On February 26, 2009 the FTC released a recommendation to Congress for changes in the Fair Debt Collection Practices Act (FDCPA). The recommendations were based on an October 2007 debt collection conference. In its recommendation for changes, the FTC said that “the nature of consumer debt has changed in numerous important ways since enactment of the FDCPA.” The Commission noted that the most significant change in the ARM industry is the growth in debt buying. Full text can be found here.

Summarily, the recommended changes are:

• Debt collectors should provide better information to consumers in a debt validation notice (dunning letter), including: (1) the name of the original creditor; and (2) itemization of (a) the principal, (b) the total of all interest, and (c) the total of all fees and other charges making up the debt
• Require that debt collectors inform consumers in validation notices that (1) if they send a timely written dispute or request for verification, the debt collector must suspend collection efforts until it has provided the verification in writing; and (2) if they request in writing that the debt collector cease contacting them, the collector must comply.
• The statutory damages awarded under the FDCPA should be increased to account for inflation.
• The FTC should have regulatory authority under the FDCPA — this means the FTC would have the power to issue rules (a power they do not have today).
• The law should generally prohibit debt collectors from contacting consumers via cell phones. However, the Commission also concludes that debt collectors should be permitted to contact consumers on their cell phones if, among other things, they have obtained prior express consent to such contacts. The report also notes that “The FTC believes that debt collectors generally should be allowed to use all communication technologies, including new and emerging technologies, to contact consumers.”
• The law should require creditors (particularly debt buyers) to conduct a “reasonable” investigation specific to the dispute raised by the consumer. This recommendation opens several new issues — the first issue is an agreed definition of “reasonable” — the second issue is the notion of the creditor being responsive to the issues raised by the consumer in the dispute (which starts to sound like Fair Credit Reporting Act (FCRA) where the consumer explains the particular nature of the dispute and not just “I dispute.”

These are much needed changes to the laws, as debt collectors, particularly junk debt buyers, continue to abuse consumers. Please contact your local Congressional Representative and urge them to take up these recommendations in the form of the passage of a revised Fair Debt Collection Practices Act.

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