UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
20580
Division of Credit Practices
Bureau of Consumer Protection
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November 10, 1992
Michael L. Zager, Esq.
403 Broadway
P.O. Box 948
Monticello, New York 12701
Dear Mr. Zager:
This is in response to your letter dated July 31, 1992, in which
you requested an informal staff opinion regarding the effect of
the Fair Debt Collection Practices Act ("FDCPA") on
a proposed arrangement between your law firm and a hospital. I
apologize for the delay in responding to your request.
Based upon your letter and our recent telephone conversation,
it appears that the proposed arrangement would be as follows.
The hospital would attempt one time to collect the amount allegedly
owed from its former patients. The hospital would then send you
lists of those patients who fail to pay. You would prepare and
mail letters to those patients, outlining the balance due and
seeking payment and/or insurance information. You would mail the
letters on hospital letterhead and request that patients send
payments directly to the hospital. You would, however, give a
telephone number at your law firm as the number to call if patients
receiving the letters have questions. The telephone line would
be devoted solely to the hospital's patients, and employees of
your firm who answer the line would respond as if they were located
at the hospital. The letters sent from your office would not contain
the validation notice required for debt collection letters under
Section 809 of the FDCPA. You ask if your firm would be acting
as a "debt collector" for purposes of the FDCPA if they
drafted and mailed such letters.
Section 803(6) of the FDCPA defines "debt collector"
as
any person who uses . . . the mails . . . who regularly
collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another. . . .
Based upon your letter and our conversation, it appears that
your firm is acting as a debt collector if it mails the letters
described above because (1) the firm is regularly attempting to
collect debts from third-party patients;(1)
(2) although the money is sent directly to the hospital, the firm
will have collected the money indirectly; and (3) the
money is owed to another, i.e., the hospital.
Because your firm would be acting as a debt collector in this
capacity, the firm would have to comply with all the provisions
of the FDCPA. The letters would thus have to include the Section
809 validation notice and the Section 807(11) disclosure that
the letter is an attempt to collect a debt and any information
obtained would be used for that purpose.
The letters would appear to violate the Section 807(14) prohibition
against using "any business, company, or organization name
other than the true name of the debt collector's business, company,
or organization" since the firm is the debt collector but
it would be using the hospital's name.
The views expressed herein represent an informal staff opinion.
As such, they are not binding on the Commission. They do, however,
reflect the staff's current enforcement position.
Sincerely,
Thomas E. Kane
Attorney
Division of Credit Practices
1. Your firm probably would not be
a debt collector covered by the Act if it simply mailed letters
requesting insurance information because, theoretically, it would
not be attempting to collect a debt. If, however, the letters
request that patients pay an alleged debt -- as I assume most
of the letters will -- your firm would be covered because it clearly
would be engaged in a collection activity.
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