FDCPA – Facts, Fiction & Reality
Legal Disclaimer
This information is not to be intended as legal advice and may not be used as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.
Introduction
Sherri L. Andrew
Mark Giddings
Agenda
• Welcome
• Overview of the FDCPA
• Third Party Communications
• Communicating with Consumers
• Deceptive Acts and Practices
• Wrap Up & Close
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Overview of the FDCPA
• The purpose of the FDCPA
• The benefits of the FDCPA
• Who must comply with the FDCPA
• Whom the FDCPA protects
Discussion points:
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) became federal law in March 1978.
The FDCPA is part of the Consumer Credit Protection Act that also includes:
•Truth in Lending Act•Equal Credit Opportunity Act•Fair Credit Reporting Act
Purpose & Benefits
• Protects consumers
• Benefits ethical collectors
• Sets a professional standard
• Fosters a fair and competitive environment
Who is a Consumer?
Consumers include any natural person who is obligated or allegedly obligated to pay any debt.
Who Must Comply?
• Third-Party Debt Collectors
• Debt Purchasers
• Attorneys
• Creditors in limited circumstances
What is Debt?
• Any obligation or alleged obligation of a consumer arising out of a transaction primarily for personal, family or household purposes
Summary of Overview of the FDCPA
We have discussed the following topics:
The purpose of the FDCPA
The benefits of the FDCPA
Who must comply with the FDCPA
Who the FDCPA protects
Questions
Third Party Communications
• Identify who is considered a third party for purposes of communication under the FDCPA
• Identify what information you can and cannot seek when obtaining location information
Who May Be Contacted
• Consumer and consumer’s attorney
• Creditor and creditor’s attorney• Minor consumer’s parents• Consumer’s spouse (if permitted by state law)
• Consumer reporting agency• Debt collector’s attorney
Debt collectors can contact the following people when collecting a debt from a consumer:
Contacting the Consumer’s Attorney
If an attorney represents the consumer in regards to a debt which the consumer is collecting, the collector may only communicate with the attorney.
Skiptracing: Obtaining Location Information
• Identify yourself by name only
• State that you are trying to locate the consumer
• Request only home address, home phone number and place of employment
• Contact a third party only once
Third Party Communication Restrictions
DO NOT:
•Reveal the existence of a debt to any party
•Use symbols or language in written communication
•Use postcards
Employment Verification
You CAN:• Call the employer and request the company verify whether the consumer is currently employed by the company
You CANNOT:• Request the consumer’s work phone number, supervisor’s name, dates of employment, salary amount, dates of pay or any other information
Summary of Third Party Communications
We have discussed the following topics:
Third party definition for purposes of communication
Information you can and cannot seek when obtaining location information
Questions
Communicating with Consumers
• Requirements for written and oral communications with consumers
• How to handle to cease communication requests
• How to respond to disputes
Communication Defined
Communication is conveying information directly or indirectly to any person through any medium regarding a debt.
Communication is prohibited:
• At a time that is known to be inconvenient to the consumer
• Before 8:00 a.m. or after 9:00 p.m. local time at the consumer’s location
• If the consumer is represented by an attorney
• If it is known or reasonably understood that the consumer’s employer would prohibit it
Communication Restrictions
Discussion Questions
Mini-Miranda Disclosure
“This is an attempt by a debt collector to collect a debt.
Any information obtained will be used for that purpose.”
Mini-Miranda Disclosure
• Recite the mini-Miranda in the first written and first verbal communication with a consumer.
• All communications with consumers must indicate the communication is from a debt collector.
• Some state laws require the mini-Miranda in all communications with consumers.
Validation Notice
• Required disclosure provided to the consumer
• Informs consumer of their right to request verification of the debt
• Should be in writing
• Is required each time a subsequent agency takes over an account
Validation Notice
Validation notice must include the following information:
1. Amount of the debt2. Name of the creditor to whom the debt is owed3. Statement that the consumer has thirty days to
dispute debt or the debt is assumed valid4. Statement that if the consumer disputes debt in
writing within 30 days, debt collector will provide verification
5. Statement that the debt collector will provide the consumer name and address of original creditor if requested by the consumer in writing within 30 days
A Validation Notice Should Include:
Mini-Miranda disclosure
(if it is the first time you are communicating with the consumer)
“See Reverse Side for Important Information”
(If the Validation Notice is printed on
the reverse side of the letter)
• Demand immediate payment
• Be inconsistent so as to cause confusion
• Be printed in a smaller or lighter colored font
• Be buried in other text
Overshadowing
The validation notice should not:
Discussion Questions
Settlement Offers
SETTLEMENT OFFERS CANNOT:
• Overshadow the validation period
• Use deceptive language to present the offer
A settlement offer allows the consumer to settle the debt for an amount less than the total owed.
Web Sites
• Applies whether the consumer visits the site or not
• Web site must include federal and state-mandated disclosures
If a collection letter references the debt collector’s Web site, the Web site must comply with the FDCPA.
Leaving Messages• Majority of courts held message is a communication requiring mini-Miranda disclosure
• Catch-22 in that message may be heard by third party
• Collection agency must undertake risk management analysis to determine what, if any, message should be left for consumer
Discussion Questions
Cease Communications
The consumer has the right to request the collector cease communicating with her.
•Must be in writing
•Must be sent to the debt collector and not the creditor
Cease Communications
The debt collector should not communicate further except to:
•Advise that the collection efforts will be terminated
•Notify the consumer the debt collector or creditor may invoke certain rights as allowed by law
•Where applicable, notify the consumer of specific remedy the collector or creditor intends to take
Bankruptcy and Automatic Stay
• Immediately, when a consumer files for bankruptcy, the automatic stay goes into effect.
• The stay lasts until:the consumer receives a dischargeor the court closes the caseor the case is dismissed
Disputes
A consumer can dispute a debt at any time during the collection process.
•Dispute can be oral or written
•If reporting the debt, debt must be reported as disputed
•Written dispute during 30-day validation period triggers verification
Verification
• Collection activity must cease until verification is provided.
• Verification must be mailed by the debt collector to the consumer.
The consumer has the right to request verification in writing within the 30-day validation period.
Verification
• Debt collector confirms in writing the amount demanded is the amount owed.
• Appropriate verification of a debt will depend on the basis for the dispute.
What is verification of a debt?
Verification
• Until verification is provided, the debt collector is prohibited from pursuing collection activity on that account.
• Collectors must be knowledgeable about what constitutes proper verification.
What is verification of a debt?
Discussion Questions
Legal Action
You CAN:
Debt collectors can file suit during the validation period.
You CANNOT:
Debt collectors cannot contradict the right to request verification.
Venue for Legal Action
Suit must be filed in one of two venues:
•Judicial district in which the consumer signed the contract that is the basis for the debt or
•Judicial district in which the consumer resides at the time suit is filed
Summary of Communicating with Consumers
We have discussed the following topics:
Requirements for written and oral communications with consumers
How to handle cease communication requests
How to respond to disputes
Questions
Deceptive Acts and Practices
Following this topic, you will:
• Understand what conduct is considered harassment or abuse
• Recognize what the FDCPA considers to be false or misleading representations
• Identify what practices are considered unfair or unconscionable means to collect a debt
Harassment and Abuse
You may not engage in any harassing, oppressive or abusive conduct in connection with
the collection of a debt.
Harassment or Abuse
Examples of Harassment or Abuse:
• Use or threat of violence• Use of obscene or profane language• Publicizing list of consumers
refusing to pay debts
Harassment or Abuse
Examples of Harassment or Abuse:
• Advertising the sale of any debt to coerce payment
• Causing a telephone to ring repeatedly with the intent to annoy the consumer
• Placement of phone calls without meaningful disclosure of the caller’s identity
False and Misleading Representations
You may not use any false, deceptive or misleading representation or means in connection with the collection of any debt.
False or Misleading Representations
• False representation that the collector is affiliated with U.S. or any state
• False representation of character, amount or legal status of the debt
• False representation that the collector is or communication is from an attorney
• False representation that non-payment of the debt will result in the consumer’s arrest
Examples of False or Misleading Representations:
False or Misleading Representations
Examples of False or Misleading Representations:
• Threat to take action that cannot legally be or is not intended to be taken
• Communicating false credit information• Failure to include mini-Miranda in
communications• Use of business name other than true business
name• False representation that debt collector is a
consumer reporting agency
Unfair Practices
You may not use unfair or unconscionable means to collect or attempt to collect any debt.
Unfair Practices
Examples of Unfair Practices:
• Collection of any amount not authorized by agreement creating the debt or permitted by law
• Acceptance of check post-dated by more than 5 days without providing written notice of intent to deposit 3-10 business days before depositing
• Depositing post-dated check prior to date on check
Unfair PracticesExamples of Unfair Practices:
• Causing consumer to incur charges for communications by concealing true purpose of communication
• Communicating with a consumer regarding a debt via postcard
• Using any language or symbol, other than debt collector’s address, on any envelope when communicating with consumer via mail
Summary of Deceptive Acts and Practices
We have discussed the following topics:
Conduct considered harassment or abuse
False or misleading representations
Practices considered unfair or unconscionable means to collect a debt
Questions
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