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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
Includes:
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
Exception
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
Why?
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
Costs
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
