FTC: DEBT COLLECTORS MAY STOP INSTEAD OF VALIDATE

October 9, 2007

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The Federal Trade Commission issued an opinion today. Under the Fair Debt Collection Practices Act (FDCPA), if you dispute a debt, the debt collector (this only applies to “3rd party” debt collectors like collection agencies and lawyers) must stop contacting you about the debt until the debt collector validates the debt, or provides proof that you owe it.

Now, the FTC has agreed with the national American Collectors Association, that instead of validating the debt, the debt collector can just drop it, and notify you that it is going to stop trying to collect from you. Sound good to you? I don’t think so. In my humble opinion, a debt collector shouldn’t be able to make a demand for payment that they can’t, or won’t, validate. To me, this opinion just encourages the debt buyers and others to make demands for debts they can’t prove or that consumers don’t owe, and hope that the least sophisticated consumers just pay up. Prior to this opinion, some consumers brought suit under the FDCPA against the debt collectors for making demands for debts, then not validating them timely, as the law requires; this opinion, while it doesn’t have the force of law, may make it more difficult for such suits to succeed. Tom Black

For Your Information: October 9, 2007
FTC Advisory Opinion: Debt Collectors May Inform Consumers That Collection Efforts Have Ceased

The Federal Trade Commission has issued an advisory opinion clarifying when the Fair Debt Collection Practices Act allows a debt collector to notify a consumer that it has ceased trying to collect a debt. The FDCPA provides that if a debt collector contacts a consumer to collect a debt, and the consumer disputes the debt in writing, the collector must stop collection efforts until it has sent the consumer written verification of the debt. ACA International, a debt collection trade association, asked the Commission to address whether, if a consumer disputes a debt in writing and the debt collector determines to cease its collection efforts, it would violate the FDCPA for the collector to notify the consumer that it has ceased its collection efforts. The FTC’s advisory opinion concluded that a debt collector informing a consumer that its collection efforts have ceased would not violate the FDCPA and would benefit the consumer, in that the consumer would no longer have to worry about further contacts from that collector.

The Commission vote approving issuance of the advisory opinion was 5-0. (File No. P06-4803) The staff contact is Thomas E. Kane, Bureau of Consumer Protection, 202-326-3224.

Copies of the opinion are available from the FTC’s Web site, http://www.ftc.gov, and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

FTC: Debt Collectors May Stop Instead of Validate