UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
20580
Division of Credit Practices
Bureau of Consumer Protection
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July 13, 1994
Frank D. Gibson, Esquire
P.O. Box 447
211 Broad Street
Kingsport, TX 37662
Dear Mr. Gibson:
This is in reply to your letter of June 6, 1994, concerning a
suit for interest and attorney's fees. You ask whether it is permissible
under the enclosed Fair Debt Collection Practices Act for a collection
agency to sue a debtor for interest and attorney's fees, based
on a promissory note given by the debt collection agency to the
debtor which provides for interest and attorney's fees.
First, the Act does not attempt to regulate the contents of a
complaint filed in court, whether the issue is payment of a debt
or otherwise. Thus, under the Act, a party can sue for any thing
it wants. The Act does address, however, what are commonly regarded
as traditional collection activities engaged in by debt collection
agencies, such as sending dunning letters and making telephone
calls. In this regard, Section 808 is relevant to the question
of whether the debt collector can try to collect the interest
and attorney's fees at issue, based on the note. All this, of
course, assumes that the debt collector had the authority to execute
the note initially and that the note itself is valid under state
contract law.
Section 808 prohibits the collection of any surcharges (other
than the debt itself) unless they are expressly authorized by
the debt agreement (in this case, the note) or permitted by law.
We have interpreted this provision to permit collection
of such charges if they are provided for in the debt contract
(note) and are not prohibited by state law. This appears
to be your situation. If, however, they are prohibited
by state law, they are not permitted by the Act, regardless
of what the contract says.
I hope this has been helpful.
Sincerely,
John F. LeFevre
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