) lives or (2) signed the contract, the collector may
not join an ex-husband as a defendant to a suit against the ex-wife in the
district of her residence, unless he also lives there or signed the contract
there. The existence of community property at her residence that is available to
pay his debts does not alter the forum limitations on individual consumers.
3. Real estate security. A debt collector may sue based
on the location of a consumer's real property only when he seeks to enforce an
interest in such property that secures the debts.
4. Services without written contract. Where services
were provided pursuant to an oral agreement, the debt collector may sue only
where the consumer resides. He may not sue where services were performed (if
that is different from the consumer's residence), because that is not included
as permissible forum location by this provision.
5. Enforcement of judgments. If a judgment is obtained
in a forum that satisfies the requirements of this section, it may be enforced
in another jurisdiction, because the consumer previously has had the opportunity
to defend the original action in a convenient forum.
6. Scope. This provision applies to lawsuits brought by
a debt collector, including an attorney debt collector, when the debt collector
is acting on his own behalf or on behalf of his client.
SECTION 812 -- FURNISHING CERTAIN DECEPTIVE FORMS
Section 812 prohibits any party from designing and
furnishing forms, knowing they are or will be used to deceive a consumer to
believe that someone other than his creditor is collecting the debt, and imposes
FDCPA civil liability on parties who supply such forms.
1. Practice prohibited. This section prohibits the
practice of selling to creditors dunning letters that falsely imply that a debt
collector is participating in collection of the debt, when in fact only the
creditor is collecting.
2. Coverage. This section applies to anyone who designs,
complies, or furnishes the forms prohibited by this section.
3. Pre-collection letters. A form seller may not furnish
a creditor with (1) a letter on a collector's letterhead to be used when the
collector is not involved in collecting the creditor's debts, or (2) a letter
indicating "copy to (the collector)" if the collector is not participating in
collecting the creditor's debt. A form seller may not avoid liability by
including a statement in the text of a form letter that the sender has not yet
been assigned the account for collection, if the communication as a whole, using
the collector's letterhead, represents otherwise.
4. Knowledge required. A party does not violate this
provision unless he knows or should have known that his form letter will be used
to mislead consumers into believing that someone other than the creditor is
involved in collecting the debt.
5. Participation by debt collector. A debt collector
that uses letters as his only collection tool does not violate this section,
merely because he charges a flat rate per letter, if he is meaningfully
"participating in the collection of a debt." The consumer is not misled in such
cases, as he would be in the case of a party who supplied the creditor with form
letters and provided little or no additional service in the collection process.
The performance of other tasks associated with collection (e.g., handling
verification requests, negotiating payment arrangements, keeping individual
records) is evidence that such a party is "participating in the collection."
SECTION 813 -- CIVIL LIABILITY
Section 813 (A) imposes civil liability in the form of
(1) actual damages, (2) discretionary penalties, and (3) costs and attorney's
fees; (B) discusses relevant factors a court should consider in assessing
damages; (C) exculpates a collector who maintains reasonable procedures from
liability for an unintentional error; (D) permits actions to be brought in
federal or state courts within one year from the violation; and (E) shields a
defendant who relies on an advisory opinion of the Commission.
1. Employee liability. Since the employees of a debt
collection agency are "debt collectors," they are liable for violations to the
same extent as the agency. 2. Damages. The courts have awarded "actual damages" for
FDCPA violations that were not just out-of-pocket expenses, but included damages
for personal humiliation, embarrassment, mental anguish, or emotional distress.
3. Application of statute of limitation period. The
sections one-year statute of limitations applies only to private lawsuits, not
to actions brought by a government agency.
4. Advisory opinions. A party may act in reliance on a
formal advisory opinion of the Commission pursuant to 16 CFR 1.1-1.4, without
risk of civil liability. This protection does not extend to reliance on this
Commentary or other informal staff interpretations.
SECTION 814 -- ADMINISTRATIVE ENFORCEMENT
Section 814 provides that the principal [53 Fed. Reg.
50110] federal enforcement agency for the FDCPA is the Federal Trade Commission,
but assigns enforcement power to other authorities empowered by certain federal
statutes to regulate financial, agricultural, and transportation activities,
where FDCPA violations relate to acts subject to those laws.
SECTION 815 -- REPORTS TO CONGRESS BY COMMISSION
Section 815 requires the Commission to submit an annual
report to Congress which discusses its enforcement and other activities
administering the FDCPA, assesses the degree of compliance, and makes
recommendations.
Section 816 provides that the FDCPA pre-empts state laws
only to the extent that those laws are inconsistent with any provision of the
FDCPA, and then only to the extent of the inconsistency. A state law is not
inconsistent if it gives consumers greater protection than the FDCPA.
1. Inconsistent laws. Where a state law provides
protection to the consumer equal to, or greater than, the FDCPA, it is not
pre-empted by the federal statute.
Section 817 orders the Commission to exempt any class of
debt collection practices from the FDCPA within any state if it determines that
state laws regulating those practices are substantially similar to the FDCPA,
and contain adequate provision for enforcement.
1. State exemptions. A state with a debt collection law
may apply to the Commission for an exemption. The Commission must grant the
exemption if the state's law is substantially similar to the FDCPA, and there is
adequate provision for enforcement. The Commission has published procedures for
processing such applications (16 CFR 901).
