Abusive Debt Collection Practices and the Building Blocks of an Efficient Debt Collection Regime

Stӑnescu, Cӑtӑlin Gabriel

doi:10.1007/978-3-319-21503-7_6

Cӑtӑlin Gabriel Stӑnescu²

561 Accesses

Abstract

As shown in the previous chapter, the debt-collecting industry in America has been under continuous expansion and development, strongly fueled by the higher degree of unemployment and the increasing number of bankruptcies generated by economic crises. The proportions reached and the large numbers involved have brought from the very beginning a myriad of devious and abusive collection practices, in particular harassment (at home or at the work place), impersonation of lawyers or law officers by collectors, use of false documents or physical threats.

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Notes

1.
Potach (1978).
2.
Potach (1978), p. 895.
3.
The Congressional findings and the declaration of purpose of the FDCPA state in 15 USC 1692 (Section 802) (a) and (b) that “There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices […]. Existing laws and procedures for redressing these injuries are inadequate to protect consumers.”
4.
“Abusive collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless affect intrastate commerce.” FDCPA, 15 USC 1692 (Section 802) (d).
5.
Griffith (2012), p. 179: “It was a serious turn of events because until then many states had no effective laws to control the conduct of collectors.”
6.
One should not ignore the fact that the Congress passed the FDCPA in an attempt to balance two competing interests: consumers’ right to be treated with care and respect and not be subjected to abusive collection practices and creditors’ and debt collectors’ interest in recovering the money they were owed. See Akina (2012), p. 145 at 149.
7.
“The recent increase in reported debt collection complaints is proof enough that the FDCPA is still a necessary shield for consumers.” Akina (2012), p. 150.
8.
https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.guidance.browse&elemID=1, last visited 09.12.2014. Recital 13 of Directive 2005/29/EC states that “In order to support consumer confidence the general prohibition should apply to unfair commercial practices […] following the conclusion of a contract and during its execution.” According to Art 3.1, the Directive applies “to unfair business – to – consumer practices, as laid down in Article 5, before, during and after a commercial transaction in relation to a product.” Given the wording of Art 3, business-to-business transactions do not fall within the scope of the Directive. See also: Ramsay (2012), p. 163. However, no scholarly work dedicated to the issue of unfair debt collection under the UCPD or developing the issue of debt collection under the UCPD was identified during the research conducted for this work.
9.
Art 5.1, Art 5.4 and Art 5.5 of Directive 2005/29/EC. On difficulties raised by the UCPD’s definition of “professional diligence,” see: Micklitz et al. (2009), p. 85.
10.
Art 2, letter h) of Directive 2005/29/EC.
11.
Poncibo and Incardona (2005), p. 317 at 319.
12.
On the standard of “good faith,” see Freiburger Kommunalbauten GmbH Baugesellschaft & Co. KG v. Ludger Hofstetter and Ulrike Hofstetter, C-237/02 [2004] of the ECJ, Para 19, available online at: http://curia.europa.eu/juris/showPdf.jsf?text=&docid=49062&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=255716, last visited 10.12.2014.
13.
On the debate concerning maximum harmonization sought by the UCPD: Micklitz et al. (2009), pp. 78–81.
14.
“A misleading action occurs when a practice misleads through the information it contains, or, through the deceptive presentation of that information, and causes or is likely to cause the average consumer to take a different transactional decision than he or she would have taken otherwise. The definition of a misleading action used in the Directive has taken into account the current state of knowledge of how consumers take decisions in the market space. For example, new insights from behavioral economics show that not only the content of the information provided, but also the way the information is presented can have a serious impact on how consumers respond to it. The Directive has therefore explicit provisions to cover situations of practices which are capable of deceiving consumers ‘in any way, including overall presentation’, even if the information provided is factually correct.” https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.guidance.browse&elemID=74#article_62, last visited 09.12.2014. General misleading information is covered by Article 6 of Directive 2005/29/EC.
15.
A misleading omission occurs when a practice misleads through omitting material information that the average consumer needs, in a particular context, in order to make an informed transactional decision. Misleading omissions are covered by Art 7 of Directive 2005/29/EC and need to be read in correlation to Art 2, letter (k), which defines transactional decisions as “decisions taken by consumers concerning whether, how and on what terms to […] make payment in whole or in part […].” Given the broad wording of the definition of transactional decisions, misleading omissions seem to cover the issue of old debt as well. More importantly, a debt collector might be obliged to provide his full address, the full price (including taxes), performance and complaint handling policy and the existence of a right of withdrawal (providing that is possible—like in the case US consumer debtors who have the possibility to ask not to be contacted by the debt collector). https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.guidance.browse&elemID=74#article_62, last visited 09.12.2014.
16.
According to Arts 8 and 9 of Directive 2005/29/EC, aggressive practices are those that, by harassment, coercion, including the use of physical force or undue influence, affect the average consumer’s freedom of choice or conduct with regard to the product or causes him to take a transactional decision he would not have taken. As factors to be considered in determining whether the practice was unfair or not, the Directive mentions the time, the location, nature or persistence, the use of threatening or abusive language or behavior, the exploitation by the debt collector of specific misfortune or grave circumstances that impair the consumer’s judgment or threats with actions that cannot be taken.
17.
On the broad interpretation of the notion “commercial practice,” see Jana Perenicova and Vladislav Perenic v. SOS finance spol. s.r.o., Case C-453/10, available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010CJ0453:EN:HTML, last visited 09.12.2014. Also: Poncibo and Incardona (2005), p. 320. “This definition is broad, ranging from whether to purchase to whether to exercise or not the right arising from the purchase. The unfair practice usually will induce the consumer to make a regrettable decision.” It remains unclear what would constitute an induced regrettable decision in the field of debt collection.
18.
https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.guidance.browse&elemID=74#article_62, last visited 09.12.2014.
19.
For details on what constitutes “average consumer” at EU level and criticism brought to this standard, see: Poncibo and Incardona (2005), pp. 324–328, Poncibo and Incardona (2007), p. 21 at pp. 26–28; Micklitz et al. (2009), pp. 88–89.
20.
On vulnerable consumers: Poncibo and Incardona (2005), p. 328; and Poncibo and Incardona (2007), pp. 28–29.
21.
Micklitz et al. (2010), p. 139.
22.
“In contrast to most other directives in the consumer protection field, the UCPD does not permit Member States to deviate from the standards it specifies, even where this would result in a higher level of protection for consumers.” Poncibo and Incardona (2005), p. 317.
23.
Art. 11.1 and the following of Directive 2005/29/EC.
24.
Art 13 of Directive 2005/29/EC.
25.
The enforcement regimes based on the Directive differ significantly from country to country. In France, consumers may use an administrative mechanism of complaints, but the administrative authorities are not obliged to investigate. There is also a possibility to enforce through court action, before civil or criminal courts. The sanctions include imprisonment or fines, as well as court orders of cessation of misleading commercial practices, prohibition on exercising professional activities for a number of years and damages for direct and foreseeable losses. However, the plaintiff must prove that he suffered a loss. https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.country.viewEnforcement&countryID=FR, last visited 09.12.2014. In Germany, there is no administrative enforcement against unfair commercial practices through state bodies but through competitors and associations with help of civil law. Enforcement through court action provides for a specific cease-and-desist procedure, and in addition a claim for civil damages can be filed. https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.country.viewEnforcement&countryID=DE, last visited 09.12.2014. In the UK, the matter is much more developed. The Directive is implemented by several acts and was enforced by the former OFT and local authorities. However, there is no private right of action against traders by consumers. With respect to enforcement through court action civil actions for injunction orders, criminal proceedings and warrants are available. Again, there is no private right of action against traders by businesses or consumers. The sanctions that may be imposed include orders not to engage or repeat the infringing conduct or statutory fines (which are not higher than £5000). https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.country.viewEnforcement&countryID=UK, last visited 09.12.2014. With respect to Romania, the Directive is implemented by Law no 363/2007 on fighting against unfair practices of traders in relation to the consumers and on the harmonization of regulations with the European legislation on consumer protection. The general enforcement of the Romanian legislation on unfair practices is handled by the National Authority for Consumer Protection, a specialized administrative body. Administrative complaints can be filed by any natural person or organization with a legitimate interest. The public authority has a duty to investigate and analyze the complaint within 30 days. With respect to enforcement through courts, the law allows general claims for damages to any person or organization that proves a legitimate interest. Courts can also issue cease and desist orders, prohibit unfair practices. The available sanctions include court orders and fines for administrative offenses, but there is no criminal liability. https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.country.viewEnforcement&countryID=RO last visited 09.12.2004.
26.
“The US example might be enlightening for the developing European Union’s consumer […] policies. […] The basic consumer protection statute enforced by the FTC is Section 5(a) of the Federal Trade Commission Act. […] In addition, the FTC enforces a variety of specific consumer protection statutes that prohibit specifically-defined trade practices and generally specify that violations are to be treated as if they were ‘unfair or deceptive’ acts or practices under Section 5(a).” Poncibo and Incardona (2005), p. 329.
27.
As emphasized, the UCPD does not consider other categories of consumers, such as those provided with sufficient information but which they cannot fully understand or properly evaluate or those acting under strong emotional factors. Poncibo and Incardona (2007), pp. 31–34. With respect to debt collection, these two categories are extremely important given that most of the unfair collection practices would actually affect consumer debtors emotionally or expose them to information containing a high degree of legal content, which they may not be fully able to comprehend.
28.
“The average consumer […] is however, an overly simplistic concept with little correspondence with the real world […] and should be reinterpreted more flexibly, or even abandoned […].” Poncibo and Incardona (2007), p. 21.
29.
Poncibo and Incardona (2005), p. 327; Poncibo and Incardona (2007), p. 28.
30.
Poncibo and Incardona (2005), p. 328.
31.
Poncibo and Incardona (2007), p. 29; and Micklitz et al. (2010), pp. 107–152.
32.
Such issues deriving from the broad wording of the UCPD did not escape the attention of scholars: “Harassment concerns invasion of an individual’s private space. […] However, the term harassment is broader and covers many annoying trade practices, such as spam. There is a potential problem of aligning the well-meaning broad scope of this provision with the wording of Article 8 as many of these objectionable practices will not affect the consumer’s transactional decision. The average consumer is simply irritated by these practices and ignores them.” See: Micklitz et al. (2010), p. 140.
33.
Poncibo and Incardona (2005), p. 329. The authors also criticize the approach taken by the Commission: “[T]he Commercial Practices Directive is plagued by short sightedness and is prudent in considering only the economic interest of consumers.” The issues with this approach are even more evident in case of debt collection.
34.
https://webgate.ec.europa.eu/UCPD/public/index.cfm?event=public.directive.browse2&article =article-205&elemID=226#article-205, last visited 09.12.2014.
35.
Hudson (2009), pp. 55–56.
36.
Hudson (2009), p. 57.
37.
A list of states that have implemented their own FDCPAs can be found here: http://www.nolo.com/legal-encyclopedia/state-fair-debt-collection-laws, last visited 3.10.2014. The complete list of mini-FDCPAs, with full text, is available at http://www.fairdebtforconsumers.com/fair-debt-laws.html, last visited 3.10.2014.
38.
FDCPA, 15 USC 1692 (Section 816).
39.
FDCPA, 15 USC 1962 (Section 802)(b), corroborated by 15 USC 1692a (Section 803), (3). The first reference established by declaration of purpose that the idea behind the FDCPA is to redress the injuries of “inadequate” existing laws regarding consumer protection, while the second defines “consumers” as “any natural person obligated or allegedly obligated to pay any debt.” In fact, the FDCPA provisions refer only to consumers and not to debtors.
40.
See infra, Sect. 6.2.1.1.
41.
The exclusion arises from the constructive interpretation of 15 USC 1692a (Section 803) (6) (C), which explicitly excludes tax collectors from the definition of debt collectors.
42.
Among the states that request licensing are Arizona (http://www.nolo.com/legal-encyclopedia/arizona-fair-debt-collection-laws.html), Colorado (http://www.nolo.com/legal-encyclopedia/colorado-fair-debt-collection-laws.html), Connecticut (http://www.nolo.com/legal-encyclopedia/connecticut-fair-debt-collection-laws.html), Florida (http://www.nolo.com/legal-encyclopedia/florida-consumer-collection-practices-act.html), Georgia (http://www.nolo.com/legal-encyclopedia/georgia-fair-debt-collection-laws.html), Idaho (http://www.nolo.com/legal-encyclopedia/idaho-fair-debt-collection-laws.html), Louisiana (http://www.nolo.com/legal-encyclopedia/louisiana-consumer-collection-laws.html), Maryland (http://www.nolo.com/legal-encyclopedia/maryland-fair-debt-collection-laws.html), Massachusetts (http://www.nolo.com/legal-encyclopedia/massachusetts-fair-debt-collection-laws.html), and Washington (http://www.nolo.com/legal-encyclopedia/washington-collection-agencies-law.html). All sites last visited on 02.10.2014.
43.
Among the states asking debt collectors to post bonds are Arizona (http://www.nolo.com/legal-encyclopedia/arizona-fair-debt-collection-laws.html), Colorado (http://www.nolo.com/legal-encyclopedia/colorado-fair-debt-collection-laws.html), and Washington (http://www.nolo.com/legal-encyclopedia/washington-collection-agencies-law.html). All sites last visited on 02.10.2014.
44.
FDCPA, 15 USC 1692 (Section 802) (e). Also: Hector (2011), p. 1606.
45.
FDCPA, 15 USC 1692 (Section 805).
46.
FDCPA, 15 USC 1692 (Section 806).
47.
FDCPA, 15 USC 1692 (Section 807).
48.
FDCPA, 15 USC 1692 (Section 808).
49.
FDCPA, 15 USC 1962, (Section 813).
50.
The leading case concerning the enforcement of the FDCPA as far as piercing the corporate veil is West v. Costen, 558 F. Supp. 564 (W.D. Va. 1983). There the court held that “the FDCPA’s purpose “to eliminate abusive debt collection practices by debt collectors,” 15 USC 1692a, would be frustrated if MSF’s corporate façade was an effective shield against persons seeking their private remedies under the Act to uphold the corporate façade here would illustrate that a corporate collection agency, by operating with a minimum of assets and a fast cash flow, can be effectively judgment proof and yet be a thriving source of income for its owner.”
51.
For example, one peculiarity of the abusive debt collection legal framework in the US is the fact that the federal and state laws could be used together by consumers against abusive debt collectors, the sole exception concerning the actual damage incurred by the debtor, which cannot be recovered twice.
52.
Consumer Credit Sourcebook, Chapter 7, Arrears, Default and Recovery (Including Repossessions), http://media.fshandbook.info/content/full/CONC/7.pdf, last visited on 19.12.2014.
53.
http://www.legislation.gov.uk/ukpga/1974/39/contents, last visited on 19.12.2014.
54.
Most important was Consumer Credit Act 2006, http://www.legislation.gov.uk/ukpga/2006/14, last visited on 19.12.2014.
55.
Section 145 (1) (d) of Credit Consumer Act 1974 defined an ancillary credit business as any business so far as it comprises or relates to debt collecting, while subsection (7) defined debt collection as the taking of steps to procure payment of debts due under consumer agreements or consumer hire agreements, with the exceptions provided by Section 146 (6). http://www.legislation.gov.uk/ukpga/1974/39/section/145, last visited on 19.12.2014.
56.
According to Section 21 (1) of the Credit Consumer Act 1974, a license is required to carry on a consumer credit business or a consumer hire business or an ancillary credit business. http://www.legislation.gov.uk/ukpga/1974/39/section/21, last visited on 19.12.2014. Additionally, Section 24 A (4) (f) specifies that one of the types of business required to apply for a standard license is a business so far as it comprises or relates to debt collecting. Also: Rosenthal (2013), p. 217.
57.
OFT’s official website: http://www.oft.gov.uk/OFTwork/credit-licensing/#.UbYnwUAtxp4, last visited on 19.12.2014.
58.
http://www.oft.gov.uk/OFTwork/credit-licensing/penalties-and-requirements/#.UbY2jkAtxp4, last visited on 19.12.2014.
59.
According to Section 25 (1) (a) and (b), an applicant for a standard license must make an application within Section 24 (1) (A) in relation to a type of business and satisfy the OFT that he is a fit person to carry on that type of business with no limitation. Subsection (2) states that in determining whether an applicant for a license is a fit person for the purposes of this section, the OFT shall have regard to any matters appearing to be relevant, including (among other things) c) practices and procedures that the applicant proposes to implement in connection with any such business. http://www.legislation.gov.uk/ukpga/1974/39/section/25, last visited on 19.12.2014.
60.
Rosenthal (2013), p. 218.
61.
CONC, Section 7.13.9.
62.
Rosenthal (2013), p. 17. CCA 1974 did not define the consumer, as the FDCPA did in the US. However, it did define debtor as the individual receiving credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law and, in relation to a prospective consumer credit agreement, includes a prospective debtor (p. 19).
63.
Wider coverage may occur in the US as well under state law. However, based on the definition of consumer as provided by the FDCPA, it is clear that the federal statute wanted to exclude any coverage of a legal person, by explicitly referring to natural persons and not to individuals, as the CCA 1974 did in the UK.
64.
Last amendment was in November 2012. http://www.roxburghe.com/OFT664Rev_Debt_collection_g1.pdf, last visited on 19.12.2014.
65.
The Guidance, Section 1.4.
66.
The Guidance, Purpose, Sections 1.6–1.9. The document mentions that some of the practices that are labled as imporper of unfair may also constitute criminal offenses.
67.
The reason is that the Consumer Credit Act 1974 made differences between main and ancillary credit businesses with respect to their types of licenses. As such difference would not be justified in relationship with the debtor, especially as both the creditor and his agents could employ the same tactics in order to recover the debt, the OFT took the right position of imposing same standards for all those dealing with debt collection, personally or via intermediaries. Following the same logic, the guidelines extended the protections offered to debtors to those individuals who are wrongly pursued for a debt, despite the fact that in such case they would not qualify as debtors under the law.
68.
By American counterpart here the book refers to the federal FDCPA, for most of the state laws (mini-FDCPAs) include the original creditor in the definition of the debt collector as well.
69.
CONC, Sections 7.3–7.4, restating the previous provisions of the Guidance, Overreaching Practices of Fair Business Practice, Sections 2.1 and 2.2.
70.
CONC, Section 7.13.13, restating in more general terms the previous obligation of Section 2.5 of the Guidance. Section 2.5, reads as follows: “Licensed businesses cannot ignore the unfair or improper practices of others instructing them or acting on their behalf. [..] However, we would expect to see that care has been taken in the selection process, complaints about such third parties are properly investigated, and effective action is taken as necessary to ensure that similar problems do not recur.”
71.
The Guidance clearly mentioned the nonexhaustive character of its examples in the Forward, while CONC does not make such assertion. However, this cannot be construed in the sense that the examples offered in CONC are exhaustive, the wording of the new regulation suggesting that any practice that causes similar effects would fall under its coverage. In addition, the fact that most of CONC’s provisions are restatements of the previous Guidance’s provisions is a good indication that the principles behind the Guidance are still valid.
72.
A CPA authorizes the creditor to withdraw sums from the debtor’s account, subject to agreed terms, but not through direct debit, standing order or similar payment mechanisms.
73.
CONC, Sections 7.6.1 and 7.6.2, restating and expanding the previous provisions of Section 3.9.m. (i) of the Guidance. Examples of CPA’s misuse are debiting higher or lower amounts than agreed, adding default fees or other sums, debiting before or after the due date for payment.
74.
CONC, Sections 7.6.3, 7.6.4., 7.6.5, 7.6.6, 7.6.7, 7.6.8 (1), 7.6.9, 7.6.10 and 7.6.11, restating and expanding the previous provisions of Section 3.9.m. (ii) of the Guidance. Examples of unreasonable use are seeking payment before income or other funds may reasonably be expected to reach the account, seeking payment when there is reason to believe that there are insufficient funds in the account. For details, see the Guidance.
75.
CONC, Section 7.6.1 (1) (a), restating the previous provisions of Section 3.9.m. (iii) of the Guidance. This provision was clearly meant to ensure that consumers entering into payday loan agreements receive sufficient and appropriate a priori information in order to be able to give an informed consent. It is doubtful whether such disclosure requirements could really benefit consumers in need for money.
76.
Sections 7.6.16 and 7.6.17 of CONC, restating and expanding the previous provisions of Section 3.9.m. (iv) of the Guidance.
77.
FCA (2014), p. 4.
78.
Hudson (2009), p. 58.
79.
“[M]any people we interviewed had low awareness of the help and support available to them […] so helping people get the right advice and solution they need […] is vital.” FCA (2014), p. 46.
80.
CONC, Section 7.3.
81.
CSA’s Code of Practice, April 2014, http://www.csa-uk.com/assets/documents/compliance-and-guidance/code_of_practice.pdf, last visited 19.12.2014.
82.
The Introduction of the CSA’s Code of Practice, April 2014, http://www.csa-uk.com/assets/documents/compliance-and-guidance/code_of_practice.pdf, last visited 19.12.2014, p. 5, states: “Members agree to comply with this Code of Practice by virtue of Membership. We will ensure that Members found to be acting contrary to this Code of Practice will be dealt with in accordance with out disciplinary procedures.” However, in the chapter dedicated to “Complaints Procedure” (p. 26), nothing more than “appropriate action” is mentioned in case of breach, without further details concerning what appropriate action would be.
83.
Since no case was reported, one may assume that such document does not play a meaningful role within the general regulatory framework available in the UK.
84.
Use, format and content of standard debt collection communication. Guidance document (December 2013).
85.
Infra Sect. 6.2.3.1.
86.
Infra Sect. 6.2.3.3.
87.
The Procedure, Section 6.1.2.
88.
Decree No. 96-1112 regulating the activities of persons involved in amicable recovery of debts on behalf of others (in French original: Décret n° 96-1112 du 18 décembre 1996 portant réglementation de l’activité des personnes procédant au recouvrement amiable des créances pour le compte d’autrui.) (1996). It was abrogated in 2012 and inserted without modifications in the Code for Civil Procedure, Chapter 4: Persons responsible for amiable debt collection. See: 783 (2012).
89.
Wise.
90.
According to the Latin maxim used to interpret statutes in France: Ubi lex non distinguit, nec nos distinguere debemus. Steiner (2010), p. 80.
91.
783 (2012), Art. R. 124-1.
92.
783 (2012), Art. R. 124-2.
93.
783 (2012), Art. R. 124-3.
94.
Cohn. Also p. 70: “Thus, in the United States the engagement of collection agencies appears to be an extra-legal step, most commonly used, though fraught with abuse, which is taken before or substituted for, the legal means of a law suit to enforce a duty to pay. The discipline of comparative law often reveals that most diverse methods can be applied for achieving the same goal. In West Germany, for example, the institution of a debt collector is virtually unknown.
The following pages shall describe and evaluate a very simplified procedure, used there, to obtain an enforceable title, the so-called “Reminder Procedure” (Mahnverfahren), which may well be the reason why they have no debt collectors” and pp. 78–79: “Thus, the Mahnverfahren in its new form does appear to be a quick, simple and inexpensive way to obtain an enforceable title. Although venue for it may now lie in a court far away from the adversary's residence, he is still protected by the necessity of being served and by the easy way in which he may force, through contestation, the proceeding to become a full-fledged normal law suit to be dealt with by the court which would have both, jurisdiction and venue if the claim had been pursued, from the start, outside the Mahnverfahren. An American petitioner should keep in mind that though he may have no general venue within the Federal Republic of Germany, he still can avail himself of the Mahnverfahren by petitioning the local court (Amstgericht) Schoneberg in Berlin. The result seems to confirm the assumption made at the end of the Introduction that the Mahnverfahren has eliminated the need for debt collectors in West Germany.”
95.
Rainer.
96.
Tajti (2013), pp. 105–106, footnote 308.
97.
Tajti (2013), p. 110.
98.
In German original: Gesetz über außergerichtliche Rechtsdienstleistungen (Rechtsdienstleistungsgesetz—RDG), was adopted on 12th of December 2007 and into force from 1st of July 2008.
99.
http://www.rechtsdienstleistungsregister.de/en/index.php?button=Voraussetzungen&sess_clean=1, last visited 02.10.2014.
100.
Michael Kleine-Cosack, Rechtsdienstleistungsgesetz—RDG—Kommentar (C.F. MüllerVerlag, Heidelberg, 2008) at 143, cited by Tajti (2013), p. 113, footnote 330.
101.
Law no. 677/2001 regarding the protection of people with respect to processing personal data and the free circulation of such data (In Romanian original: Legea pentru protectia persoanelor cu privire la prelucrarea datelor cu caracter personal si libera circulatie a acestor date), published in the Official Gazette of Romania, Part I, no. 790/12.12.2001.
102.
Lege privind procedura colectarii debitelor (English translation: “Law Concerning Debt Collection Procedure”) (2010).
103.
The World Bank (2009).
104.
The World Bank (2009), p. 7.
105.
The World Bank (2009), p. 8.
106.
Urban.
107.
See the document in Annexes 1.
108.
Annex 2.
109.
Annex 3.
110.
(2010) Chapter IV, Art 9–11.
111.
In Romanian: Asociatia de Management al Creantelor Comerciale. The Code of Conduct is available online, in Romanian on the Association’s website: www.amcc.ro/library/files/codul_de_conduita_amcc.pdf, last visited 19.12.2014.
112.
Cirkot v. Diversified Systems Inc., 839. Supp. 941 (D.Conn. 1993), where the court held that a third party debt collection agency qualifies as debt collector for the purposes of FDCPA.
113.
Heintz v. Jenkins, 514 U.S. 291 (1995) and Garret v. Derbes, 1110 F. 3d 317 (5^th Cir. 1997). In the latter case, the attorney received 639 debt collection cases, which constituted less than 1 % of the attorney’s practice. However, the court held that he qualified as a debt collector for he regularly collected debts due to another. Similarly, in Scott v. Jones, 964 F.2d 314, 316 (4^th Circ. 1992), where, given that 70–80 % of the attorney’s fees were generated from collection cases and the attorney filed around 4000 cases per year, during a 4 year period, the court held the attorney qualified as a debt collector. Since the FDCPA did not define what “regularly” means, the standard applied varies from case to case, based on the analysis of multiple factors (see ruling in James v. Wadas, F.3d, 2013 WL 3928631 (10^th Cir. 2013). For example, a different outcome was reached in Mertes v. Devitt, 734 F. Supp. 872 W.D. Wis., 1990, where the attorney sent a letter to a consumer requesting payment on behalf of his client. The letter did not comply with the requirements of the FDCPA, but since in the past 10 years the attorney was only involved in fifteen collection cases on behalf of the client, out of which only two cases in the past 4 years, the court held he does not qualify as a debt collector. See also the list of cases and discussion in Edelman (2013), pp. 9–15.
114.
Orenbuch v. North Shore Health Systems, Inc., 250 F. Supp. 2d 145 (e.D.N.Y. 2003). In the mentioned case, the collection department of a hospital acted under a different name from that of the hospital, which led the court to consider it a separate entity for the purposes of the FDCPA.
115.
Munoz v. Pipestone, 397 F.Supp. 2d 1129, 1133 (D. Minn. 2005). The court held that a debt buyer who never communicated with the consumer qualifies as debt collector, where the debt buyer had an agreement with a collection agency that it would collect the purchased debt and the buyer’s principal business was debt collection. For a similar decision: Olvera v. Blitt & Gaines, P.C., 431 F.3d 285 (7^th Cir. 2005). However, from the reasoning of the courts, it appears that the matter is far from being settled, for example, in case the debt buyer does not have as principal business debt collection but financial investment (like major debt buyers), which might lead to inconsistent or even contradictory outcomes, in the absence of a clear definition. For example: Scally v. Hilco Receivables, LLC, 392 F. Supp. 2d 1036, N.D. III. 2005. The case concerned a debt buyer of defaulted credit card debt at high discounts, which hired collection agencies to collect the debt and did not engage in the collection of its debts, although it was accepting direct payments from pursued debtors, if they insisted. The court held Hilco did not qualify as debt collector under FDCPA. On the other hand, assignees (before default), such as car finance companies or mortgage servicing companies, will not qualify as debt collectors. For a detailed list of cases concerning the debt collector status of bad debt buyers, see: Edelman (2013), pp. 7–9.
116.
An exception would be the purposes of 15 USC 1692f(6) (Section 808(6)).
117.
Goldstein v. Chrysler Financial Co., LLC, 276 F. Supp. 2d 687 (E. D. Mich. 2003).
118.
For a list of cases, see: Edelman (2013), pp. 16–17.
119.
The Advisory Opinion “Repossession Companies Acting as Collection Agencies” issued in 2000 by Colorado Attorney General: https://www.coloradoattorneygeneral.gov/sites/default/files/uploads/1-3-00%20Repossession%20Companies%20as%20Collection%20Agencies.pdf, last visited on 05.10.2014. According to this opinion, “if a repossession company requests the debtor to make payment on the debt, whether to prevent the immediate repossession of the collateral or otherwise, it is collecting or attempting to collect a debt.” Hence, “such repossession companies must obtain a Colorado collection agency license.” Also: Section 45-1052 of Nebraska FDCPA, which considers self-help repossession to be an abusive collection practice if it happens with breach of peace, as well as Sections 61-18A-3 and 61-18-5 of New Mexico FDCPA, which establish the same licensing and penalties regime and for both collection agencies and repossessors.
120.
For example: Section 1788.2(c) of Rosenthal Fair Debt Collection Practices Act, California Civil Code, Section 1788 et seq.; Sec. 36a-645 (2). (Formerly Sec. 36-243a). Definitions of Connecticut’s Creditors’ Collection Practices Act (CCPA)—however, this act deals only with creditors, since collection agencies are covered by a separate statute, the Consumer Collection Agencies Act; Section 28-3814(b)(3) of District of Columbia Fair Debt Collection Practices Act; Section 7-101(c) of Maryland Fair Debt Collection Statute, MD Code, Business Regulation; Original creditors collecting their own debts in Colorado, are not included in the Colorado FDCPA but in the Colorado’s Uniform Consumer Credit Code (Section 5-5-202.(4)).
121.
CONC, Section 7.1.1.
122.
CONC, Section 7.1.3 (1), requires that firms ensure that their employees and agents comply with CONC and must take reasonable steps to ensure that other persons acting on the firm’s behalf act in accordance with the firm. However, the liability for their actions will be primarily with the firm benefitting from their services.
123.
Art. R. 124-1 of 783 (2012).
124.
RDG, Section 2 (2).
125.
RDG, Sections 11 and 12 concerning the special expertise required and the registration requirements.
126.
Decision 6 U 695/14 of Oberlandesgericht München.
127.
Art 4 of Project Law.
128.
Defined in Art 3 d) of Project Law as a division of a banking institution or commercial enterprise, which acts in the area of debt collection and police the payments to the entities they represent.
129.
Defined in Art 3 e) of Project Law as any person employed by a collection agency, including members of internal debt collection departments, habitually collecting or trying to collect, directly or indirectly, due or allegedly due debts.
130.
Defined in Art 3 c) of Project Law as a specialized enterprise in amicable collection of debts, from both legal and natural person debtors.
131.
Section 40-12-80 of Alabama Fair Debt Collection Practices Act; Section 32-1021 (A) of Arizona Fair Debt Collection Practices Act; Section 17-240-301 of Arkansas Fair Debt Collection Practices Act; Section 5-2-301 of Colorado Fair Debt Collection Practices Act; Section 36a-801 of Connecticut Fair Debt Collection Practices Act; Section 2301 (11) of Delaware Fair Debt Collection Practices Act; Section 559.553(1) and (2) of Florida Fair Debt Collection Practices Act; Section 7-3-8 of Georgia Fair Debt Collection Practices Act; Section 443B-3.5 of Hawaii Fair Debt Collection Practices Act; Section 26-2223 of Idaho Fair Debt Collection Practices Act; IC 25-11-1-3—Section 3. (a) of Indiana Fair Debt Collection Practices Act; Section 11031 of Maine Fair Debt Collection Practices Act; Section 7-301 of Maryland Fair Debt Collection Practices Act; Chapter 93, Section 24A of Massachusetts Fair Debt Collection Practices Act; Section 904 (1) of Michigan Fair Debt Collection Practices Act; Section 332.33 of Minnesota Fair Debt Collection Practices Act; Section 45-601 of Nebraska Fair Debt Collection Practices Act; NRS 649.075 (1) of Nevada Fair Debt Collection Practices Act; Section 61-18A-5 (A) of New Mexico Fair Debt Collection Practices Act; Section 62-20-15 (a) of Tennessee Fair Debt Collection Practices Act; Section 396.101 of Texas Fair Debt Collection Practices Act; RCW 19.16.110 of Washington Fair Debt Collection Practices Act; Section 47-16-4 (a) of West Virginia Fair Debt Collection Practices Act; Section 33-11-102 of Wyoming Fair Debt Collection Practices Act.
132.
Rosenthal (2013), pp. 319 and 321.
133.
RDG, Section 11 (4).
134.
Section R124-2 (3) of 783 (2012).
135.
In the UK, the obligations to be complied with for obtaining a license is referred to as “fitness test.” Rosenthal (2013), p. 326.
136.
Criminal liability may arise under some US state laws such as Section 26-2238 of Idaho FDCPA, for failure to maintain a trust account for depositing the collected amounts; Section 11040 of Maine FDCPA considers a class E crime any debt collection operations without appropriate license; Sec. 28 of Massachusetts FDCPA punishes with imprisonment for up to 3 months any debt collection operations in the absence of license, posted bond; Section 6 of Michigan FDCPA states that any willful violation of the Act may attract imprisonment for not more than a year; Section 61-18A-6 of New Mexico FDCPA considers forth degree felony or misdemeanor any debt collection operations performed without appropriate license. Operating without a license is also a criminal offense in the UK. Finlay (2009), p. 79.
137.
For example: Section 36a-807 of Connecticut FDCPA, Section 7-3-23 of Georgia FDCPA, Section 26-2244 of Idaho FDCPA, 445.253, Sec 3 of Michigan FDCPA, Section 649.390 of Nevada FDCPA, or Section 13 (3) of RDG.
138.
For example, the Settlement Agreement between Colorado Attorney General and Out-of-State Attorneys and Debt Collection Law Firms, by which the latter were either permanently banned or temporarily banned from collecting debts in Colorado, together with 200,000 dollars of costs and fees to Colorado, available online at: https://www.coloradoattorneygeneral.gov/sites/default/files/press_releases/2010/03/09/jbc_consent_decree.pdf, last visited 05.10.2014.
139.
Section 39 A of CCA 1974; Section 20 of RDG; Section R124-7 of 783 (2012).
140.
Section 32-1053 of Arizona FDCPA; Sections 17-24-104 (b) and 17-24-307 of Arkansas FDCPA; Section 36a-804 of Connecticut FDCPA; Section 559.730 (1) of Florida FDCPA; Sections 7-3-24 and 7-3-25 of Georgia FDCPA; Section 26-2227 of Idaho FDCPA; Section 11051 of Maine FDCPA; Section 7-308 of Maryland FDCPA; Section 332.40 of Minnesota FDCPA; Section 45-6512 of Nebraska FDCPA; Section 649.395 of Nevada FDCPA; Section 62-20-115 of Tennessee FDCPA; Sections 396.301 and 396.302 of Texas FDCPA; Section 33-11-106 of Wyoming FDCPA; Sections 32 and 33 of CCA 1974 or Section 14 of RDG.
141.
In the US, states fines imposed by the state vary between 500 dollars (93-section 28 of Massachusetts FDCPA and 445.256 Sec. 6 of Michigan FDCPA), 1000 dollars (Section 559.730 (5) of Florida FDCPA; Section 33-11-106 of Wyoming FDCPA), 5000 dollars (Section 7-3-26 of Georgia FDCPA; Sections 26-2227 and 26-2233 of Idaho FDCPA; section 11053 of Maine FDCPA) and 10,000 dollars (445.256 Sec. 6 of Michigan FDCPA) for each violation. However, these administrative fines and penalties do not affect the right of aggrieved consumers to seek compensation through private action as provided by both federal and state FDCPAs. Maximum administrative fines allowed for in the UK (Section 39 A of CCA 1974) and Germany (Section 20 (3) of RDG) are 50,000 pounds, respectively euros, while in France, the maximum will only reach 3000 euros (Section R124-7 of 783 (2012), corroborated by Section 131-13 (5) of the Criminal Code). However, in the UK, financial penalties are imposed in rare cases. See: Rosenthal (2013), p. 336.
142.
This particular legal gap was of concern for the UK where former OFT’s powers were increased to allow the suspension of the license with immediate effect in cases where there was an urgent need to protect the interests of consumers. Rosenthal (2013), p. 332.
143.
For example, the wording of the Surety Bond form required by the Consumer Protection Section—Collection Agency Regulation of Colorado Department of Law, stating that “the purposes of this bond are to insure […]that licensee will […]make payment of the proceeds of all collections less charges for collection in accordance with the terms of the agreements made between said licensee and all of its clients […].” http://www.coloradoattorneygeneral.gov/departments/consumer_protection/uccc_car/car/licensing_requirements_and_application/surety_bond_form, last visited 05.10.2014.
144.
Section 26-2233 of Idaho FDCPA; Section 909 of Michigan FDCPA; Section 649.355 of Nevada FDCPA; Section 19.16.240 of Washington FDCPA. Without requiring debt collectors to hold a separate account, Section 17-24-104 (b) of Arkansas FDCPA will suspend or revoke their license for not returning the collected amounts to the original creditors, while according to Section 26-2238 of Idaho FDCPA, a person may face 5-year imprisonment for not returning the collected amounts.
145.
For Germany, see: Section 12, Third Paragraph of RDG, requiring a 250,000 euro insurance for each ensured event, and for France see Art R124-2 of 783 (2012).
146.
Potach (1978), p. 899.
147.
As positive obligations, the FDCPA states that the debt collector must identify himself, stating his purpose, (confirming or correcting location information concerning the consumer) and, if expressly requested, identify his employer. In addition, the debt collector must contact only the consumer’s attorney as soon as he is aware that the consumer is represented by one. This obligation is mitigated though by debt collector’s possibility of contacting the consumer when the attorney fails to respond within a reasonable period of time or if the attorney has consented to debt collector’s direct communication with the consumer. See Lucas and Harrell (2000), 15 USC 1692 (Section 804) (1) and (6) and (Section 805) (a) (2).
148.
Lucas and Harrell (2000), 15 USC 1692 (Section 804) (2) (3) (4) and (5). Among the negative obligations, the FDCPA mentions the obligation of the debt collector: not to disclose to any third parties that the consumer owes any debt; to refrain from communicating with any person other than the consumer more than once, unless so requested by such person; not to communicate by postcard or resort to any kind of mailing that would suggest that the communication relates to the collection of a debt. The legal provision provides the debt collector with some space by adding a qualification to the negative obligation mentioned. Thus, the debt collector will be entitled to contact the third party more than once if it “reasonably believes” that the response of such person was erroneous or incomplete and that such person now has correct or complete location information. Even so, from the wording of the legal provision it results that such possibility comes with a burden of proof, as in case of a complaint, it is the obligation of the debt consumer to prove the reasonability of his believes. Last but not least, one must mention that the positive obligation of communicating solely to the consumer’s attorney is doubled by the negative obligation of not communicating with other persons than the attorney.
149.
Lucas and Harrell (2000), 15 USC 1692 (Section 802) (a). Congressional findings mentioned, among others, “abusive debt collection practices contribute to […] invasions of individual privacy.”
150.
Lucas and Harrell (2000), 15 USC 1692 (Section 802) (c). Among the congressional declarations of purpose regarding the implementation of the FDCPA, the US lawmakers stated that “means other than misrepresentation or other abusive debt collection practices are available.” Therefore, the FDCPA did not set out to ban debt collection and is not meant to affect the right of debt collectors to collect the debt on behalf of the creditor, but merely to prevent, deter or stop abusive practices.
151.
For the purposes of the section referring to communications, the FDCPA has adopted a broader definition of “consumer,” which includes all the enumerated categories. See Lucas and Harrell (2000), 15 USC 1692 (Section 805) (d).
152.
FDCPA, 15 USC 1692 (Section 805) (b).
153.
FDCPA, 15 USC 1692 (Section 802) (a).
154.
The general acceptance is that “prior consent” of the consumer must be expressed voluntarily and directly to the collector. Thus, any contract term that establishes an a priori agreement of the consumer to communications concerning debt collection does not qualify as “prior consent” under the FDCPA. In this regard, see H.R. Rep. No. 95-131, 95^th Cong., 1^st Sess. 5 (1977) quoted by Potach (1978), p. 901, footnote 46.
155.
FDCPA, 15 USC 1692 (Section 805) (b).
156.
FDCPA, 15 USC 1692 (Section 805) (b).
157.
FDCPA, 15 USC 1692 (Section 805) (a) (2).
158.
FDCPA, 15 USC 1692 (Section 805) (c).
159.
FDCPA, 15 USC 1692 (Section 805) (c) (1).
160.
FDCPA, 15 USC 1692 (Section 805) (c) (2) and (3).
161.
FDCPA, 15 USC 1692 (Section 805) (a) (1).
162.
FDCPA, 15 USC 1692 (Section 805) (a) (1) 2^nd thesis.
163.
FDCPA, 15 USC 1692 (Section 805) (a) (3).
164.
FDCPA, 15 USC 1692 (Section 808) (7).
165.
FDCPA, 15 USC 1692 (Section 808) (8).
166.
FDCPA, 15 USC 1692 (Section 804) (4) and (5).
167.
Communication through standard debt collection letters was subjected to additional guidance by the CSA and DBSG in association with the OFT, and it is addressed further in this section.
168.
See the general principle provided for in CONC, Section 7.5.2, restated in Section 7.13.4 referring to proceedings meant to validate the debt. A similar ban is specifically mentioned in Section 7.9.11, referring to the case of a firm that would either make contact with the occupier of particular premises (assuming, without further investigation that the occupier is the actual person sought) or send a letter to all persons sharing the same name and date of birth. Also, Chapter B, Section 1.2, 2.3-2.7 and Chapter C, Section 4.1-4.4 of the Standard Letter Guidance.
169.
CONC, Section 7.9.6.
170.
CONC, Section 7.9.7. (1) and (2).
171.
CONC, Section 7.10.3. The Standard Letter Guidance extends the notion of vulnerable debtors to include also debtors who have long-term or terminal illness or other disabilities that impact on their ability to pay. Also, Chapter C, Section 3.1 and 3.2 of the Standard Letter Guidance.
172.
CONC, Section 7.12.2.
173.
Examples of reasons for which the debt collectors are entitled to refuse contact with the debtor or his representative are provided in Section 7.12.3 (2), (3), (4). The list is not exhaustive, and other similar situations could justify the debt collector’s refusal, on a case-by-case basis.
174.
CONC, Section 7.9.4.
175.
CONC, Section 7.9.14 (2). The provision was also contained in the previous Guidance, Section 3.13. (b). One situation of particular vulnerability referred to there was when the debtor has proven with a doctor’s certificate that he is ill.
176.
CONC, Section 7.9.14 (3). The Section, however, allows such visits in the case the debtor has expressly consented to them.
177.
CONC, Section 7.9.4.
178.
CONC, Section 7.9.12 (1) restating Section 3.13.(a) of the previous Guidance. According to the guidance, it did not suffice to simply inform the debtor about the visit of field agents unless he will also be informed of the intended purpose of the visit.
179.
CONC, Section 7.9.12 (2), restating Section 3.13. (g) of the previous Guidance. The wording of the Guidance, maintained by the CONC, refers to “adequate” notice. OFT’s explanation on the meaning of the term “adequate” was that it is going to vary from case to case based on individual circumstances, and there is no reason why such explanation would not be valid under the new regulation. According to CONC, Section 7.9.13, however, the notice requirement may be waived by the debtor provided the debtor is happy to speak with the debt collector. Since “happy” is not exactly a legal term, but it implies more than mere agreement—maybe enthusiasm as well—the task of determining the debtor’s demeanor is most likely left to the courts.
180.
CONC, Section 7.9.14 (5). This section partially restates the provisions of Section 3.13.(c) of the previous Guidance.
181.
CONC, Section 7.9.14 (4), restating the previous Guidance’s Section 3.13(d). This is, evidently, one of the situations that would qualify as a criminal offense as well.
182.
CONC, Section 7.9.14 (6) restating Section 3.13(e) of the previous Guidance. One may find of particular interest the need of “reasonableness” in debtor’s request towards the debt collector. Such a standard might implicate not only that the debt collector has a legitimate right to visit the debtor and make himself heard but also that the debtor may not simply cease communication at any point, as it does in its American counterpart. The position adopted by the former OFT and maintained by the current FCA seems to be that as long as it does not impeach the debtor, a debt collector is allowed to do his job and pursue the recovery of the debt. In the search for balance between the creditor’s interests and the debtor’s interests, it appears that the UK system gives a narrower interpretation to the debtor’s right to cease communication.
183.
Office for Fair Trading (2003), Section 3.13. f), p. 44.
184.
CONC, Section 7.9.1. The same requirement is to be found in the Standard Letter Guidance, Chapter A, Section 2.1.
185.
CONC, Section 7.9.7, corroborated by Section 7.9.8 (1) and (2). Also: Chapter B, Section 1.3 of the Standard Letter Guidance: “unless the debt collection agency is reasonably certain it is sending letter to the actual customer, it should use correspondence that does not refer to the debt.”
186.
Chapter B, Section 1.7 of the Standard Letter Guidance.
187.
CONC, Section 7.9.5.
188.
Chapter G, Sections 1.1 and 2.1 of the Standard Letter Guidance. With respect to text messages, the guidance also takes into account the privacy risk and the possible breach of data protection laws represented by them for users of smart phones, which devices usually display the content of the messages on their screens, even if the phone is locked. However, text messages are deemed proper for encouraging the debtor to make contact, without indicating the nature of the business or demanding payment.
189.
783 (2012), Art. 124-4.
190.
783 (2012), Art. 124-6.
191.
783 (2012), Art 124-5.
192.
FDCPA, 15 USC 1692 (Section 806).
193.
Potach (1978), p. 902.
194.
FDCPA, 15 USC 1692 (Section 806) (1).
195.
FDCPA, 15 USC 1692 (Section 806) (2).
196.
FDCPA, 15 USC 1692 (Section 806) (3).
197.
FDCPA, 15 USC 1692 (Section 806) (4).
198.
FDCPA, 15 USC 1692 (Section 806) (5).
199.
FDCPA, 15 USC 1692 (Section 806) (6). The text also established an exception from the abovementioned prohibition consisting in the communications allowed under Section 804.
200.
For a detailed discussion concerning the “zone of privacy,” see footnote 60 in Potach (1978), p. 903.
201.
Potach (1978), p. 903, footnote 59. Potach mentions several constitutional challenges against these restrictions based on the First Amendment during the legislative hearings alleging that the debt collector’s communication should be protected as commercial speech. However, the author mentions two court cases contemporary with the enactment of the FDCPA, which seem to reject such objections. On the one hand, in Millstone v. O’Hanlon Reports, Inc., 528 F. 2d 829 (8^th Circuit, 1976), which concerned similar challenges for restrictions imposed by the Fair Credit Reporting Act, the court rejected them by holding that commercial speech interests must yield to the consumer’s right to privacy protected by the statute, while on the other hand, in Virginia State Bd. Of Pharmacy v. Virginia, 421 U.S. 809 (1975), the court rejected the debt collector’s challenges holding that “the public interest in proscribing harassment of a debtor through contact with his employer about an obligation to a third party simply transcends a finance company’s interest in choosing this particular means of collecting a debt.” For Potach, the fact that the FDCPA protects the consumer’s right to privacy like the Fair Credit Reporting Act, the reasoning of the 8^th circuit in Millstone, could only provide additional support for the conclusion that the debt collector’s first amendment claims must yield to the debtor’s right to privacy.
202.
Chapter 7, Sect. 7.1.1.
203.
A detailed list of what constitutes and does not constitute harassment, explained in a nontechnical language, can be found here: http://www.adviceguide.org.uk/england/debt_e/debt_action_your_creditor_can_take_e/harassment_by_creditors.htm, last visited on 19.12.2014.
204.
To take some examples, according to UK legislation, harassment or abusive behavior consists of putting undue pressure on the debtor or relevant third parties and can occur when contacting debtors at unreasonable times (CONC, Section 7.9.4, restating the previous provision of Section 3.7. a of the Guidance); pressuring the debtor to raise funds by selling his property or by taking on further loans (CONC, Section 7.3.10 (3), restating the previous provision of Section 3.7.b of the Guidance); employing multiple debt collection businesses that are seeking to recover the same debt at the same time (CONC, Section 7.13.10, restating the previous provision of Section 3.7. c of the Guidance); seeking to recover a debt without ensuring that the data is accurate, which results in pursuing the wrong person/an inexistent debt/an incorrect amount (CONC, Section 7.13.4, restating the previous provision of Section 3.7.e of the Guidance); pressuring the debtor to pay more than he can reasonably afford without experiencing undue difficulty or to pay within an unreasonably short period (CONC, Section 7.3.10 (2), restating the previous provision of Section 3.7.i of the Guidance); acting in a threatening manner towards the consumer (CONC, Section 7.9.14 (1); the section partially restates the previous provision of Section 3.7. l of the Guidance); ignoring claims that the debts have been settled or are disputed and continuing to make demands for payment without providing justification and/or evidence as to why the claims are not valid (CONC, Section 7.5.3, restating the previous provision of Section 3.7.o of the Guidance); disclosing or threatening to disclose debt details to third parties (CONC, Section 7.9.6, restating the previous provision of Section 3.7. p of the Guidance); publicly humiliating the debtor (CONC, Section 7.9.7, partially restating the previous provision of Section 3.7. q of the Guidance); either deliberately or negligently (by using postcards or other correspondence, leaving voicemails, asking others to pass messages to debtors, posting messages on social networking sites) (the examples were specifically nominated in the Guidance, and, although not restated in the CONC, there is no reason to consider them invalid, which is why they were mentioned here as well); failing to suspend the pursuit of recovery of a debt under circumstances under which it is clear that the debtor might not have the mental capacity to make relevant decisions regarding the management of the debt and/or engage in the debt recovery process at that time (CONC, Sections 7.2.3 and 7.10.1. (1), restating the previous provision of Section 3.7 r of the Guidance. This particular provision benefited from an extensive comment given by the OFT, in the previous Guidance, pp. 28–30, which comment is still relevant under the CONC as well).
205.
Ferguson v. British Gas [2009] EWCA Civ 46 (Court of Appeal).
206.
In the mentioned case, the aggrieved party claimed that British Gas's behavior was unlawful under the Protection from Harassment Act, which created a civil and a criminal offense of harassment. British Gas said that the behavior was not serious enough to amount to harassment and that as a company, rather than an individual, it could not be caught by the legislation. It argued that Ferguson would have to identify an individual directing the activity in order for harassment to be demonstrated. British Gas asked the Court of Appeal to throw the case out before it reached a full hearing because it had no basis. The Court refused and said there was a case to answer. British Gas settled the case. See: OUT-LAW.COM (2009). The case attracted the attention of recent scholarly works as well: Ramsay (2012), pp. 474–476, as an example of “persistent aggressive collection practices,” a sign that such practices are finally becoming a concern and a topic for discussion in the European academia.
207.
Art 9, Para. 1 and 2 of Project Law.
208.
By employing this tactic, original creditors try to benefit from two advantages: (1) they send a clear message to the debtor that the collection effort has reached a new phase and will be dealt with in a serious manner by a professional team, and (2) they insulate themselves from the possible negative effects of collection attempts on their image. Finlay (2009), p. 213.
209.
FDCPA, 15 USC 1692 (Section 807), pp. 8–9.
210.
Griffith (2012), p. 180. “Because the sixteen examples are not exhaustive, a collector may violate the statute even though its conduct does not fall within any of the specifically enumerated violations.”
211.
FDCPA, 15 USC 1692 (Section 807) (2).
212.
FDCPA, 15 USC 1692 (Section 807) (4). Such threats are allowed though, provided that they are lawful and there is the debt collector’s actual intent to put them into practice.
213.
FDCPA, 15 USC 1692 (Section 807) (8).
214.
FDCPA, 15 USC 1692 (Section 807) (9).
215.
FDCPA, 15 USC 1692 15 USC 1692 (Section 807) (1).
216.
FDCPA, 15 USC 1692 (Section 807) (3).
217.
FDCPA, 15 USC 1692 (Section 807) (3). This provision has recently attracted more and more attention as consumers complain that they are misled by collection letters printed on law firms’ letterheads. These make them believe that an attorney is now involved in the procedure or that litigation is imminent. See Griffith (2012), p. 181.
218.
FDCPA, 15 USC 1692 (Section 807) (14).
219.
FDCPA, 15 USC 1692 (Section 807) (10).
220.
FDCPA, 15 USC 1692 (Section 807) (11). The set of data required to be disclosed by the debt collector is also known as the “Mini Miranda” due to the similarities with the disclosure requirements necessary to be provided by police officers in case of an arrest. Debt collectors are strongly advised to recite it after the initial disclosure. For example, “the 4^th Circuit held that the Mini Miranda applies to all communications, including any follow-up correspondence.” Carroll v. Wolpoff & Abramson, 961 F.2d 459, 461 (4^th Cir. 1992) (finding section 1692 e(11) “makes no distinction between initial and subsequent communication. The “Mini-Miranda” Warning, 15 USC Section 1692e(11) (2006), does not apply to a formal pleading made in connection with a legal action and applies solely to communication with consumers, not their attorneys.” See Sartip (2012) 5th recommendation, p. 3.
221.
FDCPA, 15 USC 1692 (Section 807) (12).
222.
FDCPA, 15 USC 1692 (Section 807) (13).
223.
FDCPA, 15 USC 1692 (Section 807) (15).
224.
FDCPA, 15 USC 1692 (Section 807) (16).
225.
FDCPA, 15 USC 1692 (Section 812).
226.
FDCPA, 15 USC 1692 (Section 812).
227.
For a detailed discussion and analysis of extensive case law in this regard, see: Griffith (2012), pp. 181–193.
228.
Griffith (2012), pp. 206–211.
229.
“Several circuits agree that the status regulates communications from a collector to a consumer attorney, but the 9^th Circuit rejects that approach, ruling instead that the statute does not apply to false representations made to an attorney because the attorney protects the consumer.” For details and various cases on the issue, see Griffith (2012), pp. 216–222.
230.
One can only agree with Griffith in this regard, who rightfully underlines the fact that, in case one would adopt the contrary interpretation supported by the 9^th Circuit (see supra note 229), the statute would be shifted from its initial purpose and would protect the deceptive collector instead of the consumer, even if the latter is represented. “This limitation on the collector’s direct contact does not provide a sanctuary for the collector, but instead insulates the consumer from interaction with the collector.” For full opinion, see Griffith (2012), p. 219.
231.
Griffith (2012), p. 221.
232.
FDCPA, 15 USC 1692 (Section 808) (6) (A), (B) and (C).
233.
The doctrine emphasized that in practice it is not really easy to establish such a connection, as usually the question comes down to determine whether the collector would have contacted the debtor in case there was no outstanding debt. In the end, it is the courts’ duty to interpret the communication between the debtor and the debt collector. The case law seems to confirm the abovementioned difficulty. For example, in a case in which a mortgage servicer’s letter simply reminded the consumers their obligation to make their next payments on time, the court had to find that there was no violation of the FDCPA because the communication did not qualify as being in connection with the collection of a debt under the definition provided by the statute. As there was no default when the servicer sent the letter, the consumers could not prove the connection between the letter received and the debt collection. For details and similar cases, see: Griffith (2012), pp. 193–198.
234.
For abusive debt collection practices that were generated by the employment of technological advancements, see infra, Chap. 7, Sect. 7.2.1.6.
235.
CONC, Section 7.7.3.
236.
CONC, Section 7.9.2. Section 7.9.3 (1) provides one example of such misleading communication: leaving a calling card to the consumer’s address that states or implies that he has missed a delivery and encourages him to make contact.
237.
CONC, Sections 7.15.6 and 7.15.7, restating the previous provisions of Section 3.15 b of the Guidance.
238.
Chapter F, Section 2.1 of the new Standard Letter Guidance. Examples of terms that would overstate the nature of business are the using of terms such as enforcement, legal, solicitors, in the trading names, when there is no appropriately qualified staff. Such actions would also qualify as criminal offense.
239.
Chapter E, Section 3.1 of the new Standard Letter Guidance. For example, the font size should not be smaller than 10 and Gothic text should be avoided.
240.
Chapter B, Section 1.3 of the new Standard Letter Guidance. In cases of uncertainty, the guidance recommends the usage of “soft letters,” which do not contain any references to the debt (Section 1.6).
241.
Chapter D, Sections 1.1 and 2.1 of the new Standard Letter Guidance. The purpose of this requirement is to avoid misleading by omitting steps that would be required before enforcement action can be taken.
242.
Chapter B, Section 2.5 and Chapter D, Section 3.1 of the new Standard Letter Guidance.
243.
Chapter D, Section 1.3 of the new Standard Letter Guidance.
244.
Chapter E, Sections 1.1 and 1.2 of the new Standard Letter Guidance. The position adopted in the UK is that such look-a-like letters are misleading even if they contain disclaimers. The potential misleading effect of such letters, containing disclaimers, is still debated in the US, where courts have taken different approaches on the matter.
245.
Chapter E, Section 2.1 of the new Standard Letter Guidance. Misleading logos could be those falsely implying a connection with a court or a government body.
246.
Chapter C, Section 3.1. This recommendation refers to the cases where the collectors have knowledge of the debtor’s mental health problems, long-term or terminal illness or any other disabilities that impact on the debtor’s ability to pay.
247.
CONC, Sections 7.11.1 and 7.11.2, restating the previous provisions of Section 3.5.a of the Guidance.
248.
CONC, Sections 7.11. 6 and 7.11.7, restating the previous provisions of Section 3.5.b of the Guidance. However, the CONC has not retained the provisions of Section 3.5. e of the Guidance, according to which it was prohibited to falsely imply or state that failure to pay a debt is a criminal offense and criminal proceedings will be brought. However, such action would qualify under the umbrella of state action that cannot be legally taken.
249.
CONC, Section 7.11.9, restating the previous provisions of Section 3.5.d of the Guidance.
250.
CONC, Section 7.5.2, restating the previous provisions of Section 3.5.f of the Guidance. Unlike the CONC, the Guidance specifically mentioned that the provision covers third parties such as relatives who are not joint parties of the contract.
251.
See 783 (2012), Art. R. 124-3, corroborated by Art. R. 124-4.
252.
For a complete list, see: Project Law, Art. 10, Para 1 and 2, Letters a)–k).
253.
Debt collectors are advised to wait at least 30 days from the date the debtor received the notice before taking additional action. In Miller v. Payco-General American Credits, Inc., 943 F.2d 482, 484 (4^th Cir. 1991), the court held that the Defendant violated the FDCPA where the debt collector’s letter indicated a demand for immediate full payment of the debt in direct contradiction to the 30-day notice period. The court has labeled this violation “overshadowing.” For details, see Sartip (2012) 2^nd Recommendation, p. 2.
254.
FDCPA, 15 USC 1692 (Section 809)(a)(1)–(5).
255.
FDCPA, 15 USC 1692 (Section 809)(b).
256.
Potach (1978), p. 908.
257.
FDCPA, 15 USC 1692 (Section 809)(c).
258.
FDCPA, 15 USC 1692 (Section 809)(d).
259.
The FDCPA specifically mentions the Internal Revenue Code of 1986, title V of Gramm-Leach-Bliley Act, or any provision of Federal or State law relating to notice of data security breach or privacy or any regulation prescribed under any such provision of law. See FDCPA, 15 USC 1692 (Section 809)(e).
260.
CONC, Section 7.4.1.
261.
CONC, Section 7.13.4.
262.
CONC, Section 7.5.3.
263.
CONC, Sections 7.14.1 and 7.14.2.
264.
CONC, Section 7.13.1, restating the previous provisions of Section 3.16 of the Guidance.
265.
Office for Fair Trading (2003), Section 3.17, p. 47. Banned related activities may result in criminal offenses. For example, in one case two private investigators have been fined under Section 55 of Data Protection Act for unlawfully obtaining and selling personal information after tracking down a woman whose partner owed money. The fines amounted to a total of 900£ plus 400£ in costs. See: Williams (2008).
266.
CONC, Section 7.13.2, restating the previous provisions of Section 3.19 of the Guidance.
267.
Section 3.21 of the Guidance.
268.
Section 3.22 of the Guidance.
269.
CONC, Sections 7.13.4–7.13.7, 7.14.6 (1), 7.15.9, restating the previous provisions of Section 3.23. (a), (b), (c), (f), (h) and (i) of the Guidance. However, the CONC did not keep the entire provisions of Section 3.23 of the Guidance, which offered a much more detailed list of what might constitute unfair or improper practices due to nonobservance of data protection rules.
270.
CONC, Section 7.13.9.
271.
CONC, Sections 7.13.12 and 7.13.13, corroborated by Section 7.12.3 (1).
272.
783 (2012), Sections R124-3 and R124-4 (as amended by Decret no 2013-109 du 30 janvier 2013).
273.
FDCPA, 15 USC 1692 (Section 808).
274.
FDCPA, 15 USC 1692 (Section 808) (1). For example: in Stratton v. Portfolio Recovery Associates No. 13-6574 (6th Cir. 2014), plaintiff alleged that defendant violated the FDCPA by attempting to collect statutory interest on a purchased debt after the original creditor waived the contractual right to collect interest. The district court granted summary judgment in favor of defendant, finding that the statutory interest charge was permitted by state law, and plaintiff appealed. The appellate court reversed, finding that there is no right under state law to collect statutory interest after the contractual interest right is waived and that attempting to collect any interest after waiver is a violation of the FDCPA.—See more at: http://www.sessions-law.com/news-resources/october-27-2014-case-digest/#sthash.fwnHTUXl.dpuf, last visited 10.12.2014. In Quinteros v. MBI Associates, Inc., 2014 WL 793138 (E.D.N.Y. Feb. 28, 2014), the U.S. District Court for the Eastern District of New York denied a debt collector’s motion to dismiss an FDCPA case, holding that its $5 surcharge for payments via credit card may have violated the law, for they were not provided in the initial contract. See http://www.insidearm.com/daily/debt-collection-news/debt-collection/fdcpa-case-ruling-on-convenience-fees-having-impact-on-collectors/, last visited 10.12.2014.
275.
FDCPA, 15 USC 1692 (Section 808) (5).
276.
CONC, Section 7.7.1, restating the previous provisions of Section 3.10 of the Guidance.
277.
CONC, Section 7.7.3 restating the previous provisions of Section 3.11.a of the Guidance.
278.
CONC, Section 7.7.2 restating the previous provisions of Section 3.11.b of the Guidance.
279.
CONC, Section 7.7.4 restating the previous provisions of Section 3.11.c of the Guidance.
280.
CONC, Section 7.7.5 restating the previous provisions of Section 3.11.d of the Guidance. In the eyes of the OFT, an unreasonable charge is in this context a charge the level of which is not based on the recovery of actual and necessary costs.
281.
Hector (2011) p. 1610. For an opinion to the contrary, see: Alderman (2012), p. 586 at pp. 605–606. “The FDCPA was expressly designed for adjustments by the courts to deal with new and unforeseeable acts and practices.” However, his opinion is contradicted by the large number of issues that courts have not been able to settle in a satisfactory and consistent manner and by the increased number of calls for reform and amendment of the FDCPA in the recent years, which proves that the act cannot keep up with the new challenges in its current form.
282.
Hector (2011), p. 1610.
283.
12 US Code, Section 5511—Purpose, Objectives, and Functions, c) (5): “The primary functions of the Bureau are […] issuing rules, orders, and guidance implementing Federal consumer financial law.”
284.
The BFCP has already made use of its rule-making and guidance-issuing powers in case of large debt buyers and debt collectors and organized a workshop dedicated to the impact of technology in the debt collection market. For details: De Boer (2013), pp. 6–8.

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Legal Studies, Central European University, Budapest, Hungary
Cӑtӑlin Gabriel Stӑnescu

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Stӑnescu, C.G. (2015). Abusive Debt Collection Practices and the Building Blocks of an Efficient Debt Collection Regime. In: Self-Help, Private Debt Collection and the Concomitant Risks. Springer, Cham. https://doi.org/10.1007/978-3-319-21503-7_6

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