Source: http://ftc.gov/os/statutes/fdcpa/fdcpa2000rpt.shtm
Timestamp: 2013-05-19 02:39:24
Document Index: 614080035

Matched Legal Cases: ['§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 553']

Revealing alleged debt to third parties: Third-party contacts for any purpose other than obtaining information about the consumer's location violate the Act, unless authorized by the consumer or unless they fall within one of the Act's exceptions. We received more than 500 complaints about unauthorized third-party contacts in 1999. Consumers' employers, relatives, children, neighbors, and friends have been contacted and informed about consumers' debts. Such contacts typically embarrass or intimidate the consumer and are a continuing aggravation to third parties. Contacts with consumers' employers and co-workers about their alleged debts jeopardize continued employment or prospects for promotion. Relationships between consumers and their families, friends, or neighbors may also suffer from improper third-party contacts. In some cases, collectors reportedly have used misrepresentations as well as harassing and abusive tactics in their communications with third parties. Continuing to contact consumer after receiving "cease communication" notice: The FDCPA requires debt collectors to cease all communications with a consumer about an alleged debt if the consumer communicates in writing that he wants all such communications to stop or that he refuses to pay the alleged debt.(7) This "cease communication" notice does not prevent collectors or creditors from filing suit against the consumer, but it does stop collectors from calling the consumer or sending dunning notices. More than 400 consumers complained that collectors ignored their "cease communication" notices and continued their aggressive collection attempts.
There are times, however, when it appears to Commission staff, based often on complaints from consumers, state or local agencies, or other industry members, that a debt collector is not complying with the statute voluntarily. Accordingly, the Commission's FDCPA program includes investigations of certain debt collectors. If an investigation reveals evidence of significant FDCPA violations, staff contacts the debt collector and attempts to negotiate a settlement before recommending that the Commission issue a complaint. If a settlement is reached and the Commission accepts the staff's recommendation to approve a proposed consent order, the Commission delivers the proposed order and accompanying complaint to the Department of Justice, which files the documents in the appropriate federal district court.(13) If the debt collector will not agree to an appropriate settlement that remedies the alleged violations, the Commission requests that the Department of Justice file suit in federal court on behalf of the Commission, usually seeking a civil penalty and injunctive relief that would prohibit the collector from continuing to violate the Act. On occasion, these debt collectors agree to an appropriate settlement after suit has been brought. The Commission staff is currently conducting a number of non-public investigations of debt collectors to determine whether they are or have engaged in serious violations of the Act. In addition, there have been significant developments in several Commission enforcement actions.
In a January 1998 complaint, the Commission alleged that Capital City Mortgage Corporation and its owner, Thomas K. Nash, among other things, violated the FDCPA by falsely representing that letters from the company's in-house attorney were from a third-party collector, making false and misleading representations when collecting loan payments, and engaging in unfair or unconscionable debt collection practices. In March 1999, the court permitted the Commission to add the in-house attorney, Eric J. Sanne, as a defendant based on the Commission's discovery during litigation of hundreds of additional letters sent by the attorney. The Commission has moved for summary judgment as to all three defendants' misrepresentations of Mr. Sanne's status. The Commission is seeking a combination of civil penalties and injunctive and equitable monetary relief. Legislative Recommendations
Section 809(b)--Effect of Thirty-day Period: Section 809(b) of the FDCPA provides that if a consumer, within the thirty-day period specified in Section 809(a), disputes a debt in writing or requests verification of the debt, the collector must cease all collection efforts until verification is obtained and mailed to the consumer. The Commission and its staff have consistently read Section 809(b) to permit a debt collector to continue to make demands for payment or take legal action within the thirty-day period unless the consumer disputes the debt or requests verification during that time. Nothing within the language of the statute indicates that Congress intended an absolute bar to appropriate collection activity or legal action within the thirty-day period where the consumer has not disputed the debt or requested verification. The Commission articulated this position in an April 2000 advisory opinion. Commission staff has taken the same position in staff opinion letters and the Staff Commentary on the FDCPA.(17) Federal circuit courts that have addressed this issue recently have arrived at the same conclusion. In a 1997 opinion, the Seventh Circuit stated that "[t]he debt collector is perfectly free to sue within the thirty days; he just must cease his efforts at collection during the interval between being asked for verification of the debt and mailing the verification to the debtor."(18) In the most recent federal appellate court pronouncement on the subject, the Sixth Circuit stated that "[a] debt collector does not have to stop its collection efforts [during the thirty-day period] to comply with the Act. Instead, it must ensure that its efforts do not threaten a consumer's right to dispute the validity of his debt."(19)
1. Section 3003(a)(1) provides that most statutory requirements for "annual, semiannual, or other regular periodic" reports by federal agencies to Congress (or any committee of the Congress) "shall cease to be effective" as of December 21, 1999. Pub. L. 104-66, Section 3003(a)(1), 109 Stat. 734. 2. Section 814 of the FDCPA, 15 U.S.C. § 1692l, places enforcement obligations upon seven other federal agencies for those organizations whose activities lie within their jurisdiction. These agencies are the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, the Department of Transportation, and the Department of Agriculture. Almost all of the organizations regulated by these agencies are creditors and, as such, largely fall outside the coverage of the Act. When these agencies receive complaints about debt collection firms that are not under their jurisdiction, they generally forward them to the Commission. 3. The Commission also receives consumer complaints that are referred by state attorneys general. Occasionally, debt collectors contact us to express concern about allegedly violative practices of competitors because they fear that such practices may cause them to lose business to collectors who violate the law. 4. We cannot determine the extent to which abusive debt collection practices in general are represented by the complaints the Commission receives. Based on our enforcement experience, we know that many consumers never complain, while others complain to the underlying creditor or to other enforcement agencies. Some consumers may not even be aware that the Commission enforces the Act or that the conduct they have experienced violates the Act. 5. Section 809(a), 15 U.S.C. § 1692g(a). The collector need not send such a written notice if the collector's initial communication with the consumer was oral and the consumer received this information in the initial communication. 6. Section 805(a)(3), 15 U.S.C. § 1692c(a)(3). 7. Section 805(c), 15 U.S.C. § 1692c(c). 8. Sections 807(4)-(5), 15 U.S.C. §§ 1692e(4)-(5). 9. Section 807(2)(A), 15 U.S.C. § 1692e(2)(A). 10. Section 808(1), 15 U.S.C. § 1692f(1). 11. 53 Fed. Reg. 50,097 (1988). 12. A small number of the staff's Commentary positions are now inaccurate because of a minor amendment to the statute and several recent court decisions. 13. Consent orders are for settlement purposes only and do not constitute an admission by the debt collector that it violated the law. 14. Miller v. Payco-General American Credits, Inc., 943 F.2d 482 (4th Cir. 1991); Swanson v. Southern Oregon Credit Services, Inc., 869 F.2d 1222 (9th Cir. 1989). See also United States v. National Financial Services, Inc., 98 F.3d 131, 139 (4th Cir. 1996) ("bold commanding type of the dunning text overshadowed the smaller, less visible, validation notice printed on the back in small type and light grey ink"); Macarz v. Transworld Sys., 26 F. Supp. 2d 368, 373 (D. Conn. 1998) (collection letter violated Section 809, in part, because validation notice was "relegated to the very bottom of the page in a difficult to read and nondistinctive print, where it appear[ed] to look purposefully insignificant"). 15. Miller, 943 F.2d at 484; Swanson, 869 F.2d at 1225-26. Both the format and the substance of the letter were held to "overshadow" the notice required by Section 809(a) in each case. 16. See, e.g., Geocities, Docket No. 3849, 1999 FTC Lexis 17, *14 (Feb. 5, 1999) (consent) (website privacy disclosure); California Suncare, Inc., 123 F.T.C. 332, 383 (1997) (consent) (skin-tanning product warnings). 17. 53 Fed. Reg. at 50,109, comment 809(b)-1. The Commentary, the Commission's advisory opinion, and staff opinion letters are available at www.ftc.gov/os/statutes/fdcpajump.htm. 18. Bartlett v. Heibl, 128 F.3d 497, 501 (7th Cir. 1997) (Posner, J.). 19. Smith v. Computer Credit, Inc., 167 F.3d 1052, 1054 (6th Cir. 1999). 20. A current bill in the Senate, S. 576, proposes just such an amendment. 21. Heintz, 514 U.S. at 299 ("[T]he Act applies to attorneys who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation."). 22. Section 805(b) permits collectors to reveal a debt to third-parties under certain circumstances, including with "the express permission of a court of competent jurisdiction." Thus, an attorney could obtain "express permission" from the court before taking each third-party deposition, but this seems an inefficient method of proceeding. 23. Because of a 1996 amendment to Section 807(11), attorneys do not have to state in their pleadings that they are attempting to collect a debt and that any information obtained will be used for that purpose -- the so-called "mini-Miranda" notice. 24. A bill in the U.S. House of Representatives, H.R. 2544, includes such an amendment. That bill, however, adds the clause "or a nonjudicial foreclosure" to the end of the definitional change. The Commission would oppose this clause because consumers who undergo nonjudicial foreclosures do not receive the due process protections that consumers who are brought into federal or state court do. 25. Section 803(6)(F)(iii), 15 U.S.C. § 1692a(6)(F)(iii). 26. The principal Senate Report on the final version of the FDCPA states that the Senate committee that drafted the Act did not intend the definition of "debt collector" to cover "mortgage service companies and others who service outstanding debts for others, so long as the debts were not in default when taken for servicing." S. Rep. No. 382, 95th Cong., 1st Sess. 7, reprinted in 1977 U.S. Code Cong. & Ad. News 1695, 1698. 27. 15 U.S.C. § 1692l(d). 28. Section 553, 5 U.S.C. § 553, is the section of the Administrative Procedures Act that prescribes procedures for notice and comment rulemaking. Our mission: To prevent business practices that are anticompetitive, deceptive, or unfair to consumers About Us