*78 THE FAIR DEBT COLLECTION PRACTICES ACT, COMMUNICATIONS, AND PRIVACY ISSUES

I. Introduction

The Fair Debt Collection Practices Act (Act or FDCPA) [FN1] provides a variety of restrictions on a debt collector's communications, both with the consumer debtor and with others such as the consumer's neighbors, employers, and family members. The FDCPA defines "communication" as the conveying of information regarding a debt directly or indirectly to any person through any medium. [FN2]

II. Acquisition of Location Information

FDCPA section 1692b allows limited communications with persons other than the consumer, but only to acquire location information about the consumer. The debt collector must identify himself or herself, and state that he or she is confirming or correcting location information, and may not identify his employer unless expressly asked to do so. The debt collector is prohibited from any communication with third parties which indicates that the call is about a debt owed by the consumer; for example, this prohibits communications by post card or language on the outside of an envelope indicating that it is from someone in the debt collection business or relates to collection of a debt.

*79 In addition, once the debt collector knows the consumer is represented by counsel, the debt collector must communicate with no one other than that attorney, unless the attorney fails to respond within a reasonable time to the debt collector's communications. If the consumer's attorney fails to respond to a debt collector's communications within a reasonable period of time, the consumer forfeits the protection against debt collector contacts. However, one court rejected a debt collector's argument that the attorney must respond within some asserted "two week reasonable period of time," [FN3] and the question of what constitutes a reasonable time may have to be determined by the courts on a case-by-case basis.

Section 1692b of the Act authorizes the debt collector to communicate with a person other than the consumer for the purpose of acquiring location information under some circumstances and within specified limits. The debt collector may not state to a third party that the debt collector is trying to collect a debt. That statement likely would violate the consumer's privacy and also would violate the Act. The debt collector may contact third parties, such as a neighbor, to locate a debtor, but in doing so the debt collector must only identify himself or herself, state that he or she is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his or her employer. To illustrate this, a Motion to Dismiss was denied in a case where simultaneously with the initial demand letter, the attorney debt collector faxed the consumer debtor's employer seeking information about the debtor's employment. The court stated that this fax went well beyond location information and thus violated the FDCPA's restrictions on third party communications. [FN4]

III. Communications

A. Time and Place

The Act provides in part, at section 1692c(a)(1), that a debt collector may not communicate with a consumer at any unusual time or place. It is presumed that phone calls after 9:00 p.m. or before 8:00 a.m. at the debtor's location are inconvenient to the consumer. Once the debt collector learns of any other circumstances specific to a consumer which indicate inconvenient times or places of communication, the debt collector must avoid those times and places. A debt collector should not call at any time known or reasonably thought to be inconvenient or unusual for a particular consumer (such as daytime hours for a consumer who works at night).

In Juras v. Aman Collection Services, Inc., [FN5] the debtor lost on a claim that the debt collector had improperly communicated at an inconvenient time. The jury verdict finding of no liability for a pre-8:00 a.m. phone call was upheld because the debtor failed to establish any damages resulting from this action, and the debt collector testified that he had inadvertently failed to take into account the difference in time zones. But a case like this could go either way, depending on variations in the facts, particularly if the claim is for statutory damages.

Other communications with third parties regarding the collection of a debt are not permitted unless the consumer gives permission directly to the debt collector, or with the permission of a court having jurisdiction over the matter, or as reasonably necessary to effect post judgment judicial remedies. [FN6] Section 1692c(b) may apply to various types of communications including personal visits, telephone calls, mail, and telegrams. Sunday is another problem when considering what is inconvenient. Collection contacts and communications may be inconvenient for many (and sometimes not obvious or apparent) reasons, such as the debtor is entertaining family or friends at his or her house, or is visiting a friend or family member at a hospital.

B. Communications with Family Members

Other problem areas include contacting a parent to determine whether the parent is assuming financial responsibility for a non-minor child living at home with the parent. Depending on the conversation, this communication may violate the privacy of the non-minor child, and also may violate the Act. Even if a parent states to a debt collector that that parent assumes financial responsibility, that by itself does not necessarily authorize the debt collector to discuss the non-minor child's debt with the parent. [FN7] Moreover, a creditor's knowledge that the consumer debtor is represented by an attorney may be imputed to the debt collector. Thus the debt collector should maintain a procedure that includes inquiring of the creditor whether the debtor is represented by an attorney. [FN8] However, a letter addressed to the debtor but sent to the debtor's mother's house did not provide a basis for the mother to sue under the FDCPA, because the mother had no apparent authority to open her daughter's mail and because the letter was not addressed to the mother. [FN9]

C. Communication at Places of Employment

The debt collector cannot contact the consumer at his or her place of employment if the debt collector knows or has reason to know that the employer prohibits those contacts. [FN10] Workplaces may be deemed inherently inconvenient places to contact some types of workers, including nurses, assembly line workers, *80 and restaurant workers. In response, however, debt collectors may argue that section 1692c(a)(3) exclusively governs workplace contacts with the consumer, and proscribes workplace collection contacts only when the collector knows or has reason to know that the employer "prohibits" the consumer from receiving such contacts. These two provisions of section 1692c(a)(3) are not, however, mutually exclusive. For example, a debt collector might reasonably know that a contact at the consumer's workplace is inconvenient without knowing that the consumer's employer prohibits such work contacts.

The Ninth Circuit held in Swanson v. Southern Oregon Credit Service [FN11] that the debt collector violated the section 1692e(5) prohibition of threats of illegal action by threatening to contact the consumer's employer. The debt collector's letter to the debtor threatened to begin a "complete investigation...concerning your employment and assets" unless payment was received within forty-eight hours. Swanson argued that this was a threat to contact his employer and was a threat of illegal action prohibited by section 1692e(5), since section 1692c(b) prohibits most third party contacts, including dunning contacts with the consumer's employer. In another case, repeated contacts at work when the consumer had told the debt collector that she could not talk at work stated a claim for violations of the Act. [FN12]

D. Dealing with Powers of Attorney

What should the debt collector do if he or she receives a call from someone claiming to be the "attorney-in-fact" for a debtor? Does it mean that other communications with the debtor must stop? The answer depends on the meaning of "attorney-in-fact" and the Act's definition of "attorney." The Act states that a debt collector may not communicate with a consumer in connection with the collection of any debt, if the debt collector knows that the consumer is represented by an attorney with respect to such debt. Normally, when a debt collector learns that a consumer is represented by an attorney as to that particular debt, communication with the consumer must cease and the debt collector must then communicate exclusively with the attorney. [FN13] However, vague references to representation by "an attorney" may merely imply and not demonstrate the existence of an attorney-client relationship. The latter relationship can be established only by an express agreement between a client and an attorney at law, meaning a "lawyer" or "counselor at law" licensed to practice law in that jurisdiction by a state supreme court or federal court.

An attorney-in-fact is not the same as an attorney at law. An attorney-in-fact is one who stands in for another and is empowered to act for that person, sometimes for limited and specifically enumerated purposes. This may or may not authorize the attorney-in-fact and debt collector to discuss the consumer's debt, but either way it does not trigger the obligation to communicate exclusively with the consumer's "attorney," unless the attorney-in-fact is also the consumer's attorney at law.

The attorney-in-fact relation is often created by a power of attorney and the appointee is often not a lawyer. Attorneys-in-fact are bound by principles of agency law, not the attorney-client relation. The confidentiality and representative capacity rules which are hallmarks of the attorney-client relationship normally do not exist between attorneys-in-fact and the people for whom they are acting. An attorney-in-fact relationship is usually created by a document that gives specific powers to an agent (the attorney-in-fact) to act on behalf of another (the principal). Such a relationship frequently is set up to transfer real estate or to allow one party to sign documents for another in case the principal becomes disabled or incompetent.

Generally, the document creating the attorney-in-fact relationship limits the role the attorney-in-fact may legally perform. It will also determine whether the agent's powers remain effective after the principal becomes disabled or dies. Because the attorney-in-fact agent is often not an attorney at law as contemplated by the Act, communication with such an agent could be a third-party communication in violation of the Act, particularly if the communication is not authorized in the power of attorney. If, however, the attorney-in-fact is a lawyer and is authorized to act as a legal representative with regard to the FDCPA, or advises the debt collector not to communicate with the debtor, communication with the debtor should cease, except:
• to advise the consumer that the debt collector's further efforts are being terminated;
• to notify the consumer that the debt collector or creditor may invoke specified remedies ordinarily invoked; and/or
• when applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

E. Consolidators

What about "consolidators"? Consolidators are persons who receive payments from debtors and negotiate smaller payments or lump sum distribution/settlements with creditors and debt collectors. Consolidators as well as the debt collectors they deal with should beware of possible third party communication problems under the FDCPA. [FN14] The debt collector must have permission from the debtor to discuss the case or related matter with a third party consolidator. What about a FDCPA "cease and desist" letter? Sometimes a consolidator's letter *81 will request that the debt collector cease communications with the debtor and request that all communications go through the consolidator. Generally the debt collector should cease communications with the debtor as noted above, although he or she can still contact the debtor directly for limited purposes. [FN15] What about a debt validation request or a dispute of the debt, received from a third party such as a consolidator? Sometimes this form letter is simply for the purpose of delay. The debt collector should provide the validation and verification response to the debtor directly and also to the consolidator. Mailing this to the debtor appears to be required by section 1692g(b). Verification requires nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor claims is owed. [FN16]

F. The Debtor's Lawyer

The Act also provides in section 1692c(a)(2) that, once the debt collector knows the consumer is represented by an attorney, and can obtain the attorney's name and address, the debt collector must communicate with the attorney. Once the debt collector learns that the consumer is represented by an attorney, the debt collector must deal exclusively with the attorney and should not contact the consumer even to confirm the attorney's retention. For many attorneys, this provision is superfluous because the state bar association's Rules of Professional Conduct already prohibit attorney debt collectors from communicating with the consumer debtor about the debt once it is known that the consumer has an attorney, unless the consumer's attorney authorizes the direct communication or there is authorization by other law to do so.

There is no requirement that the debt collector be formally notified of the consumer's representation by an attorney; informal information may be sufficient. One court held that, after receipt of letters from the consumer's attorney directing the debt collector to cease communication with the debtor, the debt collector's continued mailing of dunning letters to the consumer in care of his attorney violated section 1692c(a)(2). However, another court characterized as de minimis a debt collector's direct communication with the consumer despite knowing that the consumer was represented by legal counsel, holding that the Act was not violated. [FN17] As noted, once the debt collector learns that the consumer is represented by an attorney, the debt collector should deal exclusively with the attorney, and should not contact the consumer directly even to confirm the attorney's retention. Nor is the debt collector safe in sending legally required notices directly to the debtor; they should be mailed to the consumer's counsel instead.

One court held that a debt collector was charged with the creditor's knowledge that the consumer was represented by an attorney. However, in another case the Third Circuit, affirming without an opinion, approved the district court's holding that the consumer must demonstrate actual knowledge by the debt collector of the consumer's legal representation, in order to establish a violation. [FN18]

The language in the Act, "with respect to such debt," probably means that the debt collector need not assume that the consumer is represented, except as to debts specifically indicated by the consumer or attorney. The Third Circuit held that a debt collector who knows a consumer is represented by an attorney on one debt is not required to assume the attorney represents the consumer on other debts. However, notice to the debt collector that the attorney represents the consumer for all or specified current and future debts should trigger the requirement that the collector deal only with the consumer's attorney on all or other specified debts. [FN19]

IV. Credit Reports

The debt collector also has a duty to provide information to a credit reporting agency of disputes by the debtor. Your authors suggest that a debt collector establish procedures to immediately update a credit report when the consumer debtor disputes the debt. This is separate and apart from the debt collector's obligation to verify the debt. A debt validation request is not the same as a dispute. Be careful, however, of filing a lawsuit and then finding the language disputing the debt and/or requesting verification buried in the defendant's Answer. In this case the debt collector should put the litigation on hold until the debt collector has provided the verification and/or resolved the dispute, and updated any credit report.

V. State Telemarketing Laws

Oklahoma, like several other states, has recently enacted a Telemarketer Restriction Act. [FN20] Thus, Oklahoma now has a state "Do Not Call List" and it is beginning to generate attorney fees. The "A" sections were written and enacted several years before the "B" sections. As with many statutes, there appears to have been little coordination between the these groups of sections. Also, there is another three-day "right of rescission" buried in these statutes. [FN21]

Section 775A.2 contains some of the definitions. A commercial telephone seller is someone who in the course of that person's business or on behalf of another person causes or attempts to cause a commercial telephone solicitation to be made. There are certain exceptions, for example, polling, charitable *82 contribution solicitations, and communications to schedule a later face-to-face meeting. Sections 775A.3 and 775A.5 require commercial telephone sellers to register with the Oklahoma Attorney General's office, fill out an application, and post a bond. Section 775A.4 sets out specified unlawful practices. These include, for example, failing to register, failing to allow a three day right of rescission, and misrepresentation.

The "A" sections were created in 1994. Later, in 2002, the legislature enacted the "B" sections and apparently thinks it created a unified Telemarketer Restriction Act. Section 775B.2 also contains definitions. A telemarketer means any person who for commercial purposes initiates a telemarketing sale call to a consumer located in Oklahoma or any person who directly controls or supervises the conduct of a telemarketer, Telemarketing means any plan, program, or campaign which is conducted for commercial purposes by use of one or more telephones and which involves a telephone call initiated by a telemarketer to a consumer located within Oklahoma. However, as noted, telemarketing does not include a telephone call which is made for the sole purpose of arranging a subsequent face-to-face meeting.

Section 775B.3 requires the Oklahoma Attorney General to maintain a registry of consumers who do not want to be called. Section 775B.6 provides that no telemarketer may call anyone on the list. Violating this provision is also a violation of the Oklahoma Consumer Protection Act. The Oklahoma Attorney General has the authority to bring enforcement actions and injunction actions against alleged violators and is entitled to keep any fines assessed and collected.

It is the stated policy of the Oklahoma Attorney General to investigate all reported violations. There is no procedure in place for a list or registry of persons not subject to the Act by virtue of one or more of the exceptions. Therefore, if I complain about you, you will be investigated. Obviously, aside from the usual issues, this raises the risk of inappropriate retalliation against debt collectors using the telephone to contact debtors.

[FNa1]. Mike Voorhees is a member of the south Oklahoma City firm of Voorhees & Voorhees, P.C. in association with Foshee & Yaffe. The firm's practice includes creditors' collections, foreclosures, replevins, and bankruptcies, real estate, commercial and consumer litigation, probate, guardianship, and estate planning. Mike is a member of the Oklahoma Bar Association, the Conference on Consumer Finance Law, the Oklahoma City Commercial Law Attorney's Association, the South Oklahoma City Attorney's Association, the Oklahoma City Real Property Lawyers Association, and the Real Property Section of the Oklahoma Bar Association. He is a former Member of the Board of Adjustment for the City of Oklahoma City, and served as Chairperson of the Skirvin Solutions Committee. Mr. Voorhees is admitted to practice before all Oklahoma courts, the U.S. District Courts for the Western, Northern and Eastern districts of Oklahoma, and the Tenth Circuit U.S. Court of Appeals. He received his education at Oklahoma City Community College, A.A. 1976, and at the University of Oklahoma. B.A. 1978 and J.D. 1981.

[FNaa1]. Sharon Voorhees was admitted to the Oklahoma Bar in September, 1991. She is a partner in the law firm Voorhees & Voorhees, P.C. in association with Foshee & Yaffe. Ms. Voorhees is admitted to practice before all Oklahoma courts, as well as the U.S. District Court, the Western and Eastern Districts of Oklahoma, and the United States Court of Appeals for the Tenth Circuit. She received her education at the University of Oklahoma (B.Ac., 1978; J.D., with Honors, 1991). She is a member of the Order of the Coif, the Oklahoma Bar Association, the Cleveland County Bar Association, the Conference on Consumer Finance Law, and the South Oklahoma City Lawyer's Association serving as Treasurer.

Ms. Voorhees is also a Special Municipal Judge of the City of Oklahoma City, and was appointed to that position in December, 1999. She is a member of the Rotary Club of South Oklahoma City, and was elected to the office of Secretary for the year 2003-2004 and Vice-President for the year 2004-2005. Ms. Voorhees also serves as a Commissioner on the Oklahoma Community Service Commission, having been appointed in July, 2002, by Governor Frank Keating. Her primary areas of practice are Probate, Divorce, Paternity, Guardianship, Real Estate, Criminal Defense, Collections, and General Civil Litigation.

[FN1]. 15 U.S.C. § 1692.

[FN2]. See id. § 1692a(2), "Debt collector" is defined at 15 U.S.C. § 1692a(6). "Consumer" is defined at 15 U.S.C. § 1692a(3). In this article the terms "consumer" and "debtor" are used interchangeably. Two settlement letters sent by a lawyer defending a creditor in a replevin action brought pro se by a consumer were not communications within the FDCPA. Jackson Spells v. Francis, 45 F. Supp. 2d 496 (D. Md. 1999). See also Mike Vorhees, Definitional Issues for Debt Collectors Under the FDCPA, in this issue.

[FN3]. Phillips v. Amana Collection Services, 1992 WL 227839 (W.D.N.Y. 1992).

[FN4]. Shaver v. Trauner, 1998 U.S. Dist. 1 EXIS 19647 (C.D. Ill.1998).

[FN5]. 829 F.2d 739 (9th Cir. 1987).

[FN6]. FDCPA, 15 U.S.C. § 1692c(b).

[FN7]. See id. § 1692c.

[FN8]. See Alexander v. Unlimited Progress Corp., 2003 WL 1562234 (N.D. Ill. Mar. 21, 2003).

[FN9]. See Kropelnicki v. Siegel, 290 F.3d 118 (2nd Cir. 2002).

[FN10]. FDCPA, 15 U.S.C. § 1692c(a)(3).

[FN11]. 869 F.2d 1222 (9th Cir. 1988).

[FN12]. See Pittman v. J.J. Mac Intyre Co., 969 F.Supp. 609 (D. Nev. 1997).

[FN13]. FDCPA, 15 U.S.C. § 1692c(a)(2).

[FN14]. See FDCPA, 15 U.S.C. § 1692c(b).

[FN15]. See id. § 1692c(c).

[FN16]. See Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999).

[FN17]. See Clark's Jewelers v. Humble, 823 P.2d 818 (Kan. Ct. App. 1991).

[FN18]. See Hubbard v. National Bond & Collection Assocs., Inc., 126 B.R. 422 (D. Del. 1991).

[FN19]. See Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991).

[FN20]. See 15 Okla. Stat. §§ 775A.1-775B.7 (emphasis added).

[FN21]. See 15 Okla. Stat. § 775A.4 A.2.