Sunday, March 16, 2008

What Debt Collectors Do Not Want you To Know, By Robert Paisola


The Commercial Law League of America (CLLA) is a 112-year-old national
organization of attorneys, collection agencies, and other experts in credit and
finance actively engaged in the fields of debt collection, commercial law, and
bankruptcy and reorganization. The CLLA is the publisher of the awardwinning
Commercial Law Journal, and a leading provider of legal education to
collection attorneys and agencies throughout the country. While it has long
been associated with the representation of creditor interests, the Commercial
Law League has also been an advocate for the fair, equitable, and efficient
administration of collection, commercial and bankruptcy cases for all partiesin-
interest. The League has been firmly committed to policing its own industry
and has regularly provided articles and presentations to its members on
consumer and commercial law issues, including many programs since the late
1980’s on the FDCPA and related consumer law issues.
Through its representatives, the CLLA has testified before Congress on
numerous occasions, and has provided expert testimony in the fields of
collections and bankruptcy and reorganization. The League has appeared as
amicus curiae before the United States Supreme Court and multiple federal
appeals courts on issues ranging from FDCPA to TILA to bankruptcy.

The League is concerned with the failure of Congress to modernize the FDCPA
to keep pace with technologies which are now a part of our daily lives, but
which either did not exist or were in their infancy in 1977 when the FDCPA
was enacted. The failure to update the Act serves the interests of consumers
as little as it serves those of the collection industry, and recent court decisions
have the effect of seriously impairing consumer privacy.
The CLLA is urging the FTC to support a modernization of the Act that would
address current technological issues. The League is also urging a change in
the Act to preserve vital common law immunities from liability for the contents
of pleadings and for witness testimony.

1. Voice Mail
Recent court decisions affecting voice mail messages by debt collectors have
had such an impact upon both debt collection and consumer privacy interests
that the League regards this as the most important of the technology issues to
be addressed. When the FDCPA was adopted in 1977, answering machines
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were used by few, if any debtors. Today, answering machines and voice mail
are commonplace. The League has been unable to identify any statistics on the
number of consumers or households with answering machines or voice mail.
However, a recent report indicated that
• 12.8% households did not have a traditional landline telephone,
but did have at least one wireless telephone.
• More than one-half of all adults living with unrelated roommates
(54.0%) lived in households with only wireless telephones.
• Adults renting their home (26.4%) were more likely than adults
owning their home (5.8%) to be living in households with only
wireless telephones.
• One in four adults aged 18-24 years (25.2%) lived in households
with only wireless telephones.
• Nearly 30% of adults aged 25-29 years lived in households with
only wireless telephones.
• Adults living in poverty (22.4%) were more likely than higher
income adults to be living in households with only wireless
Given the fact that voice mail is a standard feature with virtually all cell phone
services, these statistics demonstrate that, unlike 1977, debt collectors today
are being faced with and must deal with voice mail on a regular basis. It
should also be noted that these figures address only those consumers who
have only wireless phones. The League suspects that almost all non-homeless
consumers have some sort of voice mail access, either at home, at work, or
Section 807(11) of the FDCPA2 mandates what is known to the debt collection
industry as the “mini-Miranda” warning:
1 See “Wireless Substitution: Early Release of Estimates Based on Data from the National
Health Interview Survey, July – December 2006” by Stephen J. Blumberg, Ph.D., and Julian V.
Luke, Division of Health Interview Statistics, National Center for Health Statistics (May 14,
2 15 U.S.C. § 1692e(11).
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§ 807. False or misleading representations
A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.
Without limiting the general application of the foregoing, the following
conduct is a violation of this section:
. . .
(11) The failure to disclose in the initial written communication with the
consumer and, in addition, if the initial communication with the
consumer is oral, in that initial oral communication, that the debt
collector is attempting to collect a debt and that any information
obtained will be used for that purpose, and the failure to disclose in
subsequent communications that the communication is from a debt
collector, except that this paragraph shall not apply to a formal pleading
made in connection with a legal action. 3
Historically, the position taken by the collection industry was that voice
mail/answering machine messages which do not convey information regarding
consumers’ debts are not “communications” for FDCPA purposes; therefore,
they do not trigger the duty to give the mini-Miranda warning. The basis of this
position is the FDCPA’s definition of the term “communication.”
The term ''communication'' means the conveying of information regarding
a debt directly or indirectly to any person through any medium.4
A voice mail message which does not convey information regarding the
consumer’s debt is definitionally not a “communication” as defined in the
FDCPA; therefore, such a message should not be subject to Section 807(11).
This position is consistent with the FTC’s Staff Commentary on the FDCPA,
which states:
The term [communication] does not include situations in which the debt
collector does not convey information regarding the debt, such as:
• A request to a third party for a consumer to return a telephone call to
the debt collector, if the debt collector does not refer to the debt or the
caller’s status as (or affiliation with) a debt collector.
3 Multiple state laws impose a similar obligation. See, e.g., 32 Col. Rev. Stat. Ann. § 12-14-
107(l)(l); Iowa Code § 537.7103(4)(b); Me. Rev. Stat. § 11013(2)(K-1); N.C. Gen. Stat. § 75-54(2);
Tex. Fin. Code Ann. § 392.304(5).
4 15 U.S.C. § 1692a(2).
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Until last year the collection industry generally avoided leaving mini-Miranda
warnings on answering machines and voice mail out of a genuine concern for
consumer privacy and a fear that such message would result in unintended
third-party disclosures that violate Section 805(b).5 Prior to the issuance of the
decisions discussed below the majority of collection industry members had
policies that prohibited leaving voice mail messages which disclosed
information about a debt or which indicated that a call was for collection
purposes. In light of the enforcement position of the Commission (a position
which matched the reality of consumer debt collection) those policies were both
reasonable and appropriate.
However, in 2005, the United States District Court for the Southern District of
California issued an order in Hosseinzadeh v. M.R.S. Assocs., Inc., 387 F. Supp.
2d 1104 (C.D. Cal. 2005), in which the court concluded that answering
machine messages are “communications for FDCPA purposes.”
While the messages may not technically mention specific information
about a debt or the nature of the call, § 1692a(2) applies to information
conveyed "directly or indirectly." Defendant conveyed information to
plaintiff, including the fact that there was an important matter that she
should attend to and instructions on how to do so.
Hosseinzadeh at 1116.
The League would concede that the messages at issue in Hosseinzadeh were
not innocuous and did convey information to the recipient of the messages.
The various voice mail messages left for the plaintiff in Hosseinzadeh, stated:
Hello, this is Thomas Hunt calling. Please have an adult contact me
regarding some rather important information. This is not a sales call,
however, regulations prevent me from leaving more details. You will
want to contact me at 1-877-647-5945 as soon as possible. This is a toll
free number. Once again this is Thomas Hunt calling and my number is
1-877-647-5945. Thank you.
This message is for Ashraf. Ashraf, my name is Clarence Davis. I have
some very important information to discuss with you. I have to make a
decision about a situation that concerns you. I am going to make this
5 15 U.S.C. §1692c(b).
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decision with or without your input. Contact my office right away at 877-
647-5945, Extension 3619. Failure to return my call will result in a
decision-making process that you will not be a part of.
This message is for Ashraf. Ashraf my-name is Clarence Davis. I have
some very important information to discuss with you in reference to a file
that has been forwarded to my office that involves you personally.
Contact my office right away at 877-647-5945, extension 3618. Failure to
return my call will result in a decision making process that you will not
be a part of.
This message is for Ashraf. Ashraf, my name is Clarence Davis. I have
some very important information to discuss with you. There has been a
trial that has been sent to my office that I'm sure you're not aware of but
involves you personally. Contact me right away at 877-647-5945,
extension 3618. Failure to return my call will result in a decision making
process that you will not be a part of.
Hello! This is Thomas Hunt calling. Please have an adult contact me
regarding some rather important information. This is not a sales call,
however, regulations prevent me from leaving more details. You will want
to contact me at 1-877-647-5945 as soon as possible. This is a toll free
number. Once again this is Thomas Hunt calling and my number is 1-
877-647-5945. Thank you.
The defendant in Hosseinzadeh argued that the messages in question were not
“communications” as defined in the Act, but the Court rejected that argument,
The Court concludes that the messages left by defendant on plaintiff's
answering machine constitute "communications." The messages at issue
appear to fall within § 1692a(2)'s definition of "communication." See
Ahart § 2:43 (citing FTC Staff Commentary on FDCPA, 53 Fed. Reg.
50103 (Dec. 13, 1988) (rejecting contentions that "contacts that do not
explicitly refer to the debt are not communications' and, hence, do not
violate any provision where that term is not used" and concluding that
some contacts that do not mention debt may refer to the debt
"indirectly," thereby constituting communications). While the messages
may not technically mention specific information about a debt or the
nature of the call, § 1692a(2) applies to information conveyed "directly or
indirectly." Defendant conveyed information to plaintiff, including the
fact that there was an important matter that she should attend to and
instructions on how to do so. Defendant further admits that the calls
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were merely the first step in a process designed to communicate with
plaintiff about her alleged debt. Mot. at 14; McCusker Decl. P 3.
Because it appears that defendant's messages are "communications"
subjecting defendant to the provisions of § 1692e(11), it also appears
that defendant has violated § 1692e(11) because the messages do not
convey the information required by § 1692e(11), in particular, that the
messages were from a debt collector. Accordingly, the Court, sua sponte,
finds it appropriate to treat the matter as a motion for summary
judgment by plaintiff and to grant plaintiff's motion.
The League does not contend that the Hosseinzadeh messages were proper, nor
that they were consistent with the collection industry standards regarding such
messages since they clearly did convey information regarding a debt, thereby
making them “communications.” However, the League does believe that the
mini-Miranda warning has no place in a proper voice mail message.
Subsequent to the Hosseinzadeh decision, on March 25, 2006, the United
States District Court for the Southern District of New York issued an opinion in
Foti v. NCO Financial Systems, 424 F.Supp.2d 643 (S.D.N.Y. 2006). One of the
issues before the Court was NCO’s motion to dismiss on the issue of whether a
“mini-Miranda warning” must be given in voice mail messages left for
consumers. The Court’s reasoning in denying the motion presents the
collection industry with the “Hobson’s choice” of either leaving no messages for
consumers or leaving messages which contain the mini-Miranda warning,
thereby risking unintentional third-party disclosures in the name of FDCPA
The message at issue in Foti was a “uniform, pre-recorded, and standardized
message” which stated:
Good day, we are calling from NCO Financial Systems regarding a
personal business matter that requires your immediate attention. Please
call back 1-866-701-1275 once again please call back, toll-free, 1-866-
701-1275, this is not a solicitation.
The class plaintiffs in Foti alleged that the prerecorded message violated the
FDCPA by failing to include a mini-Miranda warning. The plaintiffs also
alleged that the defendant had violated Section 806(6), which forbids “the
placement of telephone calls without meaningful disclosure of the caller's
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In its discussion the Foti Court acknowledged:
In order to be subject to some of the protections of the FDCPA, correspondence
must be a "communication" within the meaning of the Act.
However, the Foti Court also stated:
In any event, NCO's Memorandum of Law in support of its Motion failed
to cite one case in support of its position that the January 18 Pre-
Recorded Message is not a communication, and pointed to only one case
at oral argument. (Tr. 7) Given this paucity of authority, the Court has
little difficulty in rejecting NCO's narrow interpretation of the word
"communication," and concludes that the January 18 Pre-Recorded
Message is protected as a "communication" under the FDCPA.
The impact of these two decisions is that collection industry members are now
forced to leave mini-Miranda warnings as part of their voice mail/answering
machine messages. Doing so, however, exposes an industry member to the
types of claims that the industry’s historical standard was designed to avoid.
In leaving a message that contains the mini-Miranda warning the collector
risks the possibility that the machine may actually belong to a person other
than the consumer,6 that the message might be screened or heard by someone
other than the consumer, or that (with some answering machines) whoever is
in the room where the answering machine is located will hear the message as it
is left.
A second impairment of consumer privacy rights created by these decisions is
that they also require a debt collector to state his or her employer’s name in
voice mail messages, as both cite with favor the decision in Joseph v. J.J. Mac
Intyre Cos., L.L.C., 281 F. Supp. 2d 1156 (N.D. Cal. 2003), another case that
dealt with voice mail messages. In Joseph, the plaintiff complained, in part,
that the Defendant had violated Section 806(6)7 by “the placement of telephone
calls without meaningful disclosure of the caller's identity.” The defendant's
automated message system did not disclose that the call was from a debt
collector or on behalf of the creditor SF General Hospital.
6 Many answering machine and voice mail messages do not identify the name of the device’s
7 15 U.S.C. § 1692d(6).
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Hi. This is Julie Green and I have an important message for you. To
reference your message, please call 1-800-777-9929. Again, my name is
Julie Green. Please call me to retrieve your message at 1-800-777-9929.
While the Joseph court indicated that the “'meaningful disclosure'” required by
Section 806(6) has been made if an individual debt collector who is employed
by a debt collection company accurately discloses the name of her employer
and the nature of her business and conceals no more than her real name, such
an interpretation is inconsistent with the express wording of the FDCPA;
nevertheless, the Hosseinzadeh and Foti courts followed Joseph.
It is clear that the Joseph decision disregards both the express wording of the
Act and the rules of legislative construction. Section 806(6) forbids:
except as provided in section 1692b of this title, the placement of telephone
calls without meaningful disclosure of the caller’s identity.
The text of the Act requires disclosure of the identity of “the caller,” not the
identity of the caller’s employer. In fact, when Congress intended to refer to an
employer of an individual it had no trouble in doing so. Section 805(a)(3) of the
Act8 refers to the “consumer’s employer.” Moreover, Section 807(14)9 forbids
the use “of any business, company, or organization name other than the true
name of the debt collector’s business, company, or organization.” It is quite
clear that Congress knew how to mandate identification of the caller’s employer
and could have done so if that had been its intention.
As the Supreme Court has so clearly stated:
When the statute's language is plain, “the sole function of the courts--at
least where the disposition required by the text is not absurd--is to
enforce it according to its terms.”
Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U.S. 1, 6, 147 L. Ed.
2d 1, 120 S. Ct. 1942 (2000), quoting United States v. Ron Pair Enterprises, Inc., 489
U.S. 235, 241, 103 L. Ed. 2d 290, 109 S. Ct. 1026 (1989); Caminetti v. United States,
242 U.S. 470, 485, 61 L. Ed. 442, 37 S. Ct. 192 (1917). On this point, the statutory
language is plain. What must be disclosed is “the caller’s” identity and not
that of the caller’s employer. Courts should neither enlarge nor restrict the
8 15 U.S.C. § 1692c(a)(3).
9 15 U.S.C. § 1692e(14).
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effect of a Congressional act. See Iselin v. United States, 270 U.S. 245, 251, 70
L. Ed. 566, 46 S. Ct. 248, 62 Ct. Cl. 755 (1926); Mobil Oil Corp. v.
Higginbotham, 436 U.S. 618, 625, 56 L. Ed. 2d 581, 98 S. Ct. 2010 (1978).10
The Joseph court clearly enlarged the wording of the Act by requiring
disclosure of the identity of the individual collector’s employer and the nature
of its business. This error was perpetuated by the Hosseinzadeh and Foti
Although the Defendant in Joseph raised the privacy and third-party disclosure
concerns that have driven the industry standard, the District Court rejected
those arguments. The arguments were also rejected in Hosseinzadeh and Foti,
where the courts also held that a message must identify the collector’s
employer and the nature of its business. The Hosseinzadeh court reasoned:
The Court finds the decision in Joseph I to be persuasive in that
"meaningful disclosure" presumably requires that the caller must state
his or her name and capacity, and disclose enough information so as not
to mislead the recipient as to the purpose of the call or the reason the
questions are being asked.
It is that final sentence which demonstrates the fallacy of the theory. A voice
mail message does not require that any questions be answered; rather, it is a
request for a return call. The purpose of the Act is served as long as the
message identifies the caller in language specific enough for the consumer to
know whose call to return and the identity of the caller in the event of any suit.
The effect of these decisions is that collectors are mandated to identify their
company names, even when those names state or imply that the employer is in
the collection business. Businesses that have names which include words
such as “Collections,” “Collectors,” “Debt,” etc. will be identified in voice mail
messages left for consumer debtors. This is a court-created situation which
10 The rationale for this policy is that the Supreme Court traditionally grants deference to “the
supremacy of the Legislature, as well as recognition that Congressmen typically vote on the
language of a bill” and requires the Court “to assume that ‘the legislative purpose is expressed
by the ordinary meaning of the words used.’” United States v. Locke, 471 U.S. 84, 95, 85 L. Ed.
2d 64, 105 S. Ct. 1785 (1985), citing Richards v. United States, 369 U.S. 1, 9, 7 L. Ed. 2d 492,
82 S. Ct. 585 (1962). "Going behind the plain language of a statute in search of a possibly
contrary congressional intent is 'a step to be taken cautiously' even under the best of
circumstances." American Tobacco Co. v. Patterson, 456 U.S. 63, 75 (1982) (quoting Piper v.
Chris-Craft Industries, Inc., 430 U.S. 1, 26 (1977)).
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wholly fails to further the public policies embodied in the FDCPA and which
injures, rather than serves consumer interests.
Although the Act’s impact upon voice mail messages has not yet reached an
appellate court, other district courts have followed Hosseinzadeh and Foti. For
example, the case of Leyse v. Corporate Collection Services, 2006 U.S. Dist.
Lexis 67719 (S.D.N.Y. 2006) involved the use of an Automated Dialing and
Answering Device which left three different messages on the Plaintiff’s
answering machine, two of which11 were worded as follows:
"Hello, this is Michael. I'm calling from CCS. I'm calling re - [sic] - I need
a return call tomorrow or today. The number is 800-741-9922. Once
doing so, ask for extension 7092. It's urgent that I speak to you today.
Thank you."
"This is Tom Green calling from CCS. I have a very important matter to
discuss with you. My phone number is 800-741-9922. Again, my toll-free
number is 800-741-9922."
The Leyse plaintiff alleged three violations of the FDCPA: (1) a violation of §
806(6) by failing to make a meaningful disclosure of the identity of the caller;
(2) a violation of § 807(11) by failing to give the mini-Miranda warning; and (3)
a violation of § 807(10) by the use of a false representation or deceptive means
to collect or attempt to collect a debt or to obtain information concerning a
consumer. Both the plaintiff and the defendant in Leyse moved for summary
judgment, as the facts were not in dispute.
The district court granted summary judgment in favor of the Plaintiff on the
claim under § 806(6), finding that use of the term “CCS” was not a meaningful
disclosure of the caller’s identity. The Defendant argued that the phone
messages were not a “communication” as defined by the FDCPA and that
disclosure of any further information would result in a violation of the privacy
provisions of the FDCPA which prohibit almost all communications with third
parties. The Defendant argued that they were being placed between the rock of
having to make meaningful disclosures and the hard place of the FDCPA’s
prohibition of even inadvertently communicating with a third party who might
listen to the phone message.
11 The wording of the third message was not included in the opinion, other than a note that the
message referred to a specific individual who was identified as an attorney and that the
message did not give the name of the individual calling nor identify CCS as a debt collector.
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In response, the Leyse Court first noted that § 806(6) relates to conduct and
not communications. Hence, whether or not the phone message constituted a
“communication” was not relevant to the obligation to make a meaningful
disclosure of the caller’s identity. The Court next pointed out that the Plaintiff
had never had any prior dealings with CCS and had no way of knowing who or
what was being referred to. The Court specifically stated that “mere reference
to ‘CCS’ does not amount to meaningful disclosure.”
As to the “disclosure vs. privacy” argument, the Court viewed this as an
argument by CCS that they were “expressly entitled to use pre-recorded
messages for debt collection.” In response, the Leyse Court stated that “CCS
has been cornered between a rock and a hard place, not because of any
contradictory provisions of the FDCPA, but because the method they have
selected to collect debts has put them there.”
The League must concede that Section 806(6) does, in fact, apply to the
placement of calls, rather than to “communications,” as such a method of
statutory analysis is consistent with the analysis that should be used in
interpreting the Act. However, the CLLA asserts that the courts and the
Commission should recognize a distinction between a “live” message left by an
actual collector and a pre-recorded message left by a computer/dialing device.
In the former situation the “caller’s identity” is that of the individual employee,
whereas in the latter situation the caller is the computer or dialer, i.e., the
collection company. Such an interpretation is consistent with the express
wording of the Act and complies with the Supreme Court’s dictate neither to
restrict nor expand the statutory language.
While such an interpretation presents a workable solution, it is not truly one
for the 21st century. The reality of modern collections is that computers and
dialers are essential tools of a collection practice. The Act should be
modernized to permit the use of such tools in a manner that is protective of
consumer privacy rights.
With regard to the mini-Miranda issue, the Leyse decision illustrates the
slippery slope of judicial activism. Responding to the argument that the phone
message did not constitute a “communication” under the FDCPA, the Court
cited Foti, supra, finding that “CCS’ Messages were intended as the first phase
of an ongoing communication ‘regarding a debt.” Thus, the narrow, non-
Webster’s, statutory requirement that an FDCPA “communication” convey
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information regarding a debt has now been expanded to the process leading up
to the conveying of such information. Such an expansion of the FDCPA is
inconsistent with the text of the Act.
It is clear that the district judges in these cases appear to believe that the
following rules should apply to all voice mail messages left by debt collectors on
consumers’ answering machines:
• The collector should identify him/herself.
• The collector should give the company name of his/her
• The collector should give a mini-Miranda warning.
• The collector should not leave a message unless he/she has
no reason to anticipate that anyone other than the debtor
will overhear or retrieve the message.
The consequences of Joseph, Hosseinzadeh, Foti, and Leyse are that debt
collectors are left with a no-win proposition. If they leave voice mail messages
without mini-Miranda warnings they risk class actions. If they leave messages
that contain mini-Miranda warnings they risk individual claims for third-party
disclosures. Similar problems exist when identification of the caller’s employer
would indicate that the call concerns a collection matter.
The real-life implications of reading Section 80512 in conjunction with the cases
discussed above appears to be that collectors may be unable to leave voice mail
messages unless they are certain that the answering machine/voice mail
belongs to the consumer and there is no reason to anticipate that anyone other
than the consumer will retrieve or overhear the message. It is easy to suggest
that collectors should simply not leave messages, but such a suggestion is
extremely naïve. A cessation of the practice of leaving voice mail messages will
have three clearly predictable results:
1. collection rates will drop, and the resulting losses will be passed on
to and borne by those consumers who do pay their bills;
12 15 U.S.C. § 1692c.
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2. consumers will feel harassed by callers who do not leave messages;
3. consumers will be more likely to be sued, as creditors, debt buyers,
and collectors will have fewer options if they cannot communicate
with the consumers.
Given the concerns of both the Commission and various consumer groups
regarding the recent increases in collection suits against consumers, it is clear
that an interpretation of the Act that hinders non-legal collections is not likely
to serve the interests of consumers any more than it serves the interests of
debt collectors. Consumer interests would be bolstered by an amendment to
the FDCPA which would permit voice mail messages to be left in a way that
protects consumer privacy. The League suggests that Section 805 should be
amended to add a new sub-section stating:
e. VOICE MAIL. A message left on voice mail or an answering machine is
not a violation of this act if the message is limited to the name of the
caller, the name of the consumer, a request for a call back to the caller’s
toll-free number, and the caller’s file or reference number. Sections
1692d(6) and 1692e(11) shall not apply to a message that is limited to
such information.
Alternatively, if the Commission truly believes that consumer interests are
served by having collectors leave mini-Miranda warnings in voice mail
messages it should support amendments to Sections 806(6) and 807(11)
A debt collector shall not incur liability to a consumer or a third party for
leaving a voice mail or answering message for the consumer which states
the information required by this sub-section.
2. Cell Phones
When the FDCPA was enacted in 1977, modern cell phone technology did not
exist. Car phones were a rare, luxury item, and Congress could not have
contemplated the current cell phone culture. The statistics cited above in
Section 1 clearly show how integral a part of our 21st century culture cell
phones have become.
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Numerous courts have referred to the FDCPA as a strict liability statute. See
Clark v. Capital Credit, 460 F.3d 1162 (9th Cir. 2006); Turner v. J.D.V.B. &
Assc., 330 F.3d 991 (7th Cir. 2003); Russell v. Equifax, 74 F.3d 30 (2nd Cir.
1996). This is tempered only by the bona fide error defense found in Section
813(c).13 Strict liability becomes especially significant when considering the
issue of communicating with a consumer on his/her cell phone.
Section 805 of the FDCPA14 deals with any communication in connection with
debt collection. Sub-section (a) contains a number of prohibitions including
communicating with a consumer:
(1) at any unusual time or place or a time or place known or which
should be known to be inconvenient to the consumer. In the absence of
knowledge of circumstances to the contrary, a debt collector shall
assume that the convenient time for communicating with a consumer is
after 8 o'clock antimeridian and before 9 o'clock postmeridian, local time
at the consumer's location;
This provision of the FDCPA includes several potential pitfalls for the unwary
debt collector. The first is contacting the consumer at any unusual time or
place. By their nature, cell phones accompany their users wherever they may
go, including destinations which may be considered as an “unusual place” for
purposes of the FDCPA. The possibilities in this regard are, quite literally,
endless -- from the debtor’s place of employment to a position beside the
hospital bed of the debtor’s dying relative.
A debt collector who contacts a consumer on a cell phone can expect that (s)he
will sometimes reach the consumer at his or her place of employment.15 This
may be considered as a time which is inconvenient to the consumer. Calling
persons of particular religious beliefs at certain times of the day and/or on
certain days of the week or year may result in contacts at inconvenient times.
The possibilities are endless, and collectors will not know of a particular
consumer’s religious beliefs unless and until (s)he is informed by the
13 15 U.S.C. § 1692k(c).
14 15 U.S.C. § 1692c.
15 If the debt collector knows that the debtor’s employer does not allow such call, they may also
incur liability pursuant to § 1692c(a)(3).
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When contacting a debtor on their cell phone, a debt collector may never be
sure what time zone the debtor is in. Because consumers both travel with
their cell phones and keep the same numbers when moving across the country,
calling someone who lives on the East Coast of the United States at what the
debt collector believes to be 8:30 a.m. may result in liability under § 805 if the
recipient of the call happens to be in California, where it is 5:30 a.m., at the
time the call is received.
Clearly, cell phones present some challenges to the collection industry for
which there are no perfect solutions under the Act. As pointed out above,
many people have abandoned fixed telephones and use cell phones as their
only telephones. However, there are also many people who treat their cell
phones as private, desiring that only close friends and associates contact them
on their cell phones. In this instance, any call by a debt collector to a cell
phone might be considered conduct the natural consequence of which is to
harass in violation of § 806.
Yet another problem is the fact that any contact with someone on a cell phone
results in some costs to the person who owns the cell phone. It is unclear
whether courts would consider such costs to be give rise to liability under
Section 808(5).16 Liability attaches under that sub-section only if the charges
are made by concealment of the true purpose of the communication.
These problems are exacerbated by the fact that: (1) the collector may not
know that (s)he is calling a cell phone number; and (2) anyone calling a
consumer on a cell phone has no way of ascertaining where the recipient is at
any given time. With the current ability to transport telephone numbers from
one service to another, what was a “land line” yesterday may be a cell phone
today. A number which yesterday would reach someone only at home in
Bangor, Maine, might reach him at work tomorrow in Hawaii.
Mistakes will be made, and the debt collectors who inadvertently run afoul of
one of these situations have only the refuge to be found in the FDCPA’s bona
fide error defense. That defense requires the maintenance of procedures
reasonably adapted to avoid the violation. Any meaningful discussion of the
procedures necessary to avoid the errors discussed would be beyond the scope
of this paper. The procedures to be maintained will probably develop over time,
and they may even become the subject of state or federal legislation. However,
16 15 U.S.C. § 1692f(5).
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the League submits that the FDCPA should be updated to recognize that cell
phones are rapidly replacing land lines as consumers’ primary phones and to
protect the ability of debt collectors to place calls to those primary lines. The
“ceasing communications” provision of Section 805(2) provides consumers with
a simple mechanism to stop unwanted calls to their cell phones.
3. Caller ID
The League agrees that it is not permissible for a collector to use a false Caller
ID, as such conduct would run afoul of Section 807(10)’s general prohibition of
the use of false representations and deceptive means to collect debts and
Section 807(14)’s specific prohibition against the use of any name other than
the debt collector’s true business, company, or organization name. However,
two issues that are of concern to the League are:
a. can Caller ID be blocked; and
b. must the Caller ID disclose that the call is from a debt collector?
These seem at first blush to be somewhat silly questions, yet at least one court
has suggested that the Caller ID message must comply with Section 807(11),
and that Section 806(6) applies to Caller ID. See Knoll v. IntelliRisk
Management Corporation, 2006 U.S. Dist. LEXIS 77467 (D.Minn. 2006). Given
the 15-character limit on Caller ID, this is simply unrealistic.
The League would begin with an acknowledgement that certain Caller ID
practices are, and should be prohibited by the FDCPA. Specifically, the
practice of using false caller identification text to trick the consumer into
thinking that a different business is calling or (even worse) that a law
enforcement agency is calling would be practices prohibited by Section 807 of
the Act. The prohibition of such conduct is not the issue that is of concern to
the CLLA.
Caller identification devices create a somewhat difficult problem for debt
collectors because, like answering machines, the collectors have no way of
knowing when they will encounter one of these devices when making a
telephone call, nor will they automatically know that they have run afoul of a
caller identification device even after making the call. The Caller ID technology
creates a unique difficulty as a result of the nominal amount of information
that can be conveyed. Such information is essentially limited to a name
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(possibly not even allowing for a complete name) and/or a ten digit telephone
number. At present there is a 15-character limit on the amount of information
that a caller can place into its caller identification.
Section 806(6)17 prohibits the placement of telephone calls to debtors without
meaningful disclosure of the caller’s identity. The question then arises as to
whether or not the information imparted by a Caller ID device (of which the
debt collector will not be aware) provides a “meaningful disclosure.” A second
Caller ID issue is whether the mini-Miranda warning is required in the caller
identification. Since the current level of technology (or at least the restrictions
imposed by telephone service providers) only allows fifteen characters,
compliance with such a requirement is not possible.
Two Caller ID decisions are of particular concern to the collection industry. In
the first, Knoll v. Intellirisk, 2006 U.S. Dist. Lexis 77467 (D.Minn. 2006), the
defendant attempted to contact the plaintiff by telephone. Although the
plaintiff did not answer, the telephone number appeared on the plaintiff’s
Caller ID device and the caller was identified as “Jennifer Smith.” When the
plaintiff returned the call, he was informed that he had reached Allied
Interstate, a debt collector, and that the company did not employ a “Jennifer
Smith.” The plaintiff argued that meaningful disclosure must be made even on
a caller identification device. The agency argued that meaningful disclosure
was impracticable because of the limited text available on Caller ID. The
district court stated that the defendant’s argument was baseless, finding that
the “device need only display that the call is from a debt collector.”
Unfortunately, the court did not feel the need to explain how that could be
In Udell v. Kansas Counselors, 313 F.Supp. 2d 1135 (D.Kan. 2004), the
defendant attempted to collect a number of separate debts from the plaintiff.
The defendant sent letters to the plaintiff and subsequently made automated
telephone calls to the plaintiff. The plaintiff became aware of the calls due to
his Caller ID system. In a letter from the plaintiff’s attorney, the attorney listed
the telephone numbers from which the telephone calls to the plaintiff were
17 15 U.S.C. § 1692d(6).
18 Oddly, the Knoll court did not place a great deal of weight to the fact that the debt collector
had used a fictitious name. The Court stated that the use of an alias was allowed as long as it
is disclosed that the call is from a debt collector. Had the decision been based on the use of a
name other than that of the caller the League would have far fewer concerns about the case.
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The plaintiff in Udell alleged that the defendant had violated the FDCPA by not
making a meaningful disclosure of its identity because the telephone calls were
not answered and no messages were left. The court found that there was
“nothing harassing, oppressive, or abusive about this conduct. Certainly, it
does not fall within the realm of the other types of egregious conduct
specifically prohibited by § 1692d.” Id. at 1144.
The Udell Court also noted as follows:
The court cannot envision a theory that KCI affirmatively attempted to
hide its identity when it placed the telephone calls because Mr. Bryan’s
May 13, 2003, letter lists the KCI telephone numbers from which the
four telephone calls were placed to plaintiffs. Thus, it appears that
plaintiffs knew KCI called them by virtue of a caller identification system
and further that KCI did not attempt to block plaintiffs’ caller
identification when it placed the telephone calls.
Id. at 1143. This is important in two respects. While we are not told what
information was left on the Caller ID, we are told that sufficient information
was given to provide meaningful disclosure. However, it is strongly implied, if
not directly stated, that blocking the collector’s identification would have
violated the statute. Thus, at least according to the Udell court, it is possible to
provide sufficient information on a Caller ID to make a meaningful disclosure
and it would appear that providing a telephone number and identification of
the debt collector is sufficient.
The League can find no basis in the Act for the proposition that a debt
collector’s caller identification message must state specifically its name, its
number, or that it is a debt collector. The requirement of Section 807(11) that
the caller identify itself as a “debt collector” applies only to a “communication”
with the consumer. However, the term “communication” is narrowly defined as
“the conveying of information regarding a debt . . . .” Since the caller
identification conveys no information regarding the debt it cannot be a
communication that is subject to Section 807(11).
More to the point, it is generally undesirable and not in the best interests of
consumers for Caller ID to display the words “debt collector” as there is far too
great a likelihood that such a display would result in countless third-party
disclosures to friends, roommates, family members, or others who may be in
the consumer’s home. Consumers are far better off if Caller ID shows only a
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number or nothing at all, as such results are far less likely to lead to
embarrassing third party disclosures.
No case has reached the issue of whether or not the mini-Miranda warning
must be given in the context of a caller identification device. It is suggested
that, like the issue of leaving messages on answering machines, the resolution
of this issue will be based upon the FDCPA’s definition of a communication as
the conveying of information regarding a debt directly or indirectly to any
person through any medium. Some information will be conveyed when making
a call to a telephone which is connected to, or includes, a Caller ID device, but
that information concerns the caller and not the debt. Thus, caller
identification information does not satisfy the Act’s definition of a
If “common sense” is applied it will be difficult for even the most anti-creditor
courts to hold that the mini-Miranda warning must be conveyed to a Caller ID
device. Sadly, sense is not always common, and the League urges the FTC to
take the position that caller identification is not a communication for FDCPA
purposes. Such a position would not enable collectors to use false caller
identification, as the use of any “false representation or deceptive means” to
collect a debt would still be prohibited by section 807(10).
4. Pagers
Pagers provide a mechanism by which debt collectors may contact consumers
and leave a digital call-back request. However, the League is concerned about
whether Sections 806(6) and 807(11) apply to pager calls. The problems
discussed above with regard to voice mail and Caller ID could apply equally to
pager calls.
5. Electronic Mail
Realistically, many consumers would prefer to communicate with collectors by
email, rather than talk to the collectors. However, what are the limits under
the FDCPA for the use of email? What consent, if any, is required to send an
email to a consumer? Given the fact that many consumers use workplace
email addresses (for which they have no privacy rights), is email to be treated
as the same as standard letters or more akin to the forbidden post card?19 Is
19 See 15 U.S.C. § 1692f(7).
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email adequate for the sending of required notices (e.g., post-dated checks,
verification of debt, validation notice)? What if the consumer expressly consents
to receiving all notices required by state or federal law by email?
The League asserts that email to a consumer’s email address should be treated
no differently than “snail mail.” There is a reasonable expectation that the
consumer will be the recipient of email messages directed to his or her email
address. The consumer has the choice of deciding whether to delete the email
in such a way that it cannot be retrieved by a third party. The League
suggests that the Act should be amended to clarify its application to email
communications. Given the fact that many consumers are more likely to read
email than “snail mail” and email programs contain tools permitting the sender
to obtain a read receipt at no cost, the Act should specifically provide that any
communication permitted or required by the FDCPA may be given by email,
provided that the email is sent with a read receipt requested.
6. Skip-tracing (“Location Information”)
Most calls to verify employment result in a transfer to the Human Resources
Department. May a collector send a fax to an HR dept? If so, under what
Fax technology was not in use in 1977, and Congress could not have
contemplated it. A debt collector who sends a fax to a Human Resources
Department is required by the Telephone Consumer Protection Act20 to include
on the fax a stamp stating the name of the sender. However, Section 804 of the
FDCPA21 forbids a debt collector who is seeking to verify a consumer’s
employment to identify the collector’s employer unless specifically requested.
Moreover, a debt collector may not send a communication which creates a false
impression as to its source (Section 807(9)), nor may (s)he use any company
name other than the debt collector’s true company name (Section 807(14)).
These restrictions combine to make it frequently impossible for a collector to
send a fax to the HR Department. Congress clearly intended to allow debt
collectors to verify consumers’ employment, and the Act needs to be clarified to
address how and when facsimile communications are permitted.
20 47 U.S.C. § 227.
21 15 U.S.C. § 1692b.
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7. Litigation
Recently, a number of courts have allowed the common law litigation privilege
to serve as a defense to suits based on alleged unfair debt collection practices.
See, e.g., Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, 950 So. 2d
380 (Fla. 2007); Sengchanthalangsy v. Accelerated Recovery Specialists, Inc.,
473 F. Supp.2d 1083 (S.D.Cal. 2007); Cox v. Great Seneca Financial Corp.,
2007 WL 772937 (E.D.Mo. 2007). However, in Sayyed v. Wolpoff & Abramson,
485 F.3d 226 (4th Cir. 2007) the Court of Appeals recently rejected application
of the common law litigation immunity privilege in FDCPA cases. Such a
situation is simply untenable. As noted in Section 2 above, multiple courts
have held that the FDCPA is a strict liability statute. Combining strict liability
with the absence of judicial immunity creates the very problem that the
Supreme Court denied could occur in its opinion in Heintz v. Jenkins, 514 U.S.
291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995).
The League certainly accepts that certain specific portions of the FDCPA were
intended to apply to litigation. For example, filing suit in an improper venue
would give rise to liability under Section 811.22 However, as the League
pointed out in its amicus curiae brief in Heintz, application of the Act to
litigation creates a variety of anomalies. Of greatest concern to the CLLA is the
possibility that the elimination of litigation immunity could make attorneys
strictly liable insurers of the success of their clients’ claims.
The text of the Heintz decision is inconsistent with the imposition of strict
liability such as the Act requires:
In any event, the assumption would seem unnecessary, for we do not see
how the fact that a lawsuit turns out ultimately to be unsuccessful
could, by itself, make the bringing of it an "action that cannot legally be
Heintz at 514 U.S. 295-96. The Court’s rejection of strict liability in connection
with litigation is inconsistent with the rejection of litigation immunity by the
Fourth Circuit in Sayyed. There are existing remedies for the filing of bad-faith
lawsuits and for malicious prosecution. Eliminating litigation immunity
diminishes the practice of law and chills the ability of creditors to secure
adjudications of their rights. Such an outcome furthers no legitimate public
policies. In fact, this situation has led to consumer lawyers, theoretically the
22 15 U.S.C. § 1692i.
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stalwart opponents of SLAPP suits, indulging in their own form of SLAPP
litigation by using claims against collection attorneys to try to impair the
collection suits that those attorneys file.
The League is also concerned about the impairment of the witness immunity
privilege reflected in cases such as Todd v. Weltman, Weinberg & Reis Co.,
L.P.A., 434 F.3d 432 (6th Cir. 2006), in which the Court of Appeals held that
FDCPA liability could attach to the use of an allegedly false affidavit by a debt
collector. That privilege is a vital one, as it serves both to encourage witnesses
to come forward to testify and, when they do testify, not to distort their
testimony out of a fear of being held civilly liable for the testimony that they
give. See Briscoe v. LaHue, 460 U.S. 325, 345-46, 103 S. Ct. 1108, 75 L. Ed.
2d 96 (1983).
In light of Todd and Sayyed, the Commercial Law League believes that the
FDCPA should be clarified to state that the Act does not alter nor impair the
common law privileges of witness immunity and litigation privilege. The
League does not seek to eliminate the existing common law exceptions to such
immunity; rather, it merely seeks a recognition in the FDCPA both that such
immunity can exist at common law and that the FDCPA did not preempt the
immunity to the extent that it can be invoked under the applicable, non-FDCPA
case law. Such an amendment would provide clarity and guidance to the
courts for future interpretation of the Act when applying it to litigation
8. Account Documentation
The FDCPA does not require a debt buyer or its collection agency or attorney to
have account documents in-hand before making demand on a consumer. In
Harvey v. Great Seneca Fin. Corp., 453 F.3d 324 (6th Cir. 2006), the plaintiff
alleged that the defendant violated the FDCPA by filing a lawsuit to collect a
purported debt “without the means of proving the existence of the debt, the
amount of the debt, or that Defendant Great Seneca . . . owned the debt.” The
District Court dismissed Harvey's claims under Sections 806 and 807(10), and
the Court of Appeals affirmed, finding that: “[e]ven when viewed from the
perspective of an unsophisticated consumer, the filing of a debt-collection
lawsuit without the immediate means of proving the debt does not have the
natural consequence of harassing, abusing, or oppressing a debtor.” Similarly,
in Deere v. Javitch, Block and Rathbone LLP, 413 F.Supp.2d 886 (S.D. Ohio
2006), the Court stated:
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However, filing a lawsuit supported by the client's affidavit attesting to
the existence and amount of a debt, is not a false representation about
the character or legal status of a debt, nor is it unfair or unconscionable.
A defendant in any lawsuit is entitled to request more information or
details about a plaintiff's claim, either through formal pleadings
challenging a complaint, or through discovery. [Plaintiff] does not allege
that anything in the state court complaint was false, or that the
complaint was baseless. She essentially alleges that more of a paper trail
should have been in the lawyers' hands or attached to the complaint. The
FDCPA imposes no such obligation.
It is illogical (and inconsistent with the validation scheme set forth in Section
809 to require a debt collector to possess more documentation to make
demand on a consumer than would be needed in order to file suit. Moreover, it
is reasonable for debt collectors and debt buyers to rely on the information
provided by the banks that issue credit card accounts. The card-issuing banks
are usually national banks, regulated and audited by the United States
Government and charged with keeping and maintaining accurate records. It is
therefore perfectly reasonable for the debt buyers and their attorneys to rely on
the information provided by the banks.
Members of the consumer bar have essentially mounted an attack on debt
buyers and their attorneys, asserting that lawyers may not sue on (or even
demand payment of) consumer debts without having full account
documentation in their possession. Such a position is not supported by the
statute, nor by the case law, and it frequently runs contrary to the cardmember
In Am. Express Travel Related Servs. v. Silverman, 2006 Ohio App. LEXIS 6327
(Ohio Ct. App., Franklin County Dec. 5, 2006), the consumer tried to raise a
number of dilatory attacks on the creditor’s summary judgment proof. In
rejecting those arguments the Court of Appeals noted that the cardmember
agreement provided that any dispute of a bill or a transaction on a bill had to
be submitted in writing, no later than 60 days after the date of the first bill on
which the error or problem appeared.
Thus, to dispute any charges, appellant was required to notify appellee in
writing. Appellant admits that he did so by telephone. Appellee has no
record of any notifications of a dispute of charges, written or oral.
Notification by telephone is insufficient to satisfy appellant's burden to
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dispute the charges. Moreover, appellant has provided no evidence of the
notification, such as the date, the specific charges disputed or any
written communication. Thus, no material fact was at issue and the trial
court did not err in granting appellee's motion for summary judgment.
Appellant's assignments of error are not well-taken.
There is no public interest in allowing consumers to violate the terms of their
contracts or to manufacture nonexistent disputes long after the time for raising
legitimate disputes has passed. The League submits that the FTC should side
with the courts and the collection industry, recognizing that it is not necessary
to have a fully documented account in order to make demand upon or sue
upon the account. To allow the tiny fraction of accounts on which written
disputes were timely submitted to be determinative of how collections should
be handled in general would truly be a case of the very tip of the tail wagging
the dog.
9. Consumer Contacts
The FDCPA does not provide for an absolute ban on calls to the workplace if
the consumer’s employer does not prohibit such calls. The Act states two
circumstances under which a consumer can stop contacts from a debt collector
at the consumers place of employment: (a) a written demand to cease
communications under Section 805(c) (which applies to all communications in
general); or (b) an oral or written notice as per Section 805(a)(3) that the
consumer’s employer prohibits such communications. Although Section 805(a)
forbids communications at times or places which are known or which should
be known to be inconvenient to the consumer, the League asserts that the
mere fact that the consumer states “I don’t want to be called at work” cannot
expand that prohibition into a new form of general bar to calls at work. If it
did, consumers could similarly say “it is inconvenient for you to call me at
home after a hard day at work or when I’m trying to spend quality time with my
family,” and that would be sufficient to prohibit calls to the consumer’s home.
The statutory scheme does not provide for such an additional method to
compel collectors to cease their communications.
As discussed above, the Act should not be expanded beyond the limits set by
Congress. A collector should not be prohibited from calling a consumer at the
consumer’s place of employment if the consumer’s employer does not forbid
personal calls. A consumer can always send a “cease” letter under Section 805
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of the Act if such communications are so inconvenient that (s)he is willing to
demand a cessation of all communications.
10. Bogus Complaints
The collection industry has been plagued for several years by a variety of
debtor scams and debt elimination schemes. The League is prepared to
furnish samples of some of the documents used to perpetrate these scams,
which range from the filing of fraudulent, nonexistent liens to false claims by
debtors that they have copyrighted their names, to the use of rogue, noncontractual
arbitration forums to generate void awards against creditors. The
problem is serious enough that the Federal Reserve Board has issued directives
to banks regarding what action should be taken in response to some of the
scams.23 A number of suits have been brought against bogus arbitration
forums, but such entities continue to operate, duping consumers into paying
them for awards that have no validity.
Additionally, many of the complaints filed with the FTC and various state
attorneys general essentially boil down to a complaint that the debt collector is
refusing to accept a payment plan. Such a refusal is not a violation of the
FDCPA, but the FTC does not weed such complaints out of its complaint
statistics. Adding insult to injury, some states’ attorneys general require debt
collectors to incur the time and expense of responding to such complaints,
rather than taking the far more appropriate measure of informing the
complaining consumers that there is no duty to accept payments on a chargedoff
debt nor any right to compel the taking of such payments. These failures by
the Commission and the various states result in disingenuous reporting of
alleged FDCPA violations and clearly flawed statistics in annual reports.
Attorneys have an ethical duty to carry out the assignments given to them by
their clients. Subsequent to charge-off neither a creditor nor a debt buyer who
is its assignee is obligated to accept a payment plan. It is not an FDCPA
violation for the attorney’s client to refuse a payment plan; therefore, it is not a
violation for the attorney to refuse (in accordance with client instructions) to
accept such a plan. Acceptance of a payment plan in contravention of client
instructions would be an ethics violation for an attorney and a breach of
fiduciary duty for a collection agency.
23 See, e.g., Federal Reserve Board Supervisory Letter SR 04-3.
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The League submits that the FTC should change its policies and procedures
with regard to consumer complaints about debt collection practices so as to
segregate all complaints which are based solely upon refusals to negotiate,
settle, or accept payment plans on delinquent debts. Such complaints should
be excluded from the FTC’s annual reporting of complaints against debt
collectors. States should enact similar policy changes so as not to engage in
deceptive annual reporting. Finally, the FTC and the state attorneys general
are encouraged to develop a response form which informs consumers that a
debt collector has no duty to accept a settlement or a payment plan and that
no response will be required to a complaint based upon such a refusal.
The Commercial Law League would be willing to work with the FTC to develop a
more accurate model of the statistical significance of the volume of consumer
complaints. The conventional wisdom of both the Commission’s staff attorneys
and most attorneys general is that 100 complaints could actually represent
10,000 or more violations because so few consumers actually complain. While
this position may have had validity when a consumer had to write a letter, buy
an envelope and a stamp, and go to the post office to mail the complaint, such
an analysis may no longer have any validity. The ease of filing complaints
online, and the availability of the internet to the majority of consumers
suggests strongly that the conventional wisdom is no longer accurate. The
increase in collection industry complaints is of great concern to the League if it
truly represents an increase in the number of industry violations. However, if
the increase merely represents the fact that it has become easier to complain,
the numbers may not represent any increase in violations at all.
The Commercial Law League proposes that the FTC work with the collection
industry to determine the whether the ability to file online complaints has
made the number of complaints more truly representative of the number of
actual violations. If it has, the current numbers would indicate an
improvement in overall compliance, rather than an increase in violations. Both
the collection industry and the consumers whose interests the Commission
protects are deserving of an accurate understanding of the significance of the
number of complaints.
The failure of Congress to modernize the FDCPA presents substantial problems
for both debt collectors and consumers. The League has proposed several
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changes to the Act that would mitigate, and in some instances cure, some of
these problems.
Ultimately, what is truly needed is a mechanism that can respond to the needs
of both consumers and debt collectors in a rapidly changing, technologically
oriented society. To that end the Commercial Law League suggests that
Congress should revisit an idea that was rejected in 1977 and grant to the FTC
the power to write and enforce regulations implementing the FDCPA. By
allowing such regulatory authority Congress would provide a mechanism to
address not only some of the problems detailed above, but also the as-yet
unrecognized problems of tomorrow.

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