FDCPA – Facts, Fiction & Reality

1. FDCPA – Facts, Fiction & Reality Welcome!

2. 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.

3. Introduction Mark Giddings Sherri L. Andrew

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

5. 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:

6. 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

7. Purpose & Benefits Protects consumers Benefits ethical collectors Sets a professional standard Fosters a fair and competitive environment

8. Who is a Consumer? Consumers include any natural person who is obligated or allegedly obligated to pay any debt.

9. Who Must Comply? Third-Party Debt Collectors Debt Purchasers Attorneys Creditors in limited circumstances

10. What is Debt? Any obligation or alleged obligation of a consumer arising out of a transaction primarily for personal, family or household purposes

11. 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

12. Questions

13. 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

14. 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:

15. 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.

16. 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

17. Third Party Communication Restrictions • DO NOT: • Reveal the existence of a debt to any party • Use symbols or language in written communication • Use postcards

18. 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

19. 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

20. Questions

21. Communicating with Consumers Requirements for written and oral communications with consumers How to handle to cease communication requests How to respond to disputes

22. Communication Defined Communication is conveying information directly or indirectly to any person through any medium regarding a debt.

23. 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

24. Discussion Questions

25. Mini-Miranda Disclosure “This is an attempt by a debt collector to collect a debt. Any information obtained will be used for that purpose.”

26. 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.

27. 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

28. Validation Notice Validation notice must include the following information: 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

29. 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)

30. 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

31. Discussion Questions

32. 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.

33. 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.

34. 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

35. Discussion Questions

36. 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

37. 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

38. 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

39. 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

40. 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.

41. 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?

42. 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?

43. Discussion Questions

44. Legal Action You CAN: Debt collectors can file suit during the validation period. You CANNOT: Debt collectors cannot contradict the right to request verification.

45. 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

46. 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

47. Questions

48. 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

49. Harassment and Abuse You may not engage in any harassing, oppressive or abusive conduct in connection with the collection of a debt.

50. 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