Debt Collection

1. What is the difference between a creditor and a collection agency?

    -collection agency collects debts to others (not its own debts)
    -one of country's largest was ICS
       -we litigated with them for about 5 years
       -case went to Supreme Court
       -we won; they paid in bull semen and title to country western bar


2. From a legal perspective, why does it matter whether the consumer is being contacted by the creditor or a collection agency?

    -federal law covers only collection agencies
    -even though only 10% of all collections
       -explain legislative history of FDCPA
    -but Vermont regulation applies to all collections

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3. According to a 1974 study conducted by David Caplovitz, what was the main reason why consumers defaulted on loans?


    -43% "loss of income"

 

4. Did that change when he repeated the study in 1989? How?


    -"voluntary overextension" was #1
    -what does that mean?

 

5. Besides defaulting consumers, whom did Caplovitz blame for the problem?

<>    -banks and financial institutions that offer credit to people who shouldn't have it
    -what do you think? Should banks share the blame?
 


6. True or False: Under the federal Fair Debt Collection Practices Act (FDCPA), a collection agency may not communicate with anyone other than the consumer at any time for any purpose.

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    -General rule: can't communicate with third parties about the debt (1692c(b))
    - but does permit contact to obtain "location information" (see next question)
       -explain "skip accounts"


7. George owes money for a nifty flight suit he purchased but did not pay for. Ace collection agency, working on behalf of the seller of the flight suit, is trying to find him. If Ace contacts Dick, his neighbor, trying to locate George, it may not
a. let Dick know George owes a debt
b. send a post card
c. use its name, Ace Collection Agency, on an envelope
d. do any of the above

    -1692b


8. Once Ace locates George, it may contact him
a. at any hour of the day or night
b. even if he's represented by an attorney and Ace knows it
c. at work, even though Ace knows George's employer doesn't permit personal calls
d. Ace may not do any of the above

   -1692c(a)(1)


9. You're the new general manager at Ace and under pressure to increase collections. One of your employees suggests a couple of tactics that may help. Should you adopt them?
a. create a "wall of shame"; i.e., posting in the newspaper a list of everyone who has failed to pay 1692d(3)
b. send out letters threatening to repossess peoples' cars if they don't pay their debts 1692e(4)--can't threaten action you can't legally take
c. send out letters threatening to sue everyone who doesn't pay within a given period of time 1692e(5)--can't threaten action you don't intend to take
d. send out letters that look like they're from the government 1692e(1)
e. try to get the consumer to write a post-dated check, then cash it early and threated to sue for fraud 1692e(10)
 


10. If George sends you a letter directing you to cease communication about the debt
a. you can ignore it
b. you cannot contact him for any reason
c. you can continue to contact him, but only by mail
d. you may contact him to notify him that you're terminating future collection efforts

<>    -important provision of the law
    -1692c(c)
    -not in Vermont regulation; only applies to collection agencies

 

Questions 11-17 relate to the opinion of the United States District Court for the Northern District of Illinois in Carbajal v. Capital One:

    -"Arggh, what's in your wallet?"


11. How do the facts of this case differ from those of more typical cases brought under the FDCPA?

<>    -As court stated, most cases involve "dunning by letter or otherwise"
    -this was a unique form of debt collection involving solicitation for credit card
    -debt was put on card (see facts p. 1)
 


12. According to the FDCPA, a debt collector must send a "validation notice" to the debtor
a. in its initial communication with the debtor
b. within five days of its initial communication with the debtor
c. either in its initial communication OR within five days of its initial communication
d. none of the above; there is no specifi time requirement for the validation notice

    -see next question


13. The validation notice must include the following information
a. the amount of the debt
b. the name of the creditor
c. a statement that unless the debtor disputes the debt's validity within 30 days, it will be assumed to be valid
d. a statement that if the debtor disputes the debt's validity, the collector will obtain verification of the debt
e. all of the above

    -1692g
 

14. Did Capital One send a validation notice to the plaintiff?

    -yes
 

15. Did the notice include the statements required by the FDCPA?

    -yes
 

16. According to the plaintiff Carbajal, what was the problem with the notice?

    -was on back of notice, buried in fine print
 

17. How did the Court rule?


    -agreed with plaintiff (see * p. 2) 
 


Questions 18-25 relate to the opinion of the United States District Court for the Northern District of California in Joseph v. J.J. MacIntyre Companies.

18. Who was Ruby Joseph and how did she find herself being contacted by a debt collector?

    -physically disabled (but not "indigent") woman
     -incurred debt of $2356.62 at San Francisco General Hospital
 


19. Did the defendant attempt to collect interest on the debt owed by Ms. Joseph to the hospital?

    -yes
 


20. Does the FDCPA permit the collection of interest?

    -yes, if permitted by underlying agreement or law
    -1692f(1)
 

21. How did the Court rule on this issue?

    -For collection agency
     -Calif. law prohibits collection of interest if indigent, but she wasn't
 


22. Plaintiff claimed that agents of defandant called her and failed to disclose that they represented a collection agency and failed to disclose the name of the agency; if proven true, is that a violation of the FDCPA? What section?

<>     -yes
     -1692d(6)
    -apparently callers used "aliases" or "desk names" (e.g., lots of "Mr. Smiths")
    -that's OK, but law requires disclosure of creditor or collection agency
 


23. In response to Plaintiff's allegation that Defendant violated section 1692d(5), the court held that
a. the defendant can call up to three times a day
b. the defendant can call only once a day
c. the defendant can call as often as it wishes as long as the content of the calls isn't outrageous
d. whether there is a violation depends on both the number of calls and the pattern of the calls

    -see * p. 3
 


24. True or False: The Court held that since the Defendant was collecting on multiple debts, it could call more frequently than if it was calling on a single debt.

    - def. argued since it was collecting 17 different debts, legal standard was different
    -court said it was no less annoying to consumer


25. What standard did the Court of Appeals say should be applied in determining whether consumers were likely to be deceived by the Defendant's practices--the "reasonable consumer" standard or a "less sophisticated" consumer standard?

     -despite the FTC policy statement referring to "consumer acting reasonably"