FDCPA — Fair Debt Collection Practices Act

2 Oct

Posted on June 29, 2009 by Neil Garfield

Don’t get misled by titles. The wording of the statute clearly uses “verification” not validation. Verification generally means some sworn document or affidavit. This means when you contest the debt under FDCPA (in addition to sending a QWR) the party who is supposedly collecting or enforcing the debt has a duty to “obtain verification”. And that means they can’t verify it themselves unless they are the actual lender. And the statutes says pretty clearly that they must give the lenders name and contact information — past and present. STRATEGY: IF THEY SUPPLY SUCH A DOCUMENT, PICK UP THE PHONE AND SPEAK WITH THE PERSON WHO SIGNED IT.I CAN PRACTICALLY GUARANTEE THEY WILL DISCLAIM EVERYTHING THAT WAS IN IT AND POSSIBLY EVEN THAT THEY SIGNED IT.

15 U.S.C. 1692 ———–


Salient provisions affecting foreclosures:

§ 1692. Congressional findings and declaration of purpose

Abusive practices

There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
(b) Inadequacy of laws
Existing laws and procedures for redressing these injuries are inadequate to protect consumers.

(4) The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.
(5) The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.

§ 1692g. Validation of debts

(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
(b) Disputed debts
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.
(c) Admission of liability
The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.
(d) Legal pleadings
A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a).
§ 1692j. Furnishing certain deceptive forms

(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.
Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 1692k of this title for failure to comply with a provision of this subchapter.

§ 1692k. Civil liability

(a) Amount of damages
Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of—
(1) any actual damage sustained by such person as a result of such failure;
(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or
(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and
(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.
(b) Factors considered by court
In determining the amount of liability in any action under subsection (a) of this section, the court shall consider, among other relevant factors—
(1) in any individual action under subsection (a)(2)(A) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or
(2) in any class action under subsection (a)(2)(B) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector’s noncompliance was intentional.
(c) Intent
A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.
(d) Jurisdiction
An action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.
(e) Advisory opinions of Commission
No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Commission, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

§ 1692n. Relation to State laws

This subchapter does not annul, alter, or affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this subchapter if the protection such law affords any consumer is greater than the protection provided by this subchapter.

§ 1692o. Exemption for State regulation

The Commission shall by regulation exempt from the requirements of this subchapter any class of debt collection practices within any State if the Commission determines that under the law of that State that class of debt collection practices is subject to requirements substantially similar to those imposed by this subchapter, and that there is adequate provision for enforcement.

The Fair Debt Collection Practices Act (FDCPA) has long been ignored by the mortgage servicing and foreclosure industry, which have thought of the law as designed to arrest the abusive behavior of bill collectors, such as the late night phone calls and the harassing letters to the debtor’s place of business. In fact, it is a law whose impact is beginning to be felt throughout the mortgage industry. The FDCPA is a federal law, first enacted in 1977. For years, the FDCPA was enforced through litigation by consumers that was outside the context of the mortgage foreclosure. However, the FDCPA’s expansive language, as well as recent court decisions have led more industries, such as lawyers and mortgage services, to examine whether they are subject to the provisions of the FDCPA. The answer is that they often are. This article will discuss who is subject to the provisions of the FDCPA, and if subject thereto, what the compliance requirements are, and finally, what the penalty provisions for violation of the FDCPA are.

There are some gray areas in the applicability of the FDCPA, but it is indisputably the law that a mortgage debt and those trying to collect  upon it, in the correct circumstances, can be subject to the FDCPA. The Act applies only to debts that were incurred primarily for “personal, family or household purposes, whether or not [a debt] has been reduced to judgment.” This means that the character of the debt, i.e., consumer or non consumer, is determined by the use to which the money loaned is put. For instance, monies loaned (and secured by a deed of trust) that are invested in a business or used to purchase a commercial strip center or apartment dwelling would represent a non-consumer debt and not be subject to the FDCPA. However, if the borrower used the loaned monies to purchase his personal residence or for other personal expenses, the debt would be a consumer debt subject to the Act.

Note that the character of the debt, consumer or nonconsumer, is not determined by the type of property that is secured by the deed of trust. For example, the borrower could borrow against a commercial strip center and use the proceeds to buy groceries. Although, the commercial center is, of course, a commercial enterprise, the loaned monies were used for personal purposes and the debt is, therefore, subject to the FDCPA.

As a practical matter, of course, mortgage services and trustees will find it insufferably burdensome to have to determine the original use of the loan proceeds in every foreclosure situation. Good practice, therefore, would be to assume that all mortgage loan debt is consumer debt, unless there is certain knowledge to the contrary.

The next question for purposes of determining the applicability of the FDCPA is to ascertain whether the person communicating with the debtor is a “debt collector.” The FDCPA defines debt collector as a person engaged in a business with the principal purpose of collecting debts or who “regularly collects or attempts to collect, directly or indirectly, debts owed to another.” Whether you fall within the definition is crucial. If you are considered a debt collector, you are subject to all of the requirements and restrictions of the FDCPA.

The application by the courts of who is a debt collector under this definition has been growing over time. For instance, in a case decided on April 18,1995, the United States Supreme Court held that lawyers who regularly collect consumer debts, even when their collection efforts are through litigation only, are debt collectors under FDCPA.  Heintz v. Jerkins 95 Daily Journal D.A.R. 7134 (1995). Note that those organizations that collect on their own debts are not debt collectors (other than those persons whose business’ principal purpose is debt collection). Therefore, courts have held that lenders who foreclose on their mortgage loans are not debt collectors. Olroyd v. Associates Consumer Discount Co., 863 F.2d 23 7 (D.C., E D. Penn 1994).

Creditors who take an assignment of the debt while it is in default are generally considered to be subject to FDCPA as debt collectors. Therefore, mortgage services who receive a loan prior to default are not covered as debt collectors (Penny v. Stewart Elk Co., 756 F.2d 1197 (5th Cir., 1985); rehearing granted on other grounds, 7611 F.2d 237), but mortgage services who obtained the loan while it was in default are subject to the FDCPA as debt collectors [Games v. Cavazas, 737 F.Supp. 1368 (D.C., D. Del. 1990)]. Thus, the same servicer can be a debt collector for purposes of some loans and not others.

The author has not reviewed any court decisions holding that a trustee merely performing its statutorily required acts for a nonjudicial foreclosure sale is a debt collector. However, given the increasingly expensive view of the FDCPA taken by the courts, this may be an area of future litigation, and so trustees may be well advised to examine whether their practices are in accordance with the requirements of the FDCPA.

Often, if not in the majority of cases, the trustee handling a non-judicial foreclosure is substituted onto the deed of trust after the loan falls into default. In a sense, the trustee is analogous to the mortgage servicer who obtains a loan in default. The trustee might be considered by a court at least for some of its activities, as a debt collector for purposes of the FDCPA.

The FDCPA falls under the purview of the Federal Trade Commission (FTC). The FTC has promulgated Statements of General Policy and Staff Commentary on the FDCPA. In part of this commentary and particularly in other FTC staff interpretations, the FTC has stated that legally required communications to debtors in connection with judicial or non-judicial foreclosures are not “communications” within the meaning of the FDCPA. In particular, the interpretations by the FTC state that the preparation or non-judicial foreclosure notices are not debt collection activities under the Act.

Although the FTC’s comments may appear comforting to trustees, relying on the FTC’s comments may be a mistake. For instance, the FTC had taken a clear position that lawyers whose practice is limited to legal activities, are not subject to the FDCPA. The United States Supreme Court noted the FTC’s position recently in the Heintz case and specifically rejected it noting that the commentary is not binding on the FTC or the public, and the FTC’s interpretations did not properly express congressional intent as stated in the statute. Even if a court ultimately did determine that legally required communications, such as the notices of default, are not subject to the FDCPA, practically any other communications between the trustee and borrower might be covered.

Once subject to the FDCPA, a debt collector has several responsibilities and restrictions. In particular, the debt collector must give a so called “Miranda Warning” in every communication with the debtor. The warning must disclose clearly to the debtor that, “the debt collector is attempting to collect the debt,” and, “any information obtained will be used for that purpose.”

In addition to the Miranda Warning, there are general rules about communications.For instance, unless otherwise informed, the debt collector should assume that it is inconvenient to contact the debtor between the hours of 9:00 p.m. and 8:00 a.m. local time. Also, if the debt collector knows the name of the debtor’s attorney or can readily obtain his name and address, the creditor must communicate only with the attorney, and address all communications only to the attorney, unless the attorney fails to respond within a reasonable period of time or consents to direct communication with the debtor. In addition, the debtor may not be contacted at his place of employment if the debt collector knows or has reason to know that the debtor’s employer prohibits the debtor from receiving such communication. There are also a number of types of communications that are considered misleading.

The FDCPA also requires that a statement be included in the initial communication with the debtor (or within 5 days of the initial communication), providing the debtor with written notice containing the following:

  • the amount of the debt;
  • the name of the creditor to whom the debt is owed;
  • the statement that, unless the consumer, within thirty (30) days after the receipt of the notice disputes the validity of the debt or any portion there of, the debt will be assumed to be valid by the debt collector;
  • the statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt or any portion there of is disputed, the debt collector will obtain a verification of the debt or a copy of the judgment will be mailed to the consumer by the debt collector;
  • a statement that upon the consumer’s written request within the thirty day period, a debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor

Violations of the FDCPA can be severely punished. The consumer has the right to bring its own lawsuit. If the debt collector is in violation of the FDCPA, he/she may be held liable for: (1) any actual damages sustained by the consumer (including damages for mental distress, loss of employment, etc.), and, (2) such additional damages as the court may allow, but not exceeding $ 1,000.

In the case of the class action, the court may award up to $500,000 or one percent of the debt collector’s net worth, whichever is less. The statute of limitations for bringing an action under the FDCPA is one year. Because a class action award could be a significant cost to a violating debt collector, the statute does have some punitive aspects. In short, because of the continually expansive view of the coverage of the FDCPA, trustees are well advised to consult with their own courts and determine whether they should implement comprehensive practices and procedures to comply with the Fair Debt Collection Practices Act.

One Response to “FDCPA — Fair Debt Collection Practices Act”

  1. www.CeaseCollectionCallsNow.com October 3, 2010 at 8:32 am #

    Consumers Everyone Needs to Pull Together in America The Banks Do not Care They got Bailed Out, and Now They are Making A Profit Again! But What about the American People Stuck in the Middle, We are The Ones that are Taking a Hit, While the Government is Spending our Tax Dollars!

    Everyone that is Being Harassed by Collection Agencies, Collection Attorney’s, Debt Collectors. If We All Pull Together We can Make a Difference, But We All Have to Pull Together, and this Will Make a Change in All Our Financial Lives. Consumers Everyone Need’s to Pull Together in America!

    Learn The Insider Secrets to Eliminate Credit Card Debt! Debt Buyers, Collection Agencies, and Collection Attorney’s Don’t Want Consumers to Know About.

    This would Hurt there Profit Margin Big Time, But All Consumers Need to Know This Very Specific Information, This can Really Change Your Life. Everyone Take Action Now, and Let’s Change Everyone’s Life for the Better. Protect Yourself Now, and Your Family!

    It’s simple when a Debt Collector calls, you use the Phone Script (it’s free with your order) to collect specific information.You have every Right to Request this information, and they are Required BY Law to give it to you!

    You then use their own information against them in your copy of Consumer Debt Collection Advocates Legal Form! Download the Legal Form and send it in the mail. We recommend that you send it Certified Mail so you have a Return Receipt that the Collection Agency or Law Office has received your Legal Form for your records.

    The Collection Agency is now obligated to comply with your wishes because of the Precise Language and Wording Incorporated into these Legal Forms.

    “Debt Collectors don’t want You to know about this Legal Form” Consumers Increase Your FICO Score & Eliminate Credit Card Debt Now. Don’t Let Debt Collectors Harass You, Protect Your family Now! You can Still Buy a House Believe It……The American Dream Still can Be Accomplished!”

    Consumers may become an Affiliate, here is Your opportunity to Make Money in Helping others get Collection Agencies & Collection Attorneys Stop Debt Collection Harassment. Consumers can Download the easy Five minute Word Document and also send it to Multiple Collection Agencies. Your Commission will be for referring people to our site and Purchasing the Document is 20%


    There are Millions of Consumers that need Your Help Now!

    Sign up as an affiliate Now, and Make Money everyone Wins!

    $9.99 is the Affiliate fee you will Make!

    Go to Clickbank.com and Sign up as an Affiliate, once your are Signed up as an Affiliate go to

    BUY PRODUCTS then go to

    SELF HELP then go to

    FIND PRODUCTS then type

    Insider Secrets To Stop Debt Collectors In Their Tracks!

    Then Highlight it and Right Click on to Copy Link Location, then Place it on Facebook or any other Social Media Site you would like. This is called a Hoplink Ad that will Track your sales and Send a Check Directly to You!

    This is Very Simple.

    Please feel free to call if you have any questions.



    Thank You for Your Time!


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: