A Quick Refresher of the Fair Debt

Collections Practices Act

by Richard Ellison

The following in-house memorandum to our collectors was written to quickly refresh their knowledge of the Fair Debt Collections Practices Act (hereafter referred to as FDCPA).

The FDCPA was originally adopted by Congress to squelch abusive debt collection agencies. Some feel it went too far and seriously affected a creditor's ability to collect on legitimate debts because of fear of lawsuits by underworked attorneys.

What follows is not a normative analysis of the FDCPA, but an attempt to be certain our agency complies and to inform our clients.

As you already know, communications generally with either the primary debtor or a third party require the following constraints:

1. No communication at any unusual time or place (convenient time for communicating with a debtor is generally defined as 8:00 a.m. through 9:00 p.m., local time, at the debtor's location).

2. If debtor is known to be represented by an attorney, then communications should be with that attorney, unless the attorney fails to respond within a reasonable period of time to a communication from us.

3. Not contact debtor at work if asked not to or we know employer does not permit those types of calls to debtor.

If the debtor notifies us that he refuses to pay the debt or that the debtor wishes us to cease all further communication, then we should stop communicating with the debtor, except:

1. To advise the debtor that we are ceasing communication.

2. That we are invoking specified remedies which we are entitled to.

Of course, we already know that we cannot harass, oppress or abuse the debtor such as making violent threats, using obscenity, ringing the telephone and hanging up, etc. We also know that we cannot misrepresent ourselves, i.e., claim that we are government entities capable of arresting the person or taking the property, or imply that we are attorneys and that we, ourselves, are able sue the debtors (but we can say, we will refer this matter to attorneys for legal action) or that nonpayment of the debt will result in arrest or imprisonment, etc. Please ask for clarification regarding what is considered misleading a debtor. It is confusing.

Many times we contact parties other than the primary debtor in order to acquire location information for the primary debtor. This is especially true now that Chris is engaged in our internet skip tracing initiative. The Fair Debt Collections Practices Act ("FDCPA") constrains us in our approach to third parties in acquiring location information. We need to be aware of these constraints.

The constraints are as follows:

1. We must make sure that we identify ourselves (but see #2) and state that we are confirming or correcting location information concerning the debtor.

2. Not state our employer or that we are a collection agency, unless expressly requested by the third party.

3. We must not state that the debtor owes any debt.

4. Not communicate with any third party more than once, unless requested to do so by that person or unless we "reasonably believe" that the earlier response of the third person is erroneous or incomplete and that the person now has correct or complete location information. Note: "reasonable belief" is not clearly defined by the act.

Except as provided above, generally, no communication should take place with third parties regarding the primary debtor's debt. Remember however, you are permitted "leeway" when questioning debtor's spouse or parent. See me for definition of "leeway".

Remember that the FDCPA applies only to natural persons involving transactions primarily for personal, family, or household purposes. Therefore, in many of our accounts, the FDCPA would not apply. However, there is common law (judge made non-statutory law) preventing us from committing many of the offenses defined by the FDCPA, therefore, it is best to adhere to the FDCPA in all cases.

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