Bernard Fagin, President
Dear Mr. Fagin:
I have been asked to respond to your letter to John LeFevre requesting Commission review "pursuant to 15 U.S.C. 1692(k)(e)" of a debt collection practice. The cited provision is Section 813(e) of the Fair Debt Collection Practices Act (FDCPA), which removes civil liability for violations of the FDCPA if the collector acted in good faith reliance upon an "advisory opinion of the Commission." The cited provision does not itself provide for advisory opinions. This letter will treat the questions you raised as an informal staff interpretation, not binding upon the commission.(1)
With your letter you enclose a copy of a specific dunning letter apparently written by an attorney in Searcy, Arkansas to an alleged debtor regarding a debt of $2,154 owed to a medical center. The letter indicates that the attorney has been retained by Consumer Collection Management (we assume that this is a debt collection agency) to collect the debt on behalf of the medical center. The letter goes on to say that the attorney has "found that many times ...matters such as this can be worked out... without the necessity of going to court." The letter asks the debtor to make contact within five days. The letter concludes by stating that if the debtor fails to get in touch with the attorney or the collector, the attorney "will have no choice but to file an action against you in the Circuit Court of Garland County, Arkansas, wherein I will request that Consumer Collection Management obtain judgment against you for the respective debt, in addition to court costs and attorney fees."
Your inquiry asks whether "this sort of [attorney] letter is appropriate and, specifically, whether it complies with federal law even if (1) no lawsuit is actually filed when the debtor misses the stated deadline; or alternatively (2) where there is no actual intent to file a lawsuit if the stated deadline...is not met."We must note at the outset that the following analysis of whether such letters violate the FDCPA is a general discussion of principles applicable to the overall facts posited in your letter. We usually cannot say definitively whether an individual mailing violates the Act without having more facts specific to that instance. Thus, we cannot say whether the specific letter attached to your inquiry violates the Act.
As you know, the chief line of inquiry in this analysis focuses on Section 807(5) which prohibits the threat to take any action (such as filing a lawsuit) that cannot legally taken or that is not intended to be taken. A threshold question, therefore, is whether the attorney has authority from the creditor to initiate a lawsuit on behalf of the creditor. If not, then the threat on the part of the attorney directly to file suit is clearly made without "intent" because the attorney does not have the requisite authority and such a threat would thus violate Section 807(5).
As your inquiries recognize, however, the more usual context in which "intent" arises in connection with threats of suit is the issue of whether the incidence of actual filings of suit is the statutory determinant of "intent." This issue is addressed in the Proposed Official Staff Commentary on the Fair Debt Collection Practices Act (51 Fed. Reg. 8019, March 7, 1986), a copy of which I enclose for your information. Because the threat of suit contained in the letter that you inquire about is not qualified, it constitutes a statement of definite action rather than a statement of possible action. As such, the threat is impermissible unless there is intent to take the action at the time the statement is made, or the action is ordinarily taken by the collector in similar circumstances. (See comments on Section 807(5) at 51 F.R. 8025.) Intent may be inferred or demonstrated by a number of factors or circumstances; but where, as here, the threat of suit is direct and unqualified, it is hard to escape the conclusion that the major determinant is whether, in the absence of payment or other action on the account, suit is actually filed in this and a majority of similarly-situated accounts.
Although misrepresentation of the urgency of a message may be a separate violation of the FDCPA (see comments on Section 807(10) at 51 F.R. 8026), it is unlikely that the passage of a specified deadline without suit being instituted would, in the case you have raised, itself make out lack of intent to take definite action.
Both Sections 807(10) and 808(1) prohibit a false representation with respect to an alleged debtor's potential liability under state law for attorney's fees or other court costs. Note, however, that state law may provide a court wide latitude in assessing fees and costs; in those circumstances, a statement that the collector (or attorney, as the case may be) will "request" court costs and attorney's fees may not be prohibited by the Act.
Finally, I must address your observation that it would improve your firm's collection prospects to be "able to use an attorney's stationery." Please be aware that Section 807(3) prohibits the false representation or implication that "any communication is from an attorney." As the Staff Commentary makes clear, although an attorney may use a computer service to send his own letters, "a debt collector may not send a computer-generated letter using an attorney's name." (51 F.R. 8025.) Of course, it is not simply the computer-generated nature of the letter that is of concern. In order to avoid violating Section 807(3), it is necessary that attorney involvement be bona fide with respect to each individual account in which a letter is sent.(2)
I hope that this information will be of use. Although it is staff opinion, and is therefore not binding on the Commission, it does represent the enforcement position of the staff. Please let me know if I can be of further assistance.
Very truly yours,
Christopher W. Keller
1. The criteria for a formal Commission advisory opinion are set out in Part 1.1. of the Commission's Rules of Practice and Procedures (16 CFR 1.1). Formal advisory opinions are available only where certain circumstances are present, among them that "the matter involves a substantial or novel question-and there is no clear Commission or court precedent" (1.1(a)(1)). Because we believe the questions posed by your letter are, as set out more fully in this response, adequately addressed by existing precedent, we doubt that your request would meet the requirements necessary for a formal advisory opinion.
2. See U.S. v. Central Adjustment Bureau, 667 F. Supp. 370, 381-382(N.D. Tex 1986).