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FDCPA Amended -- and not for the better !!

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From the CL&P Blog: http://pubcit.typepad.com/clpblog/2006/10/fdcpa_amendment.html

FDCPA Amendments

by Richard Alderman

Changes in the Fair Debt Collection Practices Act (FDCPA) have been approved by the U.S. Congress and sent to the President to sign into law. The amendments were part of the Financial Services Regulatory Relief bill, which was passed this weekend.

Some of the key changes include clarification around “mini-Miranda” disclosures and legal codification that allows agencies to collect during the 30-day validation period.

The mini-Miranda clarification comes in updating protocol for legal pleadings and other communications, such as IRS 1099-C (cancellation of debt) forms. One of the new amendments states, “A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication.” Also, communications that do not seek the payment of a debt, like 1099-C forms or Gramm-Leach-Bliley Act privacy notices, will no longer be considered an initial communication and will not require mini-Mirandas.

The FDCPA was also specifically amended to allow for the collection of a debt during the 30-day violation period, unless the consumer has an active written dispute regarding the debt.

The new amendments also include a provision that certain bad check enforcement firms, such as companies that run pretrial diversion programs for bad check offenders, will not be legally defined as debt collectors for purposes of the FDCPA.

You watch, scumbags like Bennett and Deloney and JBC in NJ, both notorious for collections on bad checks, will try to hide behind this !!

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Not sure how much this changes things, except for the exemption for court diversion programs. Some of t hose other forms don't need to be covered.

The key is, as it has always been, to dispute early and definitely

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I have to disagree, Recovering. The provision that allows collection during the 30 day period to validate pretty much eliminates the principal of overshadowing and opens the door for massive abuse where collectors can put pressure on consumers from day 1. That is very bad news.

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This is the area where I take issue with the Republican Party. Laws like this and the disaster of BK reform illustrate how they favor big business over the little guy.

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I have to disagree, Recovering. The provision that allows collection during the 30 day period to validate pretty much eliminates the principal of overshadowing and opens the door for massive abuse where collectors can put pressure on consumers from day 1. That is very bad news.

All the amendments do is write the caselaw into the statute. Collection activities ARE permitted during the validation period if the consumer has not disputed.

They even wrote the overshadowing caselaw into the statute as well, so it's specifically spelled out that you may not overshadow the 30 day notice.

Nothing has changed, except for the exemptions of state sponsored bad check diversion programs. These programs have to be under the control and supervision of the state or DA.

`(A) a State or district attorney establishes, within the jurisdiction of such State or district attorney and with respect to alleged bad check violations that do not involve a check described in subsection (B), a pretrial diversion program for alleged bad check offenders who agree to participate voluntarily in such program to avoid criminal prosecution;

`(B) a private entity, that is subject to an administrative support services contract with a State or district attorney and operates under the direction, supervision, and control of such State or district attorney, operates the pretrial diversion program described in subparagraph (A); and

[...]

(iii) does not exercise independent prosecutorial discretion;

`(I) only as a result of any determination by the State or district attorney that probable cause of a bad check violation under State penal law exists, and that contact with the alleged offender for purposes of participation in the program is appropriate; and

Lots of exemptions that your typical CA will not fall under.

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© Establishment of Right to Collect Within the First 30 Days- Section 809(B) of the Fair Debt Collection Practices Act (15 U.S.C. 1692g(B)) is amended by adding at the end the following new sentences: `Collection activities and communications that do not otherwise violate this title may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt or request the name and address of the original creditor.'.

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Overshadowing = demanding payment of any amount or leading a consumer to believe they must pay any amount during the validation period while the consumer still has the right to dispute any portion of the claim.

This is has been very clearly spelled out by the courts, so I don't know where you figure otherwise.

The quoted amendment is very circular in that regard. It appears to give a stamp of approval on overshadowing, while saying it is not allowed. That will take more than a few years to work out in courts.

So do you really think CAs won't jump on this and try to use it to their advantage? That would be naive in the extreme. Open the door a crack and they will kick it in.

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Please post a case where, absent a request for verification, filing suit during the verification period was considered overshadowing. I'm not aware of any.

If a consumer timely requests verification, and subsequent to that request a lawsuit is filed without mailing the verification, it violates for continued collection.

If a lawsuit is commenced first, and a subsequent timely verification is received, litigation must be suspended until verification is mailed.

The revision hasn't changed anything.

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Has the President signed the amendment yet?

I just sent off a DV plus a C&D dated today, Oct 2.

There is no way any debt collector or lawyer can find my phone number, though... so I never get a T-call anymore. I'm also a consultant who practically lives in cars and airports all the time--and I rejected the credit-report access from my new employer, so there is no way those stupid skip-tracing agencies can locate where I work and start calling there (they did start calling my previous employer when I moved to Pennsylvania--only because they noticed my address change in the NCOA file).

I make my calls using Skype and Vonage! Vonage has worked wonders. I gave my new creditors my old land line number, which I then had disconnected after 6 mos b/c my home phone was literally melting from calls from Portfolio Recovery!

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Overshadowing = demanding payment of any amount or leading a consumer to believe they must pay any amount during the validation period while the consumer still has the right to dispute any portion of the claim.

The courts have ruled plenty of times that merely asking for the money is okay. Creating a false sense of urgency is overshadowing or confusing your right to dispute, IE saying they have to pay within 10 days or else, or using huge font and making the validation notice really tiny.

This is has been very clearly spelled out by the courts

Yes, it's been very clearly spelled out that CAs are allowed to collect during the 30 day period, as long as they don't confuse a LSC about their validation rights. Before there was confusion that a CA wasn't allowed to attempt collections at all. Now there is not, and the courts had already ruled that way. The 30 days was not a grace period.

So do you really think CAs won't jump on this and try to use it to their advantage? That would be naive in the extreme. Open the door a crack and they will kick it in.

They can try and it will just lead to a whole new host of suits and class actions. Win-win for the attorneys as usual. :)

All the overshadowing caselaw is still valid. All the changes did was write the majority opinion caselaw into the statute. Nothing more, nothing less.

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Dr. Elizabeth Warren doesn't think this is 'nothing to worry about' !

http://warrenreports.tpmcafe.com/blog/warrenreports/2006/oct/02/congress_rewards_the_debt_collectors

If a Harvard Law Professor is concerned, we, the consumers, damn well better be worried !

The sky is not falling, and trying to create a hysteria around these minor amendments is absurd. Her article does not address anything about any of the actual changes, it's just a "oh look at Congress screwing over the little guy" partisan BS.

All she mentions is that expose they did up in Boston.

Were any of the harassment provisions amended? No.

Did they make it legal to call you at 3am now? No.

Did they preempt the statute of frauds and make you responsible for your relative's debt without a written agreement? No.

Did they take away your ability to dispute the debt? No.

Did they make JDBs exempt from the FDCPA? No.

Can CAs pretend to be law enforcement now? No.

The collection industry celebrating these changes as a big deal is as absurd as the consumer credit advocates making this out to be a major blow for our rights. It's a non issue.

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A little change here, a little change there, next thing you know we have been striped of our rights.

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I think you need to re-read your case-law, I-Hate-CAs.

"Any language suggesting that action within 30 days is necessary, creates a §1692g problem." Seplak v. IMBS, Inc., 1999 U.S. Dist. LEXIS 2106 (N.D.Ill. Feb. 23, 1999).

Demands for an "immediate" response or "immediate payment" have been held to overshadow and contradict the validation notice. Beeman v. Lacy, Katzen, Ryen & Mittleman, 892 F. Supp. 405, 407-8 (N.D.N.Y. 1995)

Even where a demand for immediate payment is required, it can be implied as well as express. A debt collector may overshadow if the overall effect is to convey that message. In Jenkins v. Union Corp., 999 F.Supp. 1120 (N.D. Ill. 1998)

Any contradiction of the §1692g warnings is a violation, and that it is not necessary to establish a violation that the contradiction be "threatening" or visually overshadow the required notice. Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996); Adams v. Law Offices of Stuckert & Yates, 926 F.Supp. 521 (E.D.Pa. 1996); Flowers v. Accelerated Bureau of Collections, 96 C 4003, 1997 U.S.Dist. LEXIS 3354, 1997 WL 136313 (N.D.Ill. Mar 19, 1997).

In other words, anything, including a request for payment, that confuses unsophisticated consumers as to their § 1692g rights, is sufficient to violate §1692g.

So what cases did you read that say a collector is allowed to request payment other than in the initial contact dunning notice? What cases did you read that say a collector is allowed to make any payment request other than the initial dunning notice during the first 30 days that would imply payment before the 30 days had expired?

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I think you need to re-read your case-law, I-Hate-CAs.

"Any language suggesting that action within 30 days is necessary, creates a §1692g problem." Seplak v. IMBS, Inc., 1999 U.S. Dist. LEXIS 2106 (N.D.Ill. Feb. 23, 1999).

Demands for an "immediate" response or "immediate payment" have been held to overshadow and contradict the validation notice. Beeman v. Lacy, Katzen, Ryen & Mittleman, 892 F. Supp. 405, 407-8 (N.D.N.Y. 1995)

Even where a demand for immediate payment is required, it can be implied as well as express. A debt collector may overshadow if the overall effect is to convey that message. In Jenkins v. Union Corp., 999 F.Supp. 1120 (N.D. Ill. 1998)

Any contradiction of the §1692g warnings is a violation, and that it is not necessary to establish a violation that the contradiction be "threatening" or visually overshadow the required notice. Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996); Adams v. Law Offices of Stuckert & Yates, 926 F.Supp. 521 (E.D.Pa. 1996); Flowers v. Accelerated Bureau of Collections, 96 C 4003, 1997 U.S.Dist. LEXIS 3354, 1997 WL 136313 (N.D.Ill. Mar 19, 1997).

In other words, anything, including a request for payment, that confuses unsophisticated consumers as to their § 1692g rights, is sufficient to violate §1692g.

So what cases did you read that say a collector is allowed to request payment other than in the initial contact dunning notice? What cases did you read that say a collector is allowed to make any payment request other than the initial dunning notice during the first 30 days that would imply payment before the 30 days had expired?

Notice that the common thread there is some sort of immediate action. Simply sending a collection letter with a balance due is not overshadowing. Even sending successive letters within that period is not overshadowing. You have to confuse a LSC about their rights.

If they send a 2nd letter that says you have to pay this in 5 days, when there are still 20 days left, that'd be overshadowing.

Miller v. Payco-General Am. Credits, Inc., 943 F.2d 482 (4th Cir. 1991). ‘‘Congress included the debt validation provisions in order to guarantee that consumers receive adequate notice of their legal rights.’’ ‘‘Screaming headlines, bright colors and huge lettering’’ in the debt collector’s initial correspondence to the consumer contradicted and overshadowed the validation notice in violation of § 1692g. A debt collector need not cease its collection efforts, but it must effectively convey the validation notice without using collection efforts contradicting it. The debt collector’s letter commanding the consumer to telephone immediately could cause the consumer to overlook his right to verification and cessation of collection efforts upon written request.

Bernstein v. Howe, 2003 WL 1702254, 2003 U.S. Dist. LEXIS 5284 (S.D. Ind. Mar. 31, 2003). A collection letter instructing the consumer that payment or payment arrangements should be made by a date prior to the expiration of the thirty-day validation period without the threat of legal or other serious consequences did not violate the FDCPA.

Lerner v. Forster, F. Supp. 2d , 2003 WL 168442 (E.D.N.Y. Jan. 22, 2003). A dun requesting full payment or a call to the creditor to arrange partial payment did not contradict or overshadow the debt validation notice in the following paragraph.

Orenbuch v. Computer Credit, Inc., 2002 WL 1918222 (S.D.N.Y. Aug. 19, 2002). A debt collector that had not received a request for validation or other reply from a consumer may continue to attempt to collect the debt during the 30-day validation period so long as it does not create the impression that the consumer has less than 30 days in which to dispute the debt. Collector’s second notice sent within the 30-day validation period stating that it was returning the account to the creditor did not contradict or overshadow the initial 30-day verification disclosure or render it false.

Kramsky v. Trans-Continental Credit & Collection Corp., 166 F. Supp. 2d 908 (S.D.N.Y. 2001). The validation notice was not contradicted or overshadowed by the statement: ‘‘This past due statement reflects a balance due the above stated creditor. This account has been referred to collection and we must ask that you remit the balance shown in full using the enclosed envelope.’’

The mere act of sending a followup letter asking for payment on a non disputed debt would not be overshadowing. You'd have to look at the contents of the letter to determine that.

Could the demand for payment overshadow? Yes, absolutely it could. However, the amendments clarified that collectors are allowed to ATTEMPT COLLECTION during the 30 days, they just may not do so in an overshadowing manner. All the caselaw on overshadowing will still apply.

Again, nothing to see here move on.

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Okay here's one I disagree with...

Higgins v. Capitol Credit Servs., Inc., 762 F. Supp. 1128 (D. Del. 1991). Language of ‘‘IMMEDIATE SETTLEMENT NOTICE’’ stating that ‘‘Your Account Must Be Settled Now’’ merely encouraged payment and did not overshadow validation notice, nor did letter almost thirty days later stating ‘‘Payment in full within 10 days will stop all recommended action’’ violate the Act.

I think that's more than merely encouraged.

Now that they have their amendments, its time for us to lobby for 1692k(A)(2) changes. :)

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The point here is that any time you give the industry another potential loophole, they will find a way to exploit it.

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If I was a collector, I would write innocuous letters but make the phone ring every day for 30 days.

That would be the way to go IMO.

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Again, nothing to see here move on.

Want to tone down the rhetoric here? This is slightly overstepping the bounds of a civilized debate.

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