UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
20580
Division of Credit Practices
Bureau of Consumer Protection
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May 17, 1994
Basil J. Mezines, Esquire
Stein, Mitchell and Mezines
1100 Connecticut Avenue, N.W.
Washington, D.C. 20036
Dear Basil:
David Medine has asked me to reply to your letter of April 20
concerning whether a debt collector that provides check collection
and verification services for a district attorney violates the
Fair Debt Collection Practices Act (Act).
The Act does not prohibit a debt collector from entering into
a contractual relationship with a district attorney's office to
provide check collection and verification services. However, the
Act continues to regulate the way in which the services are provided;
a debt collector cannot insulate itself from the Act simply by
substituting a DA's name for its own name on its collection letters.
Because Mr. Kidwell did not provide many details about how his
agency's debt collection services would be rendered, it is difficult
to render an opinion about them. We can, however, make the following
observations:
- 1) The Act does not address the amount of any surcharge that
is assessed; thus, we have chosen not to place arbitrary limits
on what a debt collector can charge in any given situation.
Whatever the charge, however, it must be permitted by applicable
state statutory and common law in accordance with the guidelines
set out on p. 50108 of the Staff Commentary on the Act.
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- 2) A debt collector that prints and sends dunning letters
under a DA's letterhead takes the same risks as a collector
that handles so-called "normal" attorney letters.
The letterhead implies that the letters are from the DA; it
also implies that the DA controlled or supervised the process
through which the letters were sent and had formed an opinion
about how to manage the cases of each of the recipients. In
sum, such letters imply that the DA was and is substantially
involved in each of the matters addressed therein. If this is
not true, then the debt collector would probably violate Section
807(10) of the Act by printing and sending such letters.
There also may be a problem with Section 807(14) if the debt
collector uses the DA's name rather then its own to collect its
own debts.
Section 806(3) sets forth the only limitation in the Act on the
use of InstaChek's database. Publication of the database in the
form of coded lists is, of course, permitted by current case law
if certain criteria are met.
Finally, we do not understand Mr. Kidwell's comment about "stating
the law." It is often true that "statements of the law"
in dunning letters imply that whatever legal remedies are described
will be sought by the collector if the consumer does not pay.
If this is not true, using such statements in dunning letters
may violate Section 807.
I hope this has been helpful.
Sincerely,
John F. LeFevre
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