TABLE OF CONTENTS. 1 Consumer Law Overview. 2 Family Expense Statute. 3 Preservation of Consumer Claims and Defenses. 4 Unlawful Trade Practices

Transcription

1 TABLE OF CONTENTS 1 Consumer Law Overview (1996 ed & 2000 supp)... Richard A. Slottee 2 Family Expense Statute (1996 ed & 2000 supp)...victoria E. Hatch 3 Preservation of Consumer Claims and Defenses (1996 ed & 2000 supp)... Richard A. Slottee 4 Unlawful Trade Practices (1996 ed & 2000 supp)... Edward J. Benett 5 Federal Trade Commission Credit Practices Rule (1996 ed & 2000 supp)... Richard A. Slottee 6 Truth in Savings Act (1996 ed & 2000 supp)...sandra A. Hansberger 7 Truth in Lending Act (1996 ed)... Michael F. Najewicz (2000 supp)...whitney L. Grubbs James Ray Streinz 8 Equal Credit Opportunity Act (1996 ed & 2000 supp)... Theresa L. Wright 9 The Fair Credit Reporting Act (1996 ed)...mark J. Wilk (2000 supp)... John J. Cosgrave 10 Retail Installment Contracts (1996 ed & 2000 supp)... Danny H. Gerlt 11 Student Loans (1996 ed)... Glennis Gold (2000 supp)... Sally Leisure 12 Home Mortgages (1996 ed)... Joseph W. West Keith N. Jones Robert A. Gebhardt (2000 supp)... Susan T. Alterman 2000 Rev

2 Table of Contents (continued) 13 Consumer Leasing Act (1996 ed)... Craig K. Edwards (2000 supp)... Richard D. Franklin 14 Fee Agreements (1996 ed & 2000 supp)... Richard A. Slottee 15 Defending Medical Collection Claims (1996 ed & 2000 supp)... Ronald J. Rubino 16 Warranties (1996 ed & 2000 supp)... Gerry Gaydos (2000 supp)... Kristie Gibson 17 Automobile Warranties (1996 ed & 2000 supp)... Charles D. Beshears 18 Door-to-Door Sales (1996 ed & 2000 supp)... Steven D. Bryant 19 Truth in Lending Act Rescission Rights (1996 ed & 2000 supp)...stephen E. Blackman (2000 supp)...erin Weeks 20 The Electronic Fund Transfer Act (1996 ed & 2000 supp)... Peter C. McCord 21 Fair Credit Billing Act (1996 ed)... David A. Stevens (2000 supp)... Melisse S. Cunningham 22 Fair Debt Collection Practices Act (2000 rev)... Richard A. Slottee 23 Oregon Unlawful Debt Collection Practices Act (1996 ed)...david S. Tilton (2000 supp)... Russell D. Garrett 24 Bankruptcy (1996 ed & 2000 supp)... Robert J. Altman 25 Garnishment (2000 ed)...victoria E. Hatch Glossary Table of Appendixes Table of Statutes and Rules Table of Cases Subject Index 2000 Rev

3 22 FRANK J. DIXON FAIR DEBT COLLECTION PRACTICES ACT I. ( 22.1) INTRODUCTION II. ( 22.2) ESSENTIAL ELEMENTS A. ( 22.3) Debt Collector B. ( 22.4) Exclusions from Definition of Debt Collector 1. ( 22.5) Employees of Creditor 2. ( 22.6) Collectors Related by Common Control 3. ( 22.7) Government Employees 4. ( 22.8) Process Servers 5. ( 22.9) Nonprofit Credit Counselors 6. ( 22.10) Original Creditors;Assignees;Fiduciaries 7. ( 22.11) Attorneys as Debt Collectors C. ( 22.12) Debt D. ( 22.13) Communication E. ( 22.14) Creditor FRANK J. DIXON, B.A., Notre Dame University (1973);J.D., Northwestern School of Law, Lewis and Clark College (1979);member of the Oregon State Bar since 1979;sole practitioner, Portland. The case citations in this chapter were checked for overrulings and reversals through the following Shepard s volumes: United States Citations... Vol 94,N o 20 Federal Citations... Vol 85,N o 20 The citations to ORS were checked through

4 22-2 F. ( 22.15) Prohibited Debt Collection Activities 1. ( 22.16) Harassment or Abuse a. ( 22.17) Threat of Violence b. ( 22.18) Profane or Abusive Language c. ( 22.19) Publication of a List of Debtors d. ( 22.20) Advertisements of Debts e. ( 22.21) Continuous Telephone Calls f. ( 22.22) Disclosing Identity During Telephone Calls 2. ( 22.23) False or Misleading Representations a. ( 22.24) Misrepresentation of Government Affiliation b. ( 22.25) Misrepresentation of Status of Debt c. ( 22.26) Misrepresentation of Attorney Status d. ( 22.27) Misrepresentation of Criminal Action or Execution e. ( 22.28) Misrepresentation of Action to Be Taken f. ( 22.29) Misrepresentation of Effect of Sale of Debt g. ( 22.30) Misrepresentation that Consumer Has Committed a Crime h. ( 22.31) Misrepresentation in Communicating Credit Information i. ( 22.32) Simulation of Government Document j. ( 22.33) False Representations in Collection Activities k. ( 22.34) Failure to Make Required Disclosure in Communications l. ( 22.35) Misrepresentation of Effect of Holder in Due Course m. ( 22.36) Misrepresentation that Documents Are Legal Process n. ( 22.37) Use of Fictitious Name o. ( 22.38) Misrepresentation of Nature of Legal Process p. ( 22.39) Misrepresentation of Employment by Consumer Reporting Agency

5 III. IV. 3. ( 22.40) Unfair Practices a. ( 22.41) Collecting Inappropriate Amounts b. ( 22.42) Postdated Checks c. ( 22.43) Charging for Communications d. ( 22.44) Misrepresentation of Right to Repossess e. ( 22.45) Communicating by Postcard f. ( 22.46) Restrictions on Envelope Return Address G. ( 22.47) Validation Disclosure Requirements 1. ( 22.48) Required Disclosure 2. ( 22.49) Location of Disclosures H. ( 22.50) Verification of the Debt I. ( 22.51) Legal Actions by Debt Collectors J. Debt Collection Communications 1. ( 22.52) Communications with Consumer 2. ( 22.53) Communications with Third Parties K. ( 22.54) Ceasing Communication ( 22.55) TYPICAL PARTIES AND FACT SITUATIONS A. ( 22.56) Improper Validation Notice B. ( 22.57) Follow-up Communications by Collector with Debtor C. ( 22.58) Communication with Persons Other than the Consumer D. ( 22.59) Communication Harassing the Consumer E. ( 22.60) Communication Threatening Legal Action ( 22.61) ADVANTAGES V. ( 22.62) PITFALLS AND HAZARDS VI. VII. REMEDIES AND DAMAGES A. ( 22.63) Public Remedy B. ( 22.64) Civil Damages C. ( 22.65) Class Action Damages D. ( 22.66) Attorney Fees DEFENSES A. ( 22.67) Bona Fide Error Defense B. ( 22.68) Reliance on Federal Trade Commission Opinions 22-3

6 VIII. C. ( 22.69) Indebtedness of the Consumer D. ( 22.70) Statute of Limitations PLEADING AND PRACTICE A. ( 22.71) Jurisdiction and Venue B. ( 22.72) Appropriate Parties C. ( 22.73) Supplemental Jurisdiction for State Claims FORMS 22-1 Required Disclosure 22-2 Validation Notice I. ( 22.1) INTRODUCTION The Fair Debt Collection Practices Act (FDCPA), 15 USC 1692 et seq., became effective March 20, The FDCPA was amended in 1986 to cover attorneys who regularly collect consumer debts on behalf of their clients. See Pub L No , 100 Stat 768. On December 13, 1988, the Federal Trade Commission (FTC) issued the Official Staff Commentary on the FDCPA (the Commentary ). See 53 Fed Reg 50,097 (1988). The Commentary, which is not binding on the courts, is where the FTC publishes its interpretations of the FDCPA. The Commentary should be used in conjunction with the statute. CAVEAT: Caution should be exercised when citing to the Commentary because many courts have rejected some of the FTC analysis since its publication. The purposes of the FDCPA are to (1) eliminate abusive practices by debt collectors, (2) ensure that ethical debt collectors are not competitively disadvantaged, and (3) promote consistent state action to protect consumers from abusive practices. 15 USC 1692(e). The FDCPA attempts to accomplish these goals through a series of open-ended lists of prohibited activities. The FDCPA applies to debt collectors and attorneys who collect debts on behalf of third parties. It does not apply to the in-house collection efforts of original creditors. The FDCPA restricts abusive collection acts and provides rights for consumers to dispute and stop certain collection activity. The courts require debt collectors to follow the express language of the FDCPA to accomplish the remedial and preventive goals of Congress. See Heintz v. 22-4

7 Fair Debt Collection Practices Act / 22.3 Jenkins, US, 115 S Ct 1489, 131 L Ed2d 395 (1995); Baker v. G.C. Services Corp., 677 F2d 775 (9th Cir 1982). A debt collector who engages in a prohibited activity becomes liable for actual damages, statutory damages of no more than $1,000, and mandatory attorney fees. Tolentino v. Friedman, 46 F3d 645 (7th Cir), cert. denied, 115 S Ct 2613 (1995). The statute of limitations is one year from the date of the violation. An action may be filed in either state or federal court. 15 USC 1692k(d). II. ( 22.2) ESSENTIAL ELEMENTS The FDCPA applies to all aspects of the collection or attempted collection, including communications, by a debt collector of a debt arising from a consumer transaction. A. ( 22.3) Debt Collector The FDCPA contains a lengthy definition of the term debt collector, which includes the following: The term debt collector means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. 15 USC 1692a(6). The primary purpose of the FDCPA is the regulation of third-party debt collectors, and not the original creditors of a debtor. United States v. Central Adjustment Bureau, Inc., 823 F2d 880, 881 (5th Cir 1987); Kimber v. Federal Financial Corp., 668 F Supp 1480, (MD Ala 1987). Consequently, creditors collecting their own debts are exempt from coverage. Dau v. Storm Lake Production Credit Ass n, 626 F Supp 862, (ND Iowa 1985). Notwithstanding the fact that a creditor may not satisfy the definition of a debt collector under the FDCPA, a creditor will be considered a debt collector if in the process of collecting its own debts, it uses any name other than its own which would indicate that a third person is collecting or attempting to collect such debts. 15 USC 1692a(6). The Commentary states that a creditor is not a debt collector if the creditor s correspondence is clearly labeled as being from the collection unit of (creditor s name). A creditor would be considered a debt collector if its salaried attorney employees who collect debts send letters 22-5

8 22.4 / Fair Debt Collection Practices Act indicating that they are employed by someone other than the creditor or are independent or separate from the creditor (e.g., ABC Corp. sends collection letters on the stationery of John Jones, Attorney at Law ). 53 Fed Reg 50,102 (1988). In Phillips v. Periodical Publishers Serv., 369 SE2d 154 (SC App 1988), rev d, 388 SE2d 787 (SC App 1989), the plaintiff was contacted by National Collection Agency, a division of Periodical Publishers Service Bureau, which was a wholly owned subsidiary of the Hearst Corporation. Although the caution letter delineated the relationship of these entities, the envelope simply listed National Collection Agency as the return address. The court held that the defendant was a debt collector under this section because the only reason for the format of the return address was to induce the debtor into believing that he was being pursued by a national collection agency. On appeal, the South Carolina Supreme Court reversed the court of appeals decision. In Phillips v. Periodical Publishers Serv., 388 SE2d 787 (SC 1989), the supreme court held that the National Collection Agency was not a debt collector as defined by 15 USC 1692a(6). The court applied the exclusionary clause of 15 USC 1692a(6)(B). It pointed to the corporate affiliation between National Collection Agency, the Periodical Publishers Service Bureau, and the Hearst Corporation, and noted that as a debt collector, the Service Bureau only collected debts for Hearst. The court said that even the plaintiff conceded that debt collection was not the Service Bureau s principal business. The court did not address the court of appeals contention that National Collection Agency had been listed as the sole return addressee in an attempt to mislead the plaintiff. 22-6