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Q#1 Arizona laws and collection fees


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Several years ago there was a collection agency situated in Arizona which was collecting on several accounts. I paid in full, and years later when I pull my Ex and TU reports for the first time, I find out that the accounts are being reported to Ex as "Installment" and "Open" to TU.

I understand how this is violating the FDCPA.

Now I am working on understanding how this is violating Arizona laws.

Regarding whether an initial letter from a CA can include the amount collection fees, attorney fees, etc., there seems to be some conflict.

Arizona Revised Statutes (A.R.S.) Title 32 Chapter 9 Article 3


A.R.S. 32-1051 (4) says:

...not attempt to collect any collection fee, attorney's fee, court cost or expenses unless the fees, charges or expenses are justly due from and legally chargeable aginst the debtor, or have been judicially determined.

VERSUS what A.R.S. 32-1051 (5)© , A.A.C. R20-4-1509 , and A.A.C. R20-4-1518 say:

ARS 32-1051 (5)©:

"....not give or send to any debtor, or cause to be given or sent to any debtor, any notice, letter, message or form which represents or infers that the existing obligation of the debtor may be increased by the addition of attorney's fees, investigation fees, service fees, or any other fes or charges when in fact these fees or charges may not legally be added to the existing obligation of the debtor."

Section R20-4-1509 of Title 20 Article 15 of the Arizona Administrative Code (A.A.C.) concerning collection agencies

http://www.azsos.gov/public_services/Title_20/20-04.htm :

"A collection agency shall not threaten to collect or attempt to collect any attorn ey's fee, collection cost or other fee not provided for in the contract establishing the debt between the debtor and his creditor."

A.A.C. R20-4-1518. Agreements with Clients

All accounts whereby one or more claims for a debt or debts are placed for collection with a collection agency by a client, shall be set forth in a written agreement between client and collection agency, or shall be set forth in the form of a written acknowledgment of every account assigned, whether there be one or more claims. The written agreement or written acknowledgment shall be specific, intelligible, and unambiguous and shall set forth in full the parties, terms, rates and/or conditions upon which the collection is undertaken. The terms of the written agreement or written acknowledgment shall not violate the laws governing the unauthorized practice of law.

It appears that what ARS 32-1051 (4) and ARS 32-1051 (5)© are saying is that in the initial collection letter under Arizona law the CA is allowed to include any fees.

Unfortunately, back in 2001 I did not ask for debt validation, so I do not have any breakdown of the amount that was being asked for. So I probably would not legally be able to dispute any collection fees that might have been included in the amount initially asked for.

However, what ARS 32-1051 (5)© seems to say is that if that initial letter does not spell out what additional fees the CA will add on if the collection is not paid in a timely enough manner, then it would be a violation for the CA in a follow-up second or third letter to add extra fees.

For one of the collections, because I did not pay on time, the CA sent a second letter requesting an amount that had had $ 8.57 added to the amount from the first letter. Since the original letter did not spell out that what this CA will add if the amount is not paid on time, would this be a violation ?

Also, am I right in interpreting AAC R20-4-1509 as seeming to completely contradict ARS 32-1051 (4) ? In other words, AAC R20-4-1509 seems to say that under no circumstances can the CA collect any collection fees (through incorporating them into the amount that the CA is requesting).

Also, AACR20-4-1514 says:

Disclosure of Information to Debtor

A collection agency must disclose to the debtor from whom it is attempting to collect the debt the name of the creditor, the time and place of the creation of the debt, the merchandise, services or other things of value underlying the debt, and the date when the account was turned over to the collection agency by the creditor. A debtor shall have the right of access to a collection agency's books and records concerning the debtor or the debt. Upon request, the collection agency shall provide to the debtor without cost, copies of any document relevant to the debt or its collection.

These two things are not mentioned in anywhere in the collection letters.

Can I cite this as a violation ?

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  • 3 years later...

I would love some interpretation as well.

Along with ars 6-137, 6-132 and 6-123 thru 131

Midland has a goverenment suit no. 07f-bd020-bnk

They were found in violation of ars laws and had to respond to inquires by superintendant within 10 days, and put a plan in place so that this would happen.

We want to get midland to answer our request for all documentation per ars and present us with any and all info they have on alleged debt.

Edited by ditaloca
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You need to differentiate between FDCPA and FCRA violations.

Does Arizona provide a right of private action for violations or is it as is more normal reserved for the state?

Even where private action is permitted there is usually an issue over using it in conjunction with federal laws.

It is not an easy or straight forward path for the unwary to tread.

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There is no opinion I can even find on basic statutes for debt collectors and the az laws are ambigious to me.

It would seem that the 10 day period is only in repsonse to superintendant but there are issues in the law that my non legal brain cannot understand.

Ill get links and repost

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I don't think that violation of AZ provides for private action, however you probably have a FDCPA and/or FCRA violation (or both).

I'd file a complaint with the AZ Dept of Financial Institutions (regulates collection agencies) and see what happens.

If they cant help you, then I'd file suit.

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I. Wish I could cut and paste better with text but the blog progam I use doesn't really allow it.





Check out the az governemt actions

Government Action(s On September 22, 2006, the Arizona Department of Financial Institutions (Department) issued a Notice o Hearing alleging that Midland Credit Management, Inc. (MCM) had violated Arizona law. Consumer complaint alleged that MCM failed to timely provide records, documents, information and reports to the Superintendent Specifically, there were five complaints brought against the company by consumers. The Department in each case sent a letter to the company requesting a response within 10 days with which MCM did not comply Therefore, the Department served upon Midland Credit Management an Order to Cease and Desist; Notice o Opportunity for Hearing and a Consent to Entry of Order on August 10, 2006. On September 6, 2006, MCM file a Request for Hearing to appeal the Cease and Desist Order. Wishing to resolve this matter in lieu of an administrative hearing, MCM did not contest the Findings of Fact and Conclusions of Law, and consented to th entry of the following Order: MCM shall immediately stop the violation of not providing timely appropriate records, documents, information and reports to the Superintendent. They shall immediately implement an maintain an adequate internal procedure to address and respond to all Arizona consumer complaints within a reasonable time frame and will immediately provide the Department with a typewritten response letter tha includes the general complaint procedures with which they (MCM) will use henceforward when receivin Arizona consumer complaints from the Department. MCM shall immediately pay to the Department a civi money penalty in the amount of $9,000. This Order became effective upon service to MCM and shall remain effective and enforceable until such time as it is stayed, modified, terminated or set aside. MCM waived all rights to seek judicial review or otherwise challenge or contest the validity of this Consent Order. You may view th Consent Order directly by viewing this link: http://azdfi.gov/Final/Forms/Midland_Credit_Management,_Inc.pdf

So does this mean if I contact superintendent they could compel midland to cough up the papers I have been asking for?

Edited by ditaloca
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32-1055. Unlawful acts

4. Fail to notify the department within ten days of any change of name under which the person does business as a collection agency or address at which the person conducts business

Ok so more than 10 days ago we sent a letter to midland, rcrr usps, it was returned. Guess why the building was vacant. When you look up their lic. Number it says the same address that is vacant.

Who do I report this to?

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