copyright 2005 general revenue corporation. all rights reserved. communicating with your students:...

Copyright 2005 General Revenue Corporation. All rights reserved.

Communicating with Your Students:

How to Abide by The Fair Debt Collections Practices Act (FDCPA)

Presented by: Chris Baker

Sallie Mae Debt Management

Presented for EARMA Conference

March 28, 2007


EARMA: Fair Debt Collections Practices Act

• Fair Debt Collections Practices Act• What is it?• Who’s covered and needs to comply?• How is it enforced and what are the

penalties for violations?• Only my agency needs to worry about

this…right? (WRONG)


The Fair Debt Collections Practices Act

• Consumer Credit Protection Act, Public Law 95-109 Enacted March 1978 Enforced by the Federal Trade Commission

• Purpose: “To eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote state action to protect consumers against debt collection abuse”


The FDCPA…..Who’s covered

• Third Party Collection Agencies AND• Maybe YOU!!!

• Term “Debt Collector means……any creditor who in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is attempting to collect such debt”


The FDCPA….What is it?

• Regulates Communication with consumer• Permissible times to contact debtor: 8am to 9pm local

time to debtor

• Collector may not contact the debtor at a place or time known to be inconvenient.

• May contact at place of employment unless told not to do so.


FDCPA regulates communication

• Must not contact consumer if they are represented by an attorney…..unless attorney is unresponsive.

• Must not reveal existence of the debt to another party.

• No postcards. Return address on envelopes must not reveal that the correspondence in from a debt collector.

• Desk names/Aliases are allowed…..must be

consistent.


FDCPA regulates communication

• Consumer may request (verbally or in writing) agency to cease contact.

• Agency is allowed one more contact• Allowed to inform that communication will cease and

that the agency may list alternatives that they may use to satisfy the debt.

• MAY NOT ASK FOR PAYMENT• COLLECTION ACTIVITES MAY CONTINUE


FDCPA and disputed debts

• I don’t owe this money (all or part of).• I want proof I owe this debt.

• Must stop collection activity and obtain verification of debt.

• Must mail to consumer and then activities may resume.


FDCPA and privacy

• Recognized third parties: spouse, attorney, parents (if consumer is a minor), or the consumer’s guardian, executor or administrator

• The FDCPA allows a third party to discuss the details of a debt without the need to gain consent.


FDCPA and Harassment

• No Definition of Harassment, but the FDCPA lists six acts that are considered harassment:– The use or threat of use of violence– The use of obscene or profane language– The publication of a list of consumers who

allegedly refuse to pay debts. – The advertisement for sale of a debt in order to

coerce payment– Calling the borrower repeatedly the same day.– Making a call to the consumer and not revealing

identity.


FDCPA: False and Misleading Info

• FDCPA prohibits the use of any false or misleading representations:

• When communicating with a debtor , you can only mention actions if:– You have normally taken that action (History)– Have the authority to take that action (Authority)– Intend to carry through with that action (Intent)


FDCPA

• State (or local) Laws take precedence over the federal statute when the state law is tougher/different than the federal statute.

• The City of New York: no excessive contacts. The number of contacts is deemed excessive if more than 2x in a seven day period. Does not include: calls from debtor, calls made in response to a request by the debtor, messages, or calls in response to returned mail.


FDCPA: Pennsylvania exceptions

• Prohibited:

• No more than 1 call per week to residence• Can not call POE unless unsuccessful for 30 days

and are also permitted to call POE• Cannot deposit check if notified that it will be NSF


Enforcement of the FDCPA:

• Primary Enforcement is by the Federal Trade Commission

– 7 other entities have enforcement obligations– Office of the Comptroller of the Currency– Federal Reserve Board– FDIC– Office of Thrift Supervision– National Credit Union Adm.– DOT– Dept. of Agriculture


Enforcement:

• FTC Reported 66,627 FDCPA complaints against third party debt collectors in 2005.

• Represents 19.1% of all complaints received by the FTC.

• In 2005, FTC received 23,605 complaints about in-house collectors


Enforcement: What are people complaining about?

• Demanding a larger payment than permitted 42.7% of all complaints

• Harassment: 21.5% of all complaints• Threatening dire consequences: 9.6%• Impermissible calls to employment: 6.3%• Revealing alleged debt to third parties: 4.5%


Enforcement:

• Investigation of complaints

• If Significant violations are found:– settlement that will remedy alleged violations– OR– Formal Complaint filed in appropriate Federal

District Court seeking Civil penalty and injunctive releif.


RECENT AWARDS:

• July 2005: N.J. Federal Court awards the FTC $10.2 million judgment against Check Investors alleging numerous violations

• January 2005: CAMCO (Ill. Company): false representations and threats. Court entered a ruling prohibiting FDCPA violations and subsequently froze the assets of the company.


Consumer and Industry Education:

• Numerous Publications:– “Facts for consumers” – “Credit and Your Consumer rights”– “Knee Deep in Debt”– “Time-Barred Debts” – “Fair Debt Collection”


Consumer and Industry Education:

• Consumer Response Center

• Open communication with Debt Collection companies– Trade conferences– Interviews in industry publications

– Communications paves way for Legislative Recommendations.


FDCPA

• Questions regarding the FDCPA?????


QUIZ…….

• A collection agency based in New York may call a consumer in California at 8am EST true or false

• A debt collector should leave a message on an answering machine that would identify the existence of a debt or that the call is from a collector T or F

• Making a series of telephone calls, one right after another, is a form of harassment. T or F

• My name is Chris Baker and I work for Rutgers U. When I call to collect money for the University, I use the name Mr. Stevens. I am not bound by the FDCPA T or F


Quiz……

• True or False:

• Debt Collectors May….– Threaten to (but not actually) deposit a postdated paycheck

before the date on the check– Accept postdated checks– Contact the consumer after they are told to cease

communication.

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