General Practice, Solo & Small Firm DivisionMagazine

by Juliet L. Gee

© American Bar Association. All rights reserved.

Juliet L. Gee is a solo practitioner in El Cerrito, California. She is a member of the Council of the ABA General Practice, Solo and Small Firm Division. Since 1995, she has been the collection attorney for AMA Collection Services, Inc. in San Leandro, California.

Lawyers who represent creditors should be familiar with the federal Fair Debt Collection Practices Act1 (FDCPA) and any applicable state law or regulation concerning debt collection.

The FDCPA is the primary federal legislation dealing with unfair and deceptive consumer debt collection practices. This statute applies to debt collectors who collect consumer debts. It is a strict liability statute. Debt collectors may be liable for violating the FDCPA requirements without regard to intent, knowledge, or willfulness.

Are You Affected?

The FDCPA applies only to the collection of "consumer debts" by "debt collectors." It does not apply to commercial debts, which are governed by the Federal Trade Commission Act. Consumer debts are debts incurred or alleged to have been incurred by natural persons in transactions involving money, property, insurance, or services used primarily for personal, family, or household purposes. Dishonored checks written to retailers or to purchase consumer goods or services may qualify as consumer debts.

A "debt collector" is a person who regularly collects-or attempts to collect-consumer debts owed or asserted to be owed to others; or a person who uses any instrumentality of interstate commerce or mail in a business whose principal purpose is to collect consumer debts.2 This is a broad definition that includes not only collection agency employees but also persons such as property managers who regularly collect overdue rent on behalf of real estate owners.

In addition, lawyers who regularly engage in collecting consumer debts are also subject to the FDCPA. Whether a lawyer or a firm is considered to be a debt collector depends in part on the volume of consumer debt collection activities in which the lawyer engages. For example, one circuit court held that a lawyer whose debt collection cases comprised 70 percent of his caseload the prior year was a debt collector under the FDCPA even though the lawyer was engaged in purely legal activities such as filing and prosecuting lawsuits to reduce debts to judgements.3

The FDCPA applies only to debt collectors who collect consumer debts owed to another. It does not apply to a creditor who collects debts owed to itself. Thus, a property manager who collects overdue rents on property owned by her is not a debt collector. Likewise, a retailer who makes collections only through its employees, under its own name, is not a debt collector subject to the FDCPA. However, if the creditor uses an alias or fictitious name to collect its debts, the creditor may be subject to the FDCPA.4

Some exemptions to the definition of debt collector include: creditors' subsidiaries or affiliates, as long as debt collection is not the entity's principal business; and government employees whose official duties include collecting debts. However, the provisions of the FDCPA relating to threatening communications, harassment, or abuse applies to IRS collection agents.

Prohibited Actions

The FDCPA limits communication with the consumer. In general, a debt collector may not communicate with a consumer at an unusual time or place that the collector knows or should know is inconvenient for the consumer. Thus, if a consumer notifies the debt collector to cease contacting her at work, then such contact must stop. Communication between 9:00 p.m. and 8:00 a.m. is presumed to be inconvenient unless directly waived by the consumer.

The debt collector may not communicate directly with the consumer if the collector knows the consumer is represented by a lawyer with respect to the debt and the lawyer's name and address can be readily ascertained. The consumer or his lawyer may waive this protection. Furthermore, if the consumer's lawyer fails to respond within a reasonable time, the collector may contact the consumer. If the consumer notifies the debt collector in writing that she wants further communications to cease or that she refused to pay the debt, then the collector must cease contact. However, the collector may notify the consumer that the collector or creditor intends to pursue a specified remedy, such as filing suit.5

In general, in prejudgment situations the debt collector may not communicate with third parties in an attempt to collect the debt. Thus, the collector may communicate only with the consumer, the consumer's lawyer, the creditor, and a consumer credit reporting agency. In post-judgment situations, third-party communications are permitted as reasonably necessary to establish a postjudgment judicial remedy such as the service of a writ of execution and earnings withholding order upon the employer of the debtor.

The FDCPA prohibits the collector from harassing, oppressing, or abusing any person to collect a consumer debt.6 This provision also applies to IRS collection agents. Most courts have applied the "least sophisticated debtor" standard in evaluating whether the actions or communications were harassing, oppressing, or abusing. Threats of violence or other criminal means are a violation of the FDCPA. This may include implied threats of violence.7 Use of obscene or profane language is prohibited.

Repeated or continuous telephoning of the consumer with the intent to annoy, harass, or abuse is also prohibited. For example, phoning the debtor several times in a short period of time after the consumer hung up may constitute a prohibited act. However, repeated mailing of demand letters, as long as they comply with specific FDCPA requirements, does not constitute abusive conduct.

The FDCPA prohibits false or misleading representations. Specifically, the collector may not falsely represent or imply that he is affiliated with the state or federal government. Nor may a collector falsely represent the character, amount, or legal status of the debt. For example, the collector may not imply that legal action on the debt has commenced when no action has been filed. A debt collector may not falsely represent herself as a lawyer. The courts have interpreted this prohibition to mean that a collection agency may not send computer-generated letters using a lawyer's name. However, if the lawyer reviewed each debtor file before authorizing the sending of a computer-generated letter, this is not a violation of the FDCPA.

The collector cannot threaten unintended or unlawful action. For example, a debt collector's lawyer cannot threaten to institute legal action where the lawyer is not admitted to practice in that jurisdiction and has not associated local counsel. Mailing an unissued summons and complaint to the consumer also constitutes misrepresentation that violates FDCPA. Similarly, misrepresenting that documents are not legal process forms or misrepresenting that they do not require action by the consumer is a violation of the FDCPA. In addition, using "_____ v. _____" in the communication when no action had been filed may constitute a misrepresentation.8

The FDCPA prohibits unfair or unconscionable practices. The debt collector cannot collect an unauthorized amount. In some states, prejudgment interest is not authorized, so a demand of such interest constitutes an unfair practice. The lawyer should check state statutes when he is unsure whether interest or attorney fees are allowed.

Similarly, it is an unfair practice to threaten a lawsuit on a debt that is time-barred. Practice pointer: Make sure that the debt is not time-barred. It is an unfair practice to mail notices to the consumer indicating publicly that a debt is being collected. So postcards sent to the debtor communicating the existence of the debt is an unfair practice.9

The Dunning Notice

The initial oral or written communication with the consumer must contain a notice often called a "mini-Miranda." The initial communication should state, "This is an attempt to collect a debt and any information obtained will be used for that purpose." Although the FDCPA only requires this notice in the initial communication, some states (Hawaii, Vermont, and the District of Columbia) require this mini-Miranda in all communications with the consumer. In subsequent communications, the FDCPA requires collectors to disclose that the communication is from a debt collector. These disclosures are required whether the communication is oral or written.

The consumer has a right to obtain validation and verification of the debt. According to the FDCPA, within five days after initial communication with the consumer, the debt collector must send the consumer a written validation notice stating the debt amount and the name of the creditor to whom the debt is owed. The notice must also inform the consumer of the following: unless the consumer disputes its validity within 30 days, the debt will be assumed to be valid; if the consumer notifies the collector in writing that the debt is disputed within 30 days, the collector will mail the consumer verification of the debt or a copy of the judgment against the consumer; and the collector will provide the consumer with the name and address of the original creditor upon the consumer's written request within 30 days. However, some courts have required this in the initial communication as well. Practice pointer: Include the validation and verification information in the initial letter as well as the mini-Miranda.

The consumer must be given 30 days to validate the debt before further debt collection activities can take place. Lawyers should check their individual state statutes to determine whether other notices to the consumer are required. The following states have specific special notice requirements: Arkansas, Colorado, Connecticut, District of Columbia, Hawaii, Idaho, Illinois, Maine, Massachusetts, Minnesota, New York, North Carolina, Tennessee, Texas, Vermont, and Wisconsin.

The consumer has a right to be sued in a convenient forum. The FDCPA requires that the consumer be sued in the "judicial district" either where the consumer resides or where the contract was signed. In the case of an oral contract, the consumer must be sued in the "judicial district" where she resides. This does not apply to actions against real property, in which case the "judicial district" is that in which the property is situated.

Finally, the FDCPA provides that where the consumer owes multiple debts, the consumer has the right to have a payment applied to a specific debt. The debt collector may not apply a payment to a debt that the consumer disputes.

A private lawsuit under the FDCPA must be filed within one year from the date of the violation. Any person against who a FDCPA violation is committed may bring suit for actual and/or statutory damages, costs, and reasonable attorney fees. Actual damages include out-of-pocket expenses and emotional distress damages.

Statutory damages of up to $1,000 may also be awarded at the court's discretion whether or not actual damages are awarded. The $1,000 applies to the action as a whole, not to each statutory violation. In awarding the statutory damages, the court must consider the following factors: the frequency and persistence of the debt collector's noncompliance; the nature of the noncompliance; and the extent to which the noncompliance was intentional.10 The debt collector may be relieved of liability if the debt collector demonstrates by a preponderance of evidence that the violation was unintentional and resulted from a bona fide error.

A prevailing plaintiff must be awarded costs and attorney fees. The degree of success and the reasonableness of the lawyer hours expended are factors affecting the amount of fees awarded. A prevailing defendant may recover costs and attorney fees only if the court finds that plaintiff brought the action in bad faith to harass the debt collector. This does not limit any rights or damages the prevailing defendant may have in state law malicious prosecution actions.

State Laws

Many states have counterparts to the federal FDCPA. While they are often similar, they are usually not identical. California includes in its definition of debt collectors both creditors who regularly collect consumer debts and third-party debt collectors. Washington limits the number of contacts with a consumer to one time in a single week at the consumer's place of employment. Lawyers should review their state statute before proceeding to collect on a debt or representing a debt collector or creditor. CL


  1. 15 U.S.C.A. §§ 1692-1692o (West 1998).
  2. 15 U.S.C.A. § 1692c(c) (West 1998).
  3. See Scott v. Jones, 964 F2d 314 (4th Cir. 1992).
  4. 15 U.S.C.A. § 1692a(6) (West 1998).
  5. 15 U.S.C.A. § 1692c(c) (West 1998).
  6. 15 U.S.C.A. § 1692d (West 1998).
  7. See 15 U.S.C.A. § 1692d(1) (West 1998) and 53 Fed. Reg. 50105.
  8. See 53 Fed. Reg. 50107
  9. See 15 U.S.C.A. § 1692f(7) (West 1998).
  10. See 15 U.S.C.A. § 1692k(b) (West 1998).


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