FTC Rules Agencies Can Put It In Writing

Collection agencies will be allowed inform consumers that collection activity has ceased in their account under a formal advisory opinion issued yesterday by the Federal Trade Commission. Previously, sending the consumer an official notice that the activity had ceased was considered a violation of the FDCPA.

The FDCPA gives a consumer contacted by a collector 30 days to request in writing that the collector provide verification of the consumer’s obligation to repay the debt. All collection activity must end once the collector receives the consumer’s request. The collector may recommence activity after providing the consumer with documentation showing the debt is owed.

Industry trade group ACA International contended that many consumers that had sent a letter asking for verification that had not heard back from the collector were confused just where their accounts stood. The collector would decide not to pursue the account but would not send a letter back to the consumer, concerned that any communication would violate the FDCPA. The FTC’s advisory opinion allows the agency to inform the consumer that collection activity has ceased. A full copy of the opinion can be found at http://www.ftc.gov/os/closings/staff/P064803fairdebt.pdf.

“Consumers had been very concerned, telling agencies ‘Can you just put it in writing?’,” said Rozanne Andersen, vice president and general counsel at ACA International, the collection agency trade group. The ACA had made a provision in its code of ethics for allowing the notice when it met this July during its annual convention.

“This (advisory) takes the ambiguity out of the situation,” said Karolyn Rubin, senior vice president of Chicago-based Bonded Collection Corp. “Before it was construed as a violation. This is great for those that want something in writing.”

The rare advisory opinion from the FTC was a victory for the ACA. In a press release yesterday, the ACA said that this marks only the second time the FTC has issued an advisory opinion regarding the FDCPA, both of them in response to requests from ACA.

Yesterday’s opinion also came on the eve of an FTC workshop Washington D.C. on the collection industry. The two-day workshop includes panel discussions with representatives from agencies, creditors, law firms, consumer advocates, the FTC and others.