Patient Account Services

Fair Debt Collection Practices Act
OVERVIEW

Purpose & Benefits:
• Eliminate abusive practices.
• Not competitively disadvantaged.
• Promote consistency.
• Protects consumers
• Benefits ethical collectors.
• Sets a professional standard.
• Fosters a fair and competitive environment.

Problems with Non-Compliance
Accountable Parties
• Financial liability for both agency
• Third- Party Debt Collectors.
and the individual.
• Debt Purchasers.
• Costly and time consuming to
• Attorneys.
respond to complaints and lawsuits.
• Creditors.
• Career threatened.

COMMUNICATING WITH THE CONSUMERS

The FDCPA governs communications between consumers and debt collectors in connection with the collection of debt.

A consumer is: Communication is:
• Any natural person. Conveying information–either directly or
• Obligated to pay a debt. indirectly–to any person, through any
• Does not include businesses. medium, regarding debt.
Does include:
•Executors. Communication is prohibited:
• Administrators. • At a time that is known to be
• Parents/Guardians inconvenient to the consumer.
(if consumer is minor) •Before 8:00 a.m. or after 9:00 p.m. local
• Spouses. time at the consumer’s location.
(limited circumstances, approved by state law) •If the consumer is represented by an
A debt is: attorney.
•An obligation. •If it is known or reasonably understood
•Arises from a transaction. that the consumer’s employer would
•For personal, family or household prohibit it.
purposes.


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

• Recite the Mini-Miranda in the Do not recite the Mini-Miranda
first written and first verbal when:
communication with a consumer. •Leaving a message with
• All communications with someone.
consumers must indicate that the •Leaving a message on an
communication is from a debt answering machine.
collector. •Obtaining location information.
• Some states laws require the •On fax coversheets or postcards.
Mini- Miranda in additional •On employment verification
communication with consumers. requests.


Cease Communication
When a consumer requests that
you cease communications:
•It must be written.
•Once received, you may not
communicate or contact any
other parties.

THIRD PARTY COMMUNICATIONS

Who May Be Contacted: Clarification of an Attorney
• Consumer • Someone who graduated from
(if not represented by an attorney) law school and passed Bar
• Creditor examination of at least one state.
• Attorney for Creditor, Debt • A person acting pursuant to the
Collector or Consumer power of a attorney is merely an
• Credit Reporting Agency agent to the consumer under a
(if otherwise permitted by law) principal agent relationship
• Consumer’s Spouse • Communicating with the power
(if permitted by state law) of Attorney is not permitted and
• Consumer’s Parents would be considered a Third Party
(if consumer is a minor) Disclosure Violation

If an attorney represents the consumer in regards to a debt that the debt
collector is collecting on, the collector must contact only the attorney
unless:
•The Attorney fails to respond within a reasonable period of time.


Regulated Third Party
Communication
DO NOT: Laws to Consider:
•Reveal the existence of a debt to any party. • Health Insurance Portability
•Use symbols or language in written and Accountability Act
communication. (HIPAA)
•Use postcards
•Discuss the existence of a consumer’s debt • Gramm-Leach-Bliley Act
with: (GLBA)
The consumer’s employer and/or coworkers.
Friends
Neighbors
Relatives
(excluding the consumer’s spouse, as otherwise permitted by law)


Obtaining Location Information: Employer Verification
• Identify yourself by name only. YOU CAN:
• State that you are trying to locate • Call the employer and request the company
the consumer. to verify whether or not the consumer is
currently employed by the company.
• Request only home
address, home phone number and
YOU CANNOT:
• Request the consumer’s work phone
place of employment. number, supervisor’s name, dates of
• Contact a third party only once. employment or any other information.


When leaving messages on What is a Pre-Recorded Message:
answering machine or • Any message recorded and
communicated to a consumer, no
voicemail: matter how long or how short.
• Make sure you are reaching • Must follow the Telephone
the correct consumer. Collection Protection Act (TCPA)
• Never leave a message that & Federal Communications
would identify the existence of a Commission. (Found in Chapter 4 & 12)
debt. Examples:
• An automated message system
Issues with Pre-Recorded Messages: that leaves a standard collection
•Debt collectors must comply with the message.
Telephone Consumer Protection Act • The recorded operator in your
• Abide by disclosure requirements voicemail system is considered a
•See Chapter 4.2.1 of ACA pre-recorded message.
International’s Guide to the Fair Debt • An introductory message from an
Collection Practices Act for guidance auto dialer stating that someone is
going to pick up the phone soon.


Written Communication:
Caller ID Concerns: • It is permissible to contact a third party
• If an agency’s telephone number in writing if the envelope does not indicate
appears on caller ID, it could that the communication is from a debt
disclose that the call relates to a collector.
debt and lead to a third party • Avoid communication via fax or e-mail.
disclosure. • Using open face communication could
Consider: result in FDCPA violations.
• Blocking the agency’s name.
ACA does not recommend using
• Using an acronym for the
agencies name if state law permits. these methods of communication to
collect a debt, due to the risk of third
party disclosure:
• Answering Machine
• Fax Machine
• Pagers
• E-mail
• Cell Phone

VALIDATION & VERIFICATION

Validation Notice: Must contain:
• Required disclosure • Amount of debt
• Provided to the consumer • Name of creditor to whom the debt is owed
• Informs consumer of their right to • Statement that unless the consumer, within 30
days after receipt of the notice, disputes the
request verification of the debt validity of the debt, or any portion thereof, the
• Should be in writing debt will be assumed to be valid by the debt
• Is required each time a subsequent collector
• Statement that if the consumer notifies the debt
collector takes over an account collector in writing within the 30-day period that
• Must be sent within five days of initial the debt, or any portion thereof, is disputed, the
communication debt collector will obtain verification of the debt
Should Include: or a copy of a judgment will be mailed to the
consumer by the debt collector
“See Reverse Side for Important • Statement that, upon the consumer’s written
Information” (If printed on the reverse side request within the 30-day period, the debt
of the letter.) collector will provide the consumer with the
Mini-Miranda Disclosure (If first time name and address of the original creditor, if
you are communicating with consumer) different from the current creditor.


Overshadowing: Settlement Offers:
• A validation notice may not be A settlement offer allows the
contradicted or overshadowed by other consumer to settle the debt for an
communications or notices. amount less than the total owed.
• A validation notice is considered SETTLEMENT OFFERS CANNOT:
overshadowed or contradicted if a • Overshadow the validation
subsequent letter includes information that period.
is inconsistent. • Use deceptive language to
present the offer.
Overshadowing the Validation
Period:
Collection Efforts:
The Validation notice should not:
While pursuing collection activity
• Demand immediate payment.
during the validation period:
• Be inconsistent so as to cause
The debt collector MUST cease
confusion.
collection activity if a written
• Be printed in smaller font.
verification request is received.
• Be buried in other text


Legal Action: Verification Request Response:
You Can: Upon receipt of a consumer’s written
Debt collectors can file suit during the request for verification, the FDCPA
validation period. requires all collection efforts cease.
You Cannot: •A collector cannot send a fax to
Debt collectors cannot contradict the verify a debt.
right to request verification. • Verification cannon be mailed by
the creditor.

Verification Request: Verification Request
•A consumer has the right to request
verification during the 30-day validation
Obligations:
• Debt Collectors are NOT obligated by
period.
the FDCPA to send verification of debts
• Verification includes any materials that
AFTER the 30-day validation period.
substantiates the consumer incurred the
•However, if you do not meet the
debt.
consumer’s request, your odds of
• A request for verification must be
collecting may be diminished
submitted in writing

CREDIT REPORTING

Credit reporting is a collection activity when it is:
• A communication in connection with the collection of a debt.
• Done after a written dispute is received, but before responding to the dispute with verification.
Credit reporting IS allowed during 30-day validation period unless a written dispute is received.

Brady Decision
• Has major implications for the collection industry. In February 1999, ACA issued an action
alert stating:
The plain language of section 1692e(8) required debt collectors to communicate the
disputed status of a debt if the debt collector “knows or should know” that the debt is
disputed. This standard requires no notification by the consumer, written or oral.
• Consumers who wish to dispute a debt do not have to do so in writing.
• Collection agencies are obligated to report a dispute, whether it is oral or
written, when reporting a debt to a credit reporting agency.

Bankruptcy Issues:
After consumer files for bankruptcy there must be:
•Automatic Stay (injunction that stops all collection activity right after bankruptcy is
filed) goes into effect.

HANDLING PAYMENTS

Application of Payments:
•If the debt is undisputed and interest is being collected on it, the debt collector is permitted
to apply payment first to the interest then to the principal.
• Payment allocation is governed by state law and/or specified by the contract with the
creditor

Multiple Accounts:
•Debt collectors collecting multiple debts from a consumer may NOT apply a payment to
any debt that is DISPUTED by the consumer.
• If the debt collectors are collecting multiple accounts from the same consumer, the
consumer must specify to which debt the payment should be applied

Overpayments/Refunds:
Resolve/Refund the overpayment
• Contact the consumer for payment instruction.
• Comply with state law.
• Follow internal policies and procedures.

UNFAIR PRACTICES

Examples of Unfair Practices:
• Adding Interest, Fees, Charges or Expenses.
• Accepting , soliciting or depositing postdated
checks or other postdated payment instruments.
• Causing a consumer to incur charges.
• Possession and Disablement of Property.
• Postcards and Envelope restrictions.

HARASSMENT AND ABUSE

Examples of Harassment and Abuse:
• Threats of Violence.
• Use of Obscene or Profane Language.
• Publishing a list of consumers who allegedly refuse to pay debts.
• Causing the phone to ring repeatedly to annoy, abuse or harass any person.
• Placing phone calls without meaningful disclosure of the caller’s identity
• Advertising for sale any debt in order to coerce payment of the debt.
• Harassment and abuse can occur through oral and written communications.
YOU AND YOUR AGENCY ARE LIABLE FOR YOUR ACTIONS.

FALSE AND MISLEADING REPRESENTIONS

The FDCPA prohibits a collector from making false and misleading
representations:
• An example of this is claiming to be an attorney when in fact he/ she is not.

Other False and Misleading Representations:
• Government Affiliation.
• Misrepresenting Amount owned or Legal Status.
• Unintended or Unlawful Action.
• Threatening Arrest or seizure of Property.
• False Accusations.
• False Legal Documents.
• Reporting a Disputed Debt.
• Misrepresentation of Identity.
• Misrepresentation of CRA.
• False and Deceptive Means.

LIABILITY

Personal Responsibility: Common Violations:
• Ensure compliance with the FDCPA. • Harassment
• Know the federal and state laws. • Failure to send notice.
• Be aware of changes. • Failure to verify disputed debts.
• Ask for help. • Calling a consumer’s place of
employment.
Enforcement: • Revealing alleged debt to third
• The enforcement of the FDCPA is parties.
assigned primarily to the Federal • Failure to cease communication.
Trade Commission (FTC). • Threatening the consumer
• The government reserves the right • Demanding larger payment.
to bring administrative enforcement • Violations affect the image of the
against debt collectors when the collection industry and can cause
bother agency and person liability.
action affects the general public.

LIABILITY

Actual Damages:
Some courts have ruled that actual
• Consumers have a “right of action”. damages could include “out-of-
• Civil liability may be assessed in the pocket expenses” and damages for:
form of:
• Actual Damages • Personal Humiliation.
•Statutory Damages • Embarrassment.
•Court Costs • Mental Anguish.
• Reasonable Attorney Fees. • Emotional Distress.

Actual Damages could include:
• Money illegally collected. The consumer bears the
• Unlawful collection charges or burden of proof:
interest. • Must prove a reasonable
• Lost Wages. connection between debt
• Cost of treating mental or collector’s conduct and
physical injury.
emotional or physical damage
alleged by the consumer

LIABILITY

Emotional Distress:
Are You Personally Liable?
The consumer must show that the debt
collector’s behavior: • Liability is not limited to the
• Was extreme and outrageous collection agency
• Was intentional or reckless • Individual debt collectors may be
• Resulted in emotional distress held liable for violations to the same
• Resulted in distress that was extent as the agency
severe

Consequences for Non-Compliance: Bona Fide Error:
Collectors can be held liable for: Collectors must show by a
• Actual damages preponderance of the evidence
•Statutory damages up to $1,000 • The error was unintentional
• Attorney’s fees • Resulted from a bona fide error
• Up to $500,000 or 1% of the • Occurred despite procedures
agency’s net worth for class reasonably adapted to avoid
action suits. such errors

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