John D. Krisor, Jr., Esq.
Dear Mr. Krisor:
I am responding to your inquiry of May 9, 1989, regarding certain questions your client, Midwest Collection Service, Inc., has pertaining to the Fair Debt Collection Practices Act ("FDCPA" or "the Act"). I regret the delay in reaching your inquiry.
Your letter presents a number of questions involving interpretation of Section 808 (l) of the Act, 15 U.S.C. 1692f, and asks for an informal staff opinion letter. May I begin by pointing out that the Commission, motivated in part by a desire to minimize the number of such opinion letters, recently published the Staff Commentary on the Fair Debt Collection Practices Act (53 F.R. 50097, December 13, 1988). I enclose a photocopy. The Commentary is intended to address recurring areas of inquiry and provide substantial guidance for compliance with the Act. You will note, for example, that the subject of your first inquiry is addressed at page 50108, first column, item 4, "Agreement not in writing."
In your first question you ask whether the phrase "expressly authorized by the agreement" used in Section 808 (l) pertains only "to a written agreement executed by the debtor himself, or can the express authorization arise absent signature by the debtor?" As I noted above, this question is largely answered by the Staff Commentary, which states
In other words, the agreement must be permitted by law and must not itself run afoul of the principal requirement of Section 808 ("a debt, collector may not use unfair or unconscionable means to collect or attempt to collect any debt.")
Your second question asks "[w]hat, if any, laws are there within the State of Indiana that would permit the collection of any amount (including any interest, fee, charge, or expense) incidental to the principal obligation?" We cannot address this inquiry because we do not maintain an ongoing familiarity with the details of permissive laws in every jurisdiction. We can only recommend that you turn to a more local resource for information about Indiana law.
Your third inquiry asks "[w]hat effect does the UCCC in Indiana, specifically, Indiana Code I.C. 24-4.5-3-405. . . have upon the inclusion of 'collection expenses' as it pertains to Section 808 (l) of the FDCPA?" For much the same reason as cited above, we cannot give you a specific response to this inquiry. We are unfamiliar with the Indiana Code section cited and could not, even if we had the text available to us, speculate about its effect under applicable state case law, if any. Therefore, I cannot enlarge upon the Staff Commentary statements that
Finally, you ask whether the loan agreement that you included with your May 9 letter "conform[s] to the requirements of the FDCPA, Section 808 (l), in view of the Uniform Consumer Credit Code . . . within the State of Indiana," and, once again, I must defer to sources versed in the particulars of Indiana law. I would note, however, that the language that you underlined in the subject paragraph ("5. Default") seems exclusively to address rights of the lender. Thus, to assess any compliance question under the FDCPA, one would need to know both the extent to which a given charge or collection fee was authorized by law for the lender and the extent to which the law permitted that lender to assign the right to collect such additional fees or charges to another (i.e., the collector).
You indicate in your letter that "significant differences of opinion" exist in Indiana regarding "these questions" and that, as a result, Midwest Collection Service "is placed at a serious disadvantage with respect to competition in the marketplace." I regret that this letter has not been able to supply more detailed guidance but the questions you posed are difficult to address, not only because they seem to depend in such large degree upon the specifics of Indiana law, but also because the questions themselves are, as you pose them in your letter of May 9, somewhat generalized.
Please let me know if we may be of further assistance.
Very truly yours,
Christopher W. Keller