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Collections IV

Consumer Protection Laws - Part 1

Utah Collection Agencies Rules

Found in UCA 12-1-et seq [et seq means and following sections]

Anyone (except Attorneys, Banks, & Trust Companies) who collect bills incurred by a person other than themselves must:

Register with the Division of Corporations

Post a Bond in the Amount of $10,000

And use an Attorney to prepare Legal Pleadings and Appear in Court

If anyone violates this statute

It is a Criminal Offence

A class A Misdemeanor - 2500.00 fine + 2125.00 surcharge

And any information reported to any credit agency is "void"

Note application to buy and collect debt schemes.

The Fair Debt Collection Act

Found in 15 USC 1692 et seq.

Applies to anyone who collects a consumer bill incurred by a person other than themselves.

There is an exception for Non-Profit Credit Counseling Companies which do not charge a fee to the consumer for their services and offer Debt Counseling as part of their services.

There is an exception for someone who buys a debt that is current when purchased.

There is no exception for Attorneys.

Business debts are not included.

It generally does not apply to anyone collecting their own debt (even if through an employee) unless:

They use a different name to collect with

They are a Post Dated Check company which threatens criminal prosecution for non payment.

A Rent to Own company that threaten theft charges for failure to pay.

A Vehicle sales company who lets the debtor take the vehicles without transferring the title and then threatens theft charges if the vehicle is not returned when the financing doesn't go through.

Strict Liability 140

Communication Violations

Purpose is to protect rights of privacy

No Contact at Inconvenient Times

Calls before 8:00 am or after 9:00 pm

Times known to be inconvenient

Daytime for Day Sleeper

Religious, Illness, Work

No Contact at Inconvenient Places

Neighbor's Home, Hospital, Funeral Parlor

Should know is inconvenient

The Workplace (in some cases)

Presumed by certain types of work such as Nurse, Assembly line worker, Restaurant employee.

If the Collector knows it is inconvenient, knows it is prohibited by the employer, or should know it is inconvenient (you should say this)

No Contact if Represented by an Attorney

Requires you to give Name and Address of Attorney to Collector

Require Attorney to Respond within a Reasonable Amount of Time

Limited Contact with 3rd Parties

Collectors can contact 3rd Parties only to

Find your address, your phone number, and work address

However, they cannot disclose that they are attempting to collect a debt or who they are calling for, unless asked.

They are to only contact 3rd parties one time for this information

Exceptions to this general rule include

Your attorney, credit reporting agencies, your spouse, a parent if you are a minor, your guardian, an executor or administrator, and co-debtors.

Collectors must stop Contacting you if you ask them to cease communicating with you or that you refuse to pay the debt.

The Statute allows one last communication to tell you they are not going to communicate with you any more.

This last communication may include a statement of what the collector is going to do next.

It is recommended (but not required, verbal notice is enough) that you send a written request by certified mail.

In this way you have proof under the statute of your request.

Harassing, Oppressive, or Abusive Conduct

The next prohibition is against harassing, oppressive or abusive conduct.

This includes things like

Threatening to contact 3rd parties

Phone messages left with neighbors when direct contact was possible

Intimidating, belittling or insulting behaviors

Calling at work after notice not to

Failure to properly identify themselves when they call you

Threats of violence or criminal conduct

Obscene, profane, or abusive language

Publishing "dead beat" lists

Advertising the debt for sale

Repeated phone calling (one case said more than 2 times per week)

False, Deceptive or Misleading Representations and Methods

Next is a prohibition against false, deceptive or misleading representations and methods.

This includes things like

Threatening the immanence of, the intent to, or the authority to sue when such is not true.

This can even be inferred rather than direct (e.g. lets settle before court, or referral to an attorney).

Note: keep good records of your collection contacts. If what they say turns out to be false, they may be liable for damages under the statute.

They will take drastic or unspecified action

Mentioning post-judgement remedies before the case is even filed

Such as garnishment or execution

Fake Telegrams or Legal Documents

Indicating that they are affiliated with or bonded by the Government

Even though they are required by law to be bonded

Misrepresenting the amount, character or status of the debt. For example:

saying you owe someone else's debt when you don't

collecting a debt discharged in bankruptcy

collecting a debt after the statute of limitations has expired

collection efforts after you dispute the debt

saying there is a judgement when there isn't

pretending to be an attorney or government official

implying that if you don't pay you will be arrested or imprisoned

(Crime of wilful non-payment???)

threatening action that cannot be legally taken

(Garnishment, food from fridge etc.)

False statements to get information about you

False statement to credit reporting agencies

False statement that you have committed a crime

Saying that if you don't pay you will lose rights or defenses

Saying that papers are not legal documents when they are

Collecting using a false name

Use of Unfair or Unconscionable Collection Means


Threats to contact third parties

Threatening to tell the Client to sue

Letters on Law Office stationary from an in-house attorney

Letters signed by an outside attorney with no knowledge of the debt

Excessive default charges

Placing information on the outside of envelopes

Collecting any non-contractual charges

Anything not in your contact

Interest, late fees, check charges, service charges,

Attorneys fees, litigation costs, taxes

Restrictions of Post Dated Checks

Can't deposit post dated checks til date on check

Can't request them if the purpose is to threaten criminal proceedings or early deposit

If they accept post dated checks then they must provide you written notice 10 to 3 days prior to deposit.

Repossession or threats of repossession when no right or intent to do so exists

Note: if behind in your payments at all, they can repossess.

Includes threats to take exempt property.

We'll take some time to discuss exemptions in a few minutes.

Using a post card to communicate with a consumer

Not confidential enough

Envelopes cannot indicate the purpose of letter is debt collection

Can only contain Collectors Name and Address

Note: most get around this by having a name that includes word collection

Required Disclosures

In the initial communication the Collector must:

Disclose that the communication is an attempt to collect a debt

That any information received may be used for debt collection

That the person calling is a debt collector

Applies to initial verbal or written communication

Exception is legal pleadings

Within 5 days of initial communication the collector must send written notice containing:

Amount of the debt

Creditor to whom it is owed

That the debt will be assumed valid unless objected to in 30 days

A statement that if the debtor disputes the debt the collector

Will provide the debtor with written verification of the debt

And if requested

Will provide the address of the original creditor


The bill is paid

The information is provided in the initial contact.

Note: If you dispute the debt they must cease collection efforts until the bill have been verified.

Some will just verbally verify, the law requires written verification

Practical Pointers

Make your request in writing, return receipt requested

Make your request complete

Dispute the bill

Copy of original contract

Copy of bill showing services, charges, etc.

Address of original creditor


Verify authorized collection charges

Verify unrecorded payments

Directing Application of Payments

If the Collector is handling multiple accounts you can direct who gets the payment

Law Suits must be filed in a location convenient to the Debtor

Legally they may have a number of choices, but they must use the one convenient to you.

E.g. Law says: where payments due, where contract signed, where you live, or where contract says.

Damages for Violation

Actual Damages

These are your out of pocket expenses

Actions taken as a result of collection efforts

E.g. sold property at a discount

Plus provable medical injuries, pain and suffering, damage to relationships

Requires expert witness testimony

Statutory Damages of up to $1,000 per violation

Attorney Fees


Punitive Damages

Serious, aggravated, malicious conduct

Declaratory Relief

One Year Statute of Limitations

Threatening to send to separate department or to an attorney

Advertising "easy credit" but using rigorous collection methods

FTC Credit Practices Rules

Similar to Fair Debt Collection Act

Also includes:

Threats to send to different department or to an attorney

Advertising "easy credit" but using rigorous collection methods

Waiving exemptions

Confession of Judgment

Assignment of wages before judgment

Security interests in consumer goods

FCC Rules

Calls at odd hours

Repeated calls

Calls to friends, neighbors, relatives, employment

Threatening calls

False assertions that legal process is about to be served

Failing do disclose identity of caller

Up to $50,000 penalty for violations