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

Mark Giddings Sherri L. Andrew

Agenda

5 6 3 4 1 2 • Welcome • Overview of the FDCPA • Third Party Communications • Communicating with Consumers • Deceptive Acts and Practices • Wrap Up & Close

Overview of the FDCPA

Discussion points: • The purpose of the FDCPA • The benefits of the FDCPA • Who must comply with the FDCPA • Whom the FDCPA protects

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

Debt collectors can contact the following people when collecting a debt from a consumer: • • • • • • 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

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 Restrictions

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

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.

2.

3.

4.

5.

Amount of the debt Name of the creditor to whom the debt is owed Statement that the consumer has thirty days to dispute debt or the debt is assumed valid Statement that if the consumer disputes debt in writing within 30 days, debt collector will provide verification 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:

“See Reverse Side for Important Information”

(If the Validation Notice is printed on the reverse side of the letter)

Mini-Miranda disclosure

(if it is the first time you are communicating with the consumer)

Overshadowing

The validation notice should not: • Demand immediate payment • Be inconsistent so as to cause confusion • Be printed in a smaller or lighter colored font • Be buried in other text

Discussion Questions

Settlement Offers

A settlement offer allows the consumer to settle the debt for an amount less than the total owed. • SETTLEMENT OFFERS CANNOT: Overshadow the validation period • Use deceptive language to present the offer

Web Sites

If a collection letter references the debt collector’s Web site, the Web site must comply with the FDCPA.

• Applies whether the consumer visits the site or not • Web site must include federal and state-mandated disclosures

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 discharge  or the court closes the case  or 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

The consumer has the right to request verification in writing within the 30-day validation period.

• Collection activity must cease until verification is provided.

• Verification must be mailed by the debt collector to the consumer.

Verification

What is verification of a debt?

• 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.

Verification

What is verification of a debt ?

• 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.

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

Examples of 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

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 Practices

Examples 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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