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• PERMISSIBLE ACTIVITIES IN THE FIRST 3O DAYS

In a March 31, 2000 binding opinion letter to the American Collectors Association, the FTC stated that there is “no bar to appropriate or legal [collection] action” during the first 30 days after receipt of a debt. Collection activities must not be inconsistent with or overshadow a debtor’s right to dispute a debt, but may include a final demand or legal action. The FTC has asked that Congress make clear its intent that it is expressly permissible to take legal action to collect during the first 30 days debt placement. Watch here for news on that request for legislative clarification!

• WHO IS COVERED BY THE FDCPA?

An informal opinion from FTC staff to TSYS Total Debt Management on May 1, 2000 reiterated the position that a creditor’s employee who collects debts for the creditor in the name of the creditor is not a debt collector by definition of the FDCPA, a distinction extended to outsource employees. The opinion proceeds with the assertion that the location of the debt collection is not necessarily a defining condition, but rather who is supervising the collectors. For example, a third party agency’s employees, collecting a creditor’s accounts in the creditor’s name at the agency’s office while working under the direct supervision of the creditor would not be debt collectors as defined by the FDCPA. This is consistent with a December 20, 1999 letter to ACS regarding debts acquired by a processor prior to default. The FTC is signaling that who performs the day-to-day supervision of a collection unit is key in determining whether the collectors are acting as creditors or as debt collectors under the FDCPA.

• WHEN IS AN ACCOUNT IN DEFAULT?

The May 1, 2000 informal opinion to TSYS Total Debt Management also offered some further clarification on the matter of pre- and post-default timing. FTC staff opined that whether a creditor considers a debt in default “has no bearing” on whether the debt is truly in default, suggesting that a debt is “probably” in default when it is 2 months past due. This definition impacts the growing group of third party collection agencies performing what is called “pre-charge-off” collections, further indicating that the FTC considers their activities to be covered by the FDCPA.