A Brief Review of the Fair Debt Collections Practices Act (FDCPA)

Posted by: on Tue, Oct 23, 2012

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A Brief Review of the Fair Debt Collections Practices Act (FDCPA)

Under the FDCPA (15 U.S.C. 1601 et.seq.), a debt collector includes an attorney, and anyone else attempting to collect a consumer debt on behalf of another person or entity. A consumer debt is simply an obligation of a consumer to pay money owing out of a transaction with which the money, property, insurance or services are primarily for personal family or household purposes. A consumer is defined as being a natural person rather than a legal entity.

The initial communication by a debt collector, which includes an attorney, with the debtor, must include a notice that the person attempting to collect the debt is a debt collector, who is attempting to collect a debt. Generally this warning, or “mini-Miranda warning,” as it is often called in the industry, is listed in the initial demand letter, in any pleading that is filed, and in any other document that is mailed to the debtor. The warning language must be placed conspicuously on the demand letter or document and be written in such a way so that it can be understood by the “least sophisticated consumer.” The debt collector must explain that the debtor is entitled to dispute the claimed debt or alleged obligation and that the debtor must do so in writing within 30 days after receipt of the initial demand letter or document. Normally the mini-Miranda warning, often called the validation notice, will state the following (in bold print) in the initial demand letter:

“This communication is an attempt to collect a debt and any information obtained will be used for that purpose. Unless you, within 30 days after receipt of this document, dispute the validity of the debt, or any portion thereof, this firm will assume that the debt is valid. If you notify me in writing within the above 30 day period, that the debt, or any portion thereof, is disputed, I will obtain verification of the debt and a copy of such verification will be mailed to you by this firm. If you so request within the above 30 day period, this firm will inform of the identity of the original creditor, if different from the current creditor.”

Additionally, any subsequent communications with the debtor should also include a statement to the affect that “this communication is from a debt collector,” or “this communication is from a debt collector and any information you provide can be used for the purpose of collecting that debt.” These additional mini-Miranda warnings are provided mainly because the debt collector cannot be certain whether or not the debtor actually received the prior initial written communication. Thus, these additional Miranda warnings should be included out of an abundance of caution in all correspondence sent to debtors. Furthermore, the Second and Seventh Circuits have adopted certain safe harbor language to add to the validation notice as follows:

“This advice pertains to your dealings with me as a debt collector. It does not affect your dealings with the court, and in particular it does not change the time at which you must answer the complaint. The summons is a command from the court, not from me, and you must follow its instructions even if you dispute the validity or amount of the debt. The advice in this letter also does not affect my relations with the court. As a lawyer, I may file papers in this suit according to the court’s rules and the judges’ instructions.”

This type of additional protective language may start a trend in the other circuits.

A debt collector may also not harass a debtor. For example, the following types of actions are considered harassment and are prohibited by debt collectors, including law firms:

  • The use or threat of use of violence of criminal means to harm the person or reputation of the debtor;
  • The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader;
  • The publication of a list of consumers who are allegedly refusing to pay their debts;
  • The advertisement for sale of any debt to coerce payment of the debt;
  • Causing a telephone to ring or engage in any personal telephone conversation repeatedly or continuously with the intent to annoy, abuse or harass the person.

Other types of prohibited communications include the following:

  • Calling the debtor before 8:00 a.m. or after 9:00 p.m., debtor’s time;
  • Contacting the debtor after the debtor is represented by an attorney;
  • Calling the debtor’s place of employment after the debt collector knows that the employer prohibits calls, such as when the debtor says do not call me at work;
  • Contacting debtor after debtor in writing tells the debt collector that the debtor is not going to pay the debt, or the debtor wants to collector to cease communications; and
  • A debt collector should not leave telephone messages that can be heard by other persons in the household.

A sample or form of demand letter under the FDCPA could look something like the following (using both the Miranda warning and the safe harbor language required in some circuits):

“Dear Sir or Madam:

The undersigned law firm represents [Creditor], with respect to collecting the above-referenced debt which is now past due and owing to [Creditor]. As you know, [Creditor] provided design services to you for your residence on Main Street, based upon an agreement and/or founded on business dealings between the parties. Payments for such services are presently due as incurred in the ordinary course of business. However, the balance owed in the amount of at least $________, together with interest accruing thereon, is now past due. The services rendered are summarized as follows: ___________________________________.

In the event that full payment is not received, we have been authorized to proceed with collection efforts, including the filing of a lawsuit against you in Clark County, Nevada, if necessary. In the event that a lawsuit is required in order to collect the amount owed, [Creditor] intends to seek recovery of all amounts owed, plus pre-judgment and post-judgment interest thereon as allowed by Nevada law, plus attorneys’ fees and collection costs, plus any other damages to which [Creditor] may be entitled by law or in equity. If you wish to avoid the expense, risk, and embarrassment of a lawsuit arising from these claims arising from and relating to services related to your personal residence, we urge you to act promptly.

UNLESS, WITHIN 30 DAYS AFTER RECEIPT OF THIS LETTER, YOU DISPUTE THE VALIDITY OF THIS DEBT OR ANY PORTION THEREOF, WE WILL ASSUME THE DEBT TO BE VALID AND WILL PROCEED IN ACCORDANCE WITH THAT ASSUMPTION. IF, WITHIN 30 DAYS OF YOUR RECEIPT OF THIS LETTER, YOU NOTIFY US IN WRITING THAT THE DEBT OR ANY PORTION THEREOF IS DISPUTED, WE WILL OBTAIN VERIFICATION OF THE DEBT AND WILL MAIL YOU VERIFICATION OF THE DEBT AT THE ADDRESS ABOVE.

PLEASE BE ADVISED THAT THIS COMMUNICATION IS MADE FOR THE PURPOSE OF COLLECTING A DEBT AND ANY INFORMATION OBTAINED MAY BE USED FOR THE PURPOSE OF COLLECTING THE DEBT.

This advice pertains to your dealings with me, as a debt collector. It does not affect your dealings with the court, and in particular, it does not change the time within which you must answer any complaint filed regarding this matter. The summons is a command from the court, not from me, and you must follow its instructions even if you dispute the validity of the claim or the amount of the debt. The advice in this letter also does not affect my relations with the court. As a lawyer, I may file papers in the law suit according to the court’s rules and the judge’s instructions.

If you have any questions regarding this account you may contact the undersigned at (702) ______.”

If a request for verification is sent by the debtor to the debt collector, this means that the debt collector must then confirm in writing that the amount being demanded is what the creditor is claiming and also provide the name and address of the original creditor by mail to the consumer. 15 USC §1692(g)(b). Verification is intended to eliminate debt collectors from pursuing the wrong person or attempting to collect debts which the consumer has already paid.

By G. Mark Albright, Esq

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on real estate, secured finance and litigation.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.