Full text of Federal Reserve Bank of New York Circulars : 8316. Fair Debt Collection Practices Act

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FEDERAL RESERVE BANK
OF NEW YORK

Circular No. 8 3 1 6
April 6, 1978 ']

[
FAIR DEBT COLLECTION PRACTICES ACT

To A ll State Member Banks, and Others Concerned,
in the Second Federal Reserve District:

Following is the text of a statement issued by the Board of Governors of the Federal Reserve
System:
To assist State member banks in complying with the new Fair Debt Collection Practices Act, the Board
of Governors of the Federal Reserve System has issued a fact sheet and a set of questions and answers
describing the responsibilities of banks under the Act.
Similar fact sheets and questions and answers are being sent by the Federal Deposit Insurance
Corporation and the Office of the Comptroller of the Currency to banks supervised by those agencies.
The Act became effective March 20. It makes abusive and deceptive debt collection practices illegal for
all individuals or businesses defined by the Act as debt collectors. Generally, a debt collector, under the Act, is
anyone who regularly collects or tries to collect—directly or indirectly—consumer debt for someone else.
Any consumer who believes a bank has violated the Fair Debt Collection Practices Act in attempting to
collect a debt from the consumer can lodge a complaint with the nearest Federal Reserve Bank or with the
Federal Reserve Board in Washington, D.C. (20551), in writing or by telephone. The Federal Reserve will
follow up on all such complaints (or refer them to the appropriate Federal bank regulatory agency if the
complaint is not against a State member bank). Federal Reserve bank examiners are being instructed to
watch for any evidence of violations of the Act.
Under the Act, Federal bank regulatory agencies may issue cease and desist orders to halt violations
and may require affirmative corrective action.
The Board’s fact sheet noted that the Act requires debt collectors to:
—At the outset of the debt collection process, or within five days thereafter, notify the consumer in
writing of the amount of the debt, the name of the creditor and how the consumer may dispute the
debt.
—Halt communications with a consumer upon written request to do so, except to let the consumer
know that there will be no further communications, or to tell the consumer what further efforts
will be made to close the case.
—Use payments made by the consumer as the consumer directs.
The fact sheet pointed out that the Act prohibits abuse and harassment, such as threats of violence or use
of profane language by the debt collector; false and misleading statements, such as giving a false impression
that documents are legal orders; and unfair practices such as misuse of postdated checks, or communicating
by postcard.




(Over)

The fact sheet also drew attention to certain specific practices that are prohibited, including contact by
the debt collector with third parties, such as employers, except to find out where the consumer lives;
communication with the consumer at work, if there is reason to believe the employer does not allow such
contact, and telephoning or meeting the consumer at any unusual time or place except with the consumer’s
agreement.
The fact sheet provided detailed guidance as to when a bank is a debt collector as defined in the Act, and
when it is not. Generally, the Act applies to a bank when it collects delinquent debts for others as a regular part
of the bank’s business, or if it uses a name other than its own in collecting debts on its own behalf. A bank is
generally not subject to the Act when it is collecting debts on its own behalf in its own name. Bank trust
department activities are generally exempted by the Act
Generally, the only State member banks to which the Fair Debt Collection Practices Act applies
are those State member banks that regularly collect defaulted debts for other institutions, including
collections under reciprocal service agreements. The fact sheet, and the set of questions and answers
relating to banks’ responsibilities under the Act, have been prepared by an interagency staff group of
the Board of Governors, the Comptroller of the Currency, and the Federal Deposit Insurance
Corporation. These materials, together with the text of the Fair Debt Collection Practices Act (Public
Law 95-109), are enclosed for State member banks only; a copy of the enclosure will be furnished to
others upon request to the Circulars Division of this Bank. No regulations will be issued under the Act.
Questions regarding these matters may be directed to our Consumer Affairs and Bank
Regulations Department (Tel. No. 212-791-5919).




P aul A. V olcker,
President.




Fa c t

Sheet

Including
Questions

an d A n s w e r s

and
Statute

Fair

Deb t

Developed
Board

Collection

by

of Governors

Interagency
of

Comptroller
Federal

Practices

Deposit

the
of

Staff Group

Federal
th e

Reserve

System

Currency

Insurance

March 20, 1978

A ct

Corporation

2

FACT
Banking

Institutions

and

SHEET

F a i r De b t

Collection

P r a c t i c e s Act

BACKGROUND
The

Fair

was

signed

Credit

Debt

Collection

into

Practices

law on September

Protection

Act.

The

Act

20,

(the A c t ) ,

1977,

effective

15 U S C

as T i t l e

date

§ 1692

VIII

of the A c t

is M a r c h

It is d e s i g n e d to e l i m i n a t e a b u s i v e a nd d e c e p t i v e d e b t
p r a c t i c e s and to i n s u r e that r e p u t a b l e deb t c o l l e c t o r s

et

seq.,

of the Consumer
20,

1978.

collection
are not

competitively disadvantaged.
COVERAGE
Not all
Th e Ac t

persons
defines

attempts

or b u s i n e s s e s w h o c o l l e c t d e b t s are c o v e r e d b y the Ac t .
" d e b t c o l l e c t o r " as a n y p e r s o n w h o r e g u l a r l y c o l l e c t s or

to c o l l e c t ,

be o w e d

to

primarily
business

another
for

or

The Act

is

for o t h e r
service

d i r e c t l y or

person.

personal,

unrelated

the

help of

has

relocated.

Act

if

for

bank

example,

be

other

a deb t

debts

Collects

o

Collects,

o

Collects

a debt

which

o

Collects

a debt

not

o

Collects

a debt

obtained

o

Collects
or

o

due

another

in the b a n k ' s

transaction

which

Debts

to

individual

incurred

regularly collect

collections

under

an a r r a n g e m e n t ,

a defaulted

subject
in

in

own name,

debt

to the
its

subject
only

asserted
by an

for

to

reciprocal

a bank

of

debts

solicits

a c u s tomer who

requirements

of

the

collection efforts.
the A c t

isolated
debts

when

it:

instances.

owed

to

the

bank.

it o r i g i n a t e d .

in d e f a u l t

involving

a debt

su c h

be

collector

o

purposes.

to b a n k s

its o w n

debts

incurred

covered.

including

also
than

consumer

is d e b t

not

in c o l l e c t i n g

A bank would
a name

not

ar e

Typically under

another

it u s e s

A bank will

purposes

institutions,

agreements.

debt

f a m i l y or h o u s e h o l d

agricultural
applicable,

indirectly,

Consumer

as

the

when

obtained.

security

for

a commercial

credit

bank.

incidental

to

a bona

fi d e

fiduciary relationship

escrow arrangement.

Collects

a debt

ownership
those

or

persons

for

another

corporate
to w h o m

person

control,
it

is

as

to w h o m

it

l o n g as

it d o e s

so r e l a t e d .

is r e l a t e d

However,

by common

so o n l y
if th e

for

bank

r e g u l a r l y c o l l e c t s d e f a u l t e d d e b t s o w e d a n o n - a f f i l i a t e per so n ,
the b a n k w i l l b e c o m e a d e b t c o l l e c t o r for t h o s e d e f a u l t e d d e b t s
as w e l l

as

for

own debts.




its

for d e f a u l t e d

debts

of a ffiliated

entities,

but

not

3

Others

who

are no t

covered

o

An

officer

or e m p l o y e e

name,
o

owe d

to

Attorneys-at-law
the

o

debts

by the Act
of

are:

the

bank when

collecting,

in the

bank's

the bank.

collecting

debts

on b e h a l f

of

and

in the

name

of

bank.

Legal

process

serv e r s .

REQUIREMENTS
The Act
o

requires

debt

collectors:

To c e a s e f u r t h e r c o m m u n i c a t i o n w i t h a c o n s u m e r u po n w r i t t e n
r e q u e s t , e x c e p t to a d v i s e the c o n s u m e r that the debt c o l l e c t o r ' s
f u r t h e r e f f o r t s are b e i n g t e r m i n a t e d , or to n o t i f y the c o n s u m e r
tha t

specified

o

To

apply

o

If

the

payments

following

to n o t i f y
contact,

the
of

to a d v i s e

the

deb t

within

if

information
of

is not

the

consumer

is d i s p u t e d .

30 day s ,

the d e b t

verification

is

the
If

to

the

and

the

the

consumer's

provided

at

five

the

deb t

collector

sent

invoked.

within

debt

of

be

with

in w r i t i n g ,

amount

the

it

m a y or w i l l

in a c c o r d a n c e

consumer

the

an d

until

remedies

name

initial
days
of

must

stop

of

creditor,

duty

disputes

contact,
initial

the

collector's

consumer

instructions.

to v e r i f y

the

collection

debt

efforts

consumer.

PROHIBITIONS
T h e Ac t
o

prohibits:
Abuse

and

language
o




the

and M i s l e a d i n g

false

credit

represent

o

the

With

limited

if t h e r e

is

or

the

violence

with

giving

misusing

with

to o b t a i n

profane

threatening

to c o m m u n i c a t e

impression

that

checks,

communicating

by

third

or

the Act

are

parties,

information

location.

consumer

to b e l i e v e

communications.

false

prohibited

contact

except

the

a

postdated

specifically

consumer's

reason

or u s i n g

collection

process.

exceptions,

Communication
su c h

- e.g.,

employers,

concerning

o

legal

activities

including

threatening

of a debt.

R e p r e s e n ta tion - e.g.,

information,

Unfair Practices
by postcard.
Among

- e.g . ,

collection

False

documents
o

Harassment
in

at

that

place
the

of

employment

employer

prohibits

the

following

k

o

Contact
unless

o

CIVIL

with

a c o n s u m e r at

agreed

to b y the

civil

damages

act io n must

In an

plus

collector

is

be b r o u g h t

individual

punitive
liable

ADMINISTRATIVE
bank

t h e ir

damages

damages,
and

one

th e d e b t

of up to

for a c t u a l

the

year

f r o m th e d a t e

collector

$ 1, 0 0 0 .
as w e l l

is

In a c l a s s
as

l e s s e r of

punitive
1% of net

of the

liable

for a c t u a l

action,

the debt

damages
worth

up to

or $ 5 0 0 , 0 0 0

ENFORCEMENT

regulatory

agencies

Federal

Deposit

authority

under

provisions

within

action,

$ 1, 0 0 0 for e a c h n a m e d p l a i n t i f f
for all o t h e r c l a s s m e m b e r s .

the

place,

LIABILITY

Private

The

time or

B r i n g i n g a d e b t c o l l e c t i o n a c t i o n in a j u r i s d i c t i o n
o t h e r t h a n t h o s e p e r m i t t e d b y th e A c t .

violation.

of

any unusual

consumer.

requiring

are

responsible

Insurance Act.
§8 to

issue

affirmative

cease

for e n f o r c i n g

This m e a n s
and

desist

ac t i o n to correct

that

the Ac t

bank

orders

under

which may

conditions

i nc l u d e

resulting

violations.
N o r e g u l a t i o n s ca n be i s s u e d b y a n y r e g u l a t o r , a l t h o u g h the
F e d e r a l T r a d e C o m m i s s i o n ha s the a u t h o r i t y to i s s u e a d v i s o r y o p i n i o n s .




§8

r e g u l a t o r s m a y use
from

5

QUESTIONS
Fair Debt

AND ANSWERS

Collection

Practices

Ac t
REFERENCE

COVERAGE
1.

Q:
A:

When

is a b a n k a deb t

Generally,

a bank

. any arrangement,
agreements, with
defaulted
debt
In

addition,

own
is
2.

Q:

a deb t

May

collect
debts

eve r

a debt
for

Q:

A:

Is

a bank

No.

A bank

collect
before
4.

When

A:

The Act

doe s

of

bank's
the

State




a

th a n

as

its

then

it

well.

for

another

person

the

that

other

a debt

collects

debts

in the

for

regularly

also.

it c o l l e c t s

in an

isolated
The

regular

if

for n o n -

a consumer

for a n o n - r e l a t e d

covered.

a debt

without

collects

However,

debts

§ 8 0 3 ( 6 ) (B)

it m a y

institution

collector

if

instance

institution

control,

person?

instance

for

§ 803 ( 6)

bank must

course

of b u s i n e s s

collector.

in d e f a u l t ?

not

define

factors,

when

a de b t

a de b t

among

customary

contract,
law.

other

p r o v i d e d , it

affiliate

determining whether

following
th e

is

debts,

institutions.

is not

for o t h e r s

to

defaulted

collector

that

is a debt

collect

for

it b e c o m e s

isolated

person,

debts

corporate

debts

it b e c o m e s

Q:

In

or

related

a non-affiliate

§ 803(6)

collector?

collector;

a debt

in an

in

only.

a name

is r e l a t e d

defaulted

debt

that

such

a debt

regularly collects

affiliates,

participates

consumer

regularly

consumer

only

uses
ow n

for

ownership

collected,
3.

debts

its

If the b a n k

becoming

for

those

if a b a n k

becoming

by c o m m o n

regularly

debts

collector

a bank

Yes.

it

for

in c o l l e c t i n g

without
A:

that

inc luding re ci pr oc al service
a n o t h e r p e r s o n to c o l l e c t

consumer

collector

collector?

is

o th e r s ,

policies

determination

and
by

is

should

be

the

considered:

practices,
the

§ 803(6)(G)(iii)

in d e f a u l t .

in d e f a u l t ,

ter m s

originator,

and

6

5.

Q:

A:

When does
another?
The Act
which
For

a bank

does

will

not

the

Whether

the

with

debts,

collect

the

that

bank

has

another

su c h

as

of

entered

in

collects

third

into

a ny r e c i p r o c a l

are

considered

a

formal

to c o l l e c t

third

service

§ 8 03(6)

"regularly."

following

be

regularly

person

du e

activity

debts

the

should

the b a n k

debts

level

collecting

of e x a m i n a t i o n ,

factors

d e t e r m i n i n g if
party debts:

ment

define

constitute

purposes

among

regularly

agree­
party

agreement

program.
Whether

the

b a n k has

for c o l l e c t i o n
The

ratio

of

collected
defaulted

Q:

Are banks
generally

A:

No.
tha t

that
debt

the

not

bank.

loan
those

7.

8.

not
that

However,

loans

bank

debts

in

debt

in

or

collectors
when

if a b a n k

to

by

services

a

the

portfolio

that

when

A:

No.
T h e a c t i v i t i e s of tru s t d e p a r t m e n t s and
o t h e r b o n a fide f i d u c i a r y or e s c r o w a c t i v i t i e s
are e x e m p t .

Q:

Are
of

A:




No.

debt

debts

commercial
This

collectors

held

as

collectors?

if t h e y

security

for

(iii)

for

Are

banks

(ii),

it d i d

in d e f a u l t

debt

§ 8 03 ( 6 ) ( G )

debts

obtained
collector

departments

loans

if t h e y
or

is a deb t
were

third

student

it

and w h i c h

all

Q:

sumer

trust

spends

they or i g i n a t e d

in d e f a u l t

portfolio,

not or iginate
obtained.

bank

service mo rt g a g e s
collectors?

are

debts

were

procedures

debts.

party de fa u l t e d

of tim e the
collection.

Banks

service

third

party

d u r i n g the past 12 m o n t h s
debts collected.

The amount
pa rty debt
6.

established

of thi r d

collect
an

§ 803(6)(G)(i)

con­

extension

credit?

activity

is

specifically

exempted.

§ 8 0 3 ( 6 ) ( G)(iv)

7

9.

Q:

Are

employees,

considered
A:

No.

They

officers

debt
are

they collect

or

attorneys

of a b a n k

collectors?

not
the

debt

collectors

bank's

debts

so

lo n g

in the

as

§ 8 0 3 ( 6 ) (A)

bank's

name.

THIRD

10.

PARTY

Q:

COMMUNICATION

May

a bank

the

consumer

WHEN THE

communicate

BANK

with

to d e t e r m i n e

IS A C T I N G A S A

persons

the

other

location

DEBT COLLECTOR

tha n

of

the

consumer?
A:

Yes.

However,

the

communication

to l o c a t i o n i n f o r m a t i o n .
m ea ns a con sumer's place
number

or

identify
m a y be
11.

Q:

A:

place

said

as

a bank discuss

the

consumer?

Yes.

However,
attorney,

creditor
reporting
parent
person

the

the
(2)

agencies,
or

PROHIBITED ACTIVITIES

WHEN

THE

and

deb t

w it h

the
is

administrator
to p ay

limited

the

BANK

anyone

contact

other

only

(1)

attorney,
(4)

a minor),
(6)

than

its

(3)

spouse,

guardian,

any

other

debt.

IS A C T I N G A S A D E B T C O L L E C T O R 1
2

In g e n e r a l , w h a t m e a n s
p r o h i b i t e d fr o m u s i n g ?

A:

T h e b a n k c a n n o t t h r e a t e n v i o l e n c e or h a r m , swear,
p u b l i s h the c o n s u m e r ' s n am e as an i n d i v i d u a l wh o

of debt

collection

are

a l l e g e d l y r e f u s e s to pa y deb t s , a d v e r t i s e the
of the d e b t to c o e r c e p a y m e n t , m a k e e x c e s s i v e

would normally
prohibited.




banks

sale

or fail to d i s c l o s e the b a n k ' s
telephone.
Any other action which
harass,

§ 805(b)

the

consumer

consumer's
and

nothing

Q:

t el eph one calls
i d e n t i t y on the

§ 80 4

b a n k m a y not

collection.

attorney,

(5)

be

debt

consumer's

consumer

obligated

Th e

collector

bank may
the

or c r e d i t o r ' s

(if the

executor,

a de b t

concerning

May

own

12.

of e m p l o y m e n t .

itself

must

Location information
of r e s i d e n c e , p h o n e

oppress

or

abuse

anyone

is

S 806

The bank also cannot make false representation
about itself, the debt, its rights or the
consumer's rights.
13.

14.

15.

16.

17.

18.




Q:

May a bank contact a consumer at the consumer's
place of employment?

A:

The bank may not contact a consumer at the
consumer's place of employment if it is against
the consumer's wishes or if the bank knows
or should know that the employer forbids
such contacts.

Q:

May a bank contact a consumer who is represented
by an attorney concerning the debt?

A:

No. However, the bank may contact the consumer
to obtain the name and address of the attorney,
or if the attorney permits the contact or fails
to respond within a reasonable time.

Q:

May the bank be made to stop communicating with
the consumer concerning the debt?

A:

Yes. If
that the
does not
the bank
However,
consumer

Q:

May the bank collect an amount in excess of that
authorized by the contract or permitted by State
law?

A:

No.

Q:

May the bank accept postdated instruments?

A:

Yes. However, the Act provides very specific
rules for accepting these instruments.

Q:

May a postcard be used in collection efforts?

A:

No.

the consumer notifies the bank in writing
consumer refuses to pay the debt or simply
want any further contact with the bank,
must cease communication with the consumer.
at that point the bank may still notify the
of its possible further actions.

§ 807

§ 805(a)(3)

§ 805(a)(2)

§ 805 ( c )

§ 80 8 ( 1 )

§ 808(2)(3)(4)

§ 80 4 ( 4 )
§ 8 0 8( 7 )

9

19.

Q:

May

A:

Yes.

the b a n k

However,

present
of
20.

Q:

the

May

threaten

right

to r e p o s s e s s

it m a y
an d

do

property?

so o n l y w h e n

int en ti on to

take

there

is a

§ 808(6)

(see also

possession

property.

§ 803(6))

the b a n k u s e

an e n v e l o p e

that

contains

any

l a n g u a g e or s y m b o l i n d i c a t i n g de b t c o l l e c t i o n
w h en c o m mu n ic at i ng with a consumer?

A:

No.

§ 804(5)
§ 8 0 8 (8 )

REQUIREMENTS WHEN THE BANK IS ACTING AS A DEBT COLLECTOR

21.

Q:

A:

What

must

the b a n k do w h e n

for

the

first

Th e

bank must

o f the debt
a statement
dispute,

contacting

a consumer

time?
inform

the

consumer

of

the

and n a m e of the c r e d i t o r ,
that (1) th e c o n s u m e r ha s

in w r i t i n g ,

the v a l i d i t y o f

amount

the de b t

and

(2) the c o n s u m e r m a y r e q u e s t the n a m e of the
original creditor.
The ba n k must also pr ovide
consumer

with

disputing
given

to

contact,
within
22.

Q:

Wha t

a statement

the d e b t .
the

If thi s

consumer

it m u s t

five

be

of

at

the

supplied

the

§ 8 0 9 (a )

and provide
30 day s to

provisions

the

for

information

is not

t im e

i ni t i a l

of

the

in w r i t i n g or m a i l e d

days.

provisions

are m a d e

for d i s p u t i n g

a consumer

debt ?

A:




Th e

ban k must

tell

consumer notifies

the
the

consumer
bank

that

if th e

in w r i t i n g w i t h i n

30 days that the d e b t is p a r t i a l l y or w h o l l y
d i s p u t e d , the b a n k w i l l p r o v i d e a v e r i f i c a t i o n
of

the deb t .

T he

ban k must

also

inform

the

c o n s u m e r that, if t h e c o n s u m e r m a k e s a
w r i t t e n r e q u e s t w i t h i n 30 days, the b a n k w i l l
s u p p l y the n a m e
creditor
creditor.

if

it

an d

address

is d i f f e r e n t

o f the o r i g i n a l
f ro m the

current

§ 809(b)

10

23.

Q:

If t h e

consumer

the n a m e
may
A:

No.

and

However,

of th e

Q:

What

it p r o v i d e s
address




creditor,

collection

consumer

of t he de b t

o f the o r i g i n a l

§ 809(b)

a copy
or

creditor.

OF NONCOMPLIANCE

are

the

potential

noncompliance
A:

continue
th e

written verification
and

or r e q u e s t s

c o l l e c t i o n efforts?

the b a n k m a y

after

t he n a m e

24.

th e d e b t

o f the o r i g i n a l

the b a n k continue

e7forts

CONSEQUENCES

disputes

address

In c i v i l

with

actions,

consequences

of

the A c t ?
individual

consumers

may

§ 813

r e c o v e r act ual damages, court costs, at to rn ey 's
fees, and p u n i t i v e a w a r d s o f u p to $ 1 , 0 0 0 .
Class
a c t i o n r e c o v e r i e s i n c l u d e t h e a b o v e for n a m e d
p l a i n t i f f s , and p u n i t i v e a w a r d s of u p to the
l e s s e r of
worth.

$300,000

Administrative
may

involve

Deposit
desist

1% o f t h e b a n k ' s

enforcement

actions

Insurance
orders

to r e m e d y

or

under

Act,

requiring

conditions

of

th e A ct

§8 o f t h e

including
that

resulting

for

banks

Federal

cease

actions

net

and

be t a k e n

from v i ol at io ns .

§ 814

11

PUBLIC LAW 95-109—SEPT. 20, 1977

CONSUMER CREDIT PROTECTION ACT,
AMENDMENTS

••in o - n am




91 STAT. 874

PUBLIC LAW 95-109—SEPT. 20, 1977

Public Law 95-109
95th Congress
An Act
S«pt. 20, 1977
[H.R. 5294]

To amend the Consumer Credit Protection Act to prohibit abusive practices by
debt collectors.

Consumer Credit
Protection Act,
amendments.

Lie it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That the Consumer
Credit Protection Act (15 U.S.C. 1601 et seq.) is amended by adding
at the end thereof the following new title:

Fair Debt
Collection
Practices Act.

“TITLE V III—DEBT COLLECTION PRACTICES
“ Sec.

“801.
“802.
“803.
“804.
“805.
“806.
“807.
“80ft.
“809.
“810.
“811.
“812.
“813.
“814.
“815.
“816.
“817.
“818.

Short title.
Findings and purpose.
Definitions.
Acquisition of location information.
Communication in connection with debt collection.
Harassment or abuse.
False or misleading representations.
Unfair practices.
Validation of debts.
Multiple debts.
Legal actions by debt collectors.
Furnishing certain deceptive forms.
Civil liability.
Administrative enforcement.
Reports to Congress by the Commission.
Relation to State laws.
Exemption for State regulation.
Effective date.

15 USC 1601
note.

Ҥ 801. Short title

15 USC 1692.

Ҥ 802. Findings and purpose




‘‘This title may be cited as the ‘Fair Debt Collection Practices Act’.
“ (a) There is abundant evidence of the use of abusive, deceptive,
and unfair debt collection practices by many debt collectors. Abusive
debt collection practices contribute to the number of personal bank­
ruptcies, to marital instability, to the loss of jobs, and to invasions
of individual privacy.
*“(b) Existing laws and procedures for redressing these injuries are
inadequate to protect consumers.
“ (c) Means other than misrepresentation or other abusive debt col­
lection practices are available for the effective collection of debts.
“ (d) Abusive debt collection practices are carried on to a substantial
extent in interstate commerce and through means and instrumentalities
of such commerce. Even where abusive debt collection practices are
purely intrastate in character, they nevertheless directly affect inter­
state commerce.
“ (e) It is the purpose of this title to eliminate abusive debt collec­
tion practices by debt collectors, to insure that those debt collectors
who refrain from using abusive debt collection practices are not com­
petitively disadvantaged, and to promote consistent State action to
protect consumers against debt collection abuses.

13

PUBLIC LAW 95-109—SEPT. 20, 1977
Ҥ 803. Definitions

“As used in this 1itle—
“ (1) The term ‘Commission* means the Federal Trade
Commission.
“ (‘2) The term ‘communication* means the conveying of infor­
mation regarding a debt directly or indirectly to any j>erson
through any medium.
“ (3) The term ‘consumer* means any natural person obligated
or allegedly obligated to pay any debt.
“ (4) The term ‘creditor* means any person who offers or
extends credit creating a debt or to whom a debt is owed, but such
term does not include any person to the extent that he receives
an assignment or transfer of a debt in default solely for the
purpose of facilitating collection of such debt for another.
“ (.*») The term ‘debt* means any obligation or alleged obliga­
tion of a consumer to pay money arising out of a transaction in
which the money, property, insurance, or services which are the
subject of the transaction are primarily for personal, family, or
household purposes, whether or not such obligation has been
reduced to judgment.
“ (6) The term ‘debt collector* means any person who uses any
instrumentality of interstate commerce or the mails in any busi­
ness the principal purpose of which is the collection of any debts,
or who regularly collects or attempts to collect, directly or indi­
rectly, debts owed or tine or asserted to be owed or due another.
Notwithstanding the exclusion provided by clause (G) of the
last sentence of this paragraph, the term includes any creditor
who. in the process of collection: his own debts, uses any name
other than his own which would indicate that a third person is
collecting or attempting to collect such debts. For the purpose of
section 808(C>). such term also includes any person who uses anv
instrumentality of interstate commerce or the mails in any busi­
ness the principal purpose of which is the enforcement of security
interests. The term does not include—
“ (A) any officer or employee of a creditor while, in the
name of the creditor, collecting debts for such creditor:
“ (B) any person while acting as a debt collector for
another person. l>oth of whom are related by common owner­
ship or affiliated bv corporate control, if the person acting
as a debt collector does so only for persons to whom it is so
related or affiliated and if the principal business of such
( mmsoii is not the collection of debts;
“ (C) any officer or employee of the United States or any
State to the extent that collecting or attempting to collect
any debt is in the performance of his official duties:
“ (I)) any person while serving or attempting to serve
legal process on any other person in connection with the
judicial enforcement of any debt:
“ (E) any nonprofit organization which, at the request of
consumers, performs bona fide consumer credit counseling
and assists consumers in the liquidation of their debts Inreceiving payments from such consumers and distributing
such amounts to creditors:
“ (F) any attorney-at-law collecting a debt as an attorney
on l)chalf of and in the name of a client; and




91 STAT. 875
15 USC 1692*

Ik

91 STAT. 876

PUBLIC LAW 95-109— SEPT. 20, 1977

“ (G) any person collecting or attempting to collect any
debt owed or due or asserted to be owed or due another to the
extent such activity (i) is incidental to a bona fide fiduciary
obligation or a bona fide escrow arrangement; (ii) concerns
a debt which was originated by such person; (iii) concerns
a debt which was not in default at the time it was obtained
by such person; or (iv) concerns a debt obtained by such
person as a secured party in a commercial credit transaction
involving the creditor.
“ (7) The term ‘location information’ means a consumers place
of abode and his telephone number at such place, or his place of
employment.
“ (8) The term ‘State’ means any State, territory, or possession
of the United States, the District of Columbia, the Commonwealth
of Puerto Rico, or any political subdivision of any of the fore­
going.
15 USC 1692b.

Ҥ 804. Acquisition of location inform ation

“Any debt collector communicating with any person other than the
consumer for the purpose of acquiring location information about the
consumer shall—
“ (1) identify himself, state that he is confirming or correcting
location information concerning the consumer, and, only if
expressly requested, identify his employer;
“ (2) not state that such consumer owes any debt;
“ (3) not communicate with any such person more than once
unless requested to do so by such person or unless the debt collector
reasonably believes that the earlier response of such person is
erroneous or incomplete and that such person now has correct or
complete location information;
“ (4) not communicate by post card;
“ (5) not use any language or symbol on any envelope or in the
contents of any communication effected by the mails or telegram
that indicates that the debt collector is in the debt collection busi­
ness or that the communication relates to the collection of a debt:
and
“ (6) after the debt collector knows the consumer is represented
by an attorney with regard to the subject debt and has knowledge
of, or can readily ascertain, such attorney’s name and address, not
communicate with any person other than that attorney, unless the
attorney fails to respond within a reasonable period of time to
communication from the debt collector.
15 USC 1692c.




Ҥ 805. Communication in connection with debt collection

“ (a) C ommunication W ith the C onsumer G enerally.—Without
the prior consent of the consumer given directly to the debt collector
or the express permission of a court of competent jurisdiction, a debt
collector may not communicate with a consumer in connection with
the collection of any debt—
“ (1) at any unusual time or place or a time or place known or
which should be known to be inconvenient to the consumer. Tn
the absence of knowledge of circumstances to the contrary, a debt
collector shall assume that the convenient time for communicating
with a consumer is after 8 o’clock antimeridian and before 9 o’clock
postmeridian, local time at the consumer’s location;
“ (2) if the debt collector knows the consumer is represented
by an attorney with respect to such debt and has knowledge of,
or can readily ascertain, such attorney’s name and address, unless

15

PUBLIC LAW 95-109—SEPT. 20, 1977

91 STAT. 877

the, attorney fails to respond within a reasonable period of time
to a communication from the debt collector or unless the attorney
consents to direct communicat ion with the consumer; or
•‘(3) at the consumer’s place of employment if the debt collector
knows or has reason to know that the consumer's employer pro­
hibits the consumer from receiving such communication.
••(b) Communication W ith T hird P arties.— Except as provided
in section 804, without the prior consent of the consumer given directly
to the debt collector, or the express permission of a court of competent
jurisdiction, or as reasonably necessary to effectuate a postjudgment
judicial remedy, a debt collector may not communicate, in connection
with the collection of any debt, with any person other than the con­
sumer, his attorney, a consumer reporting agency if otherwise per­
mitted by law, the creditor, the attorney of <he creditor, or the attorney
of the debt collector.
“ (c) C easino C ommunication .—If a consumer notifies a debt col­
lector in writing that the consumer refuses to pay a debt or that the
consumer wishes the debt collector to cease further communication
with the consumer, the debt collector shall not communicate further
with the consumer with respect to such debt, except—
“ (l) to advise the consumer that the debt collector's further
efforts are being terminated;
“ (2) to notify the consumer that the debt collector or creditor
may invoke specified remedies which are ordinarily invoked by
such debt collector or creditor; or
“ (3) where applicable, to notify the consumer that the debt
collector or creditor intends to invoke a specified remedy.
I f such notice from the consumer is made by mail, notification shall be
complete upon receipt.
“ (d) For the purpose of this section, the term ‘consumer includes
the consumer's spouse, parent (if the consumer is a minor), guardian,
executor, or administrator.
Ҥ 806. H arassm ent or abuse

“ A debt collector may not engage in any conduct the natural con­
sequence of which is to harass, oppress, or abuse any person in con­
nection with the collection of a debt. Without limiting the general
application of the foregoing, the following conduct is a violation of
this section:
“■(1) The use or threat of use of violence or other criminal
means to harm the physical person, reputation, or property of any
person.
“ (2) The use of obscene or profane language or language the,
natural consequence of which is to abuse the hearer or reader.
“ (3) The publication of a list of consumers who allegedly refuse
to pay debts, except to a consumer reporting agency or to persons
meeting the requirements of section 603(f) or 604(3) of this Act.
“ (4) The advertisement for sale of any debt to coerce payment
of the debt.
“ (5) Causing a telephone to ring or engaging any person in
telephone, conversation repeatedly or continuously with intent to
annoy, abuse, or harass any person at the called number.
“ (6) Except as provided in section 804, the placement of tele­
phone calls without meaningful disclosure of the caller's ident ity.
Ҥ 807. F alse or m isleading representations

“A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.




15 (JSC 1692d.

15 USC 1681a,
1681b.

15 USC 1692e.

16
91 STAT. 878




PUBLIC LAW 95-109—SEPT. 20, 1977

Without limiting: the general application ot me foregoing, the follow­
ing conduct is a violation of this section :
“ (1) The false representation or implication that the debt col­
lector is vouched for, bonded by, or affiliated with the United
States or any State, including the use of any badge, uniform, or
facsimile thereof.
“ (2) The false representation of—
“ (A) the character, amount, or legal status of any debt; or
“ (B) any services rendered or compensation which may be
lawfully received by any debt collector for the collection of
a debt.
“ (3) The false representation or implication that any individ­
ual is an attorney or that any communication is from an attorney.
“ (4) The representation or implication that nonpayment of
any debt will result in the arrest or imprisonment of any person
or the seizure, garnishment, attachment, or sale of any property
or wages of any person unless such action is lawful and the debt
collector or creditor intends to take such action.
“ (5) The threat to take any action that cannot legally t)e taken
or that is not intended to be taken.
‘*(0) The false representation or implication that a sale,
referral, or other transfer of any interest in a debt shall cause
the consumer to—
"(A) lose any claim or defense to payment of the debt: or
“ (B) become subject to any practice prohibited by this
title.
“ (7) The false representation or implication that the consumer
committed any crime or other conduct in order to disgrace the
consumer.
“ (8) Communicating or threatening to communicate to any
person credit information which is known or which should be
known to be false, including the failure to communicate that a
disputed debt is disputed.
“ (9) The use or distribution of any written communication
which simulates or is falsely represented to be a document author­
ized, issued, or approved by any court, official, or agency of the
United States or any State, or which creates a false impression
as to its source, authorization, or approval.
“ (10) The use of any false representation or deceptive means
to collect or attempt to collect any debt or to obtain information
concerning a consumer.
“ (11) Except as otherwise provided for communications to
acquire location information under section 804. the failure to dis­
close clearly in all communications made to collect a debt or to
obtain information about a consumer, that the debt collector is
attempting to collect a debt and that any information obtained
will be used for that purpose.
**(12) The false representation or implication that accounts
have been turned over to innocent purchasers for value.
“ (13) The false representation or implication that documents
are legal process.
“ (14) The use of any business, company, or organization name
other than the true name of the debt collector’s business, company,
or organization.
“ (15) The false representation or implication that documents
are not legal process forms or do not require action bv the
consumer.




PUBLIC LAW 95-109—SEPT. 20, 1977

“ (16) The false representation or implication that a debt col­
lector operates or is employed by a consumer reporting agency as
defined by section 603(f) of this Act.
Ҥ808. U nfair practices
*‘A debt collector may not use unfair or unconscionable means to
collect or attempt to collect any debt. Without limiting the general
application of the foregoing, the following conduct is a violation of
this section:
“ (1) The collection of any amount (including any interest, fee,
charge, or expense, incidental to the principal obligation) unless
such amount is expressly authorized by the agreement creating the
debt or permitted by law.
“ (2) The acceptance by a debt collector from any person of a
check or other payment instrument postdated by more than five
days unless such person is notified in writing of the debt collector’s
intent to deposit such check or instrument not more than ten nor
less than three business days prior to such deposit.
“ (3) The solicitation by a debt collector of any postdated check
or other postdated payment instrument for the purpose of threat­
ening or instituting criminal prosecution.
“ (4) Depositing or threatening to deposit any postdated check
or other postdated payment instrument prior to the date on such
check or instrument.
“ (5) Causing charges to lie made to any person for communica­
tions by concealment of the true purpose of the communication.
Such charges include, but are not limited to, collect telephone
calls and telegram fees.
“ (6) Taking or threatening to take any nonjudicial action to
effect dispossession or disablement of property if—
“ (A) there is no present right to possession of the property
claimed as collateral through an enforceable security interest;
“ (B) there is no present intention to take possession of the
property • or
“ (C) the property is exempt by law from such disposses­
sion or disablement.
“ (7) Communicating with a consumer regarding a debt by
post card.
“ (8) Using any language or symlml, other than the debt col­
lector’s address, on any envelope when communicating with a
consumer by use of the mails or by telegram, except that a debt
collector may use his business name if such name does not indicate
that he is in the debt collection business.

Ҥ 809. Validation of debts

“ (a) Within five days after the initial communication with a con­
sumer in connection with the collection of any debt, a debt collector
shall, unless the following information is contained in the initial com­
munication or the consumer has paid the debt, send the consumer a
written notice containing—
“ (1) the amount of the debt;
“ (2) the name of the creditor to whom the debt is owed;
“ (3) a statement that unless the consumer, within thirty davs
after receipt of the notice, disputes the validity of the debt, or any
portion thereof, the debt will be assumed to be valid by the debt
collector;

91 STAT. 879

15 USC 1681.
15 USC 1692f.

15 USC 1692g.

18

91 STAT. 880

PUBLIC LAW 95-109—SEPT. 20, 1977

‘‘(4) a statement that if the consumer notifies the debt collector
in writing within the thirty-dav period that the debt, or any por­
tion thereof, is disputed, the debt collector will obtain verification
of the debt or a copy of a judgment against the consumer and a
copy of such verification or judgment will be mailed to the con­
sumer by the debt collector; and
*‘(f>) a statement that, upon the consumer’s written request
within the thirty-dav period, the debt collector will provide the
consumer with the name and address of the original creditor, if
different from the current creditor.
“ (b) If the consumer notifies the debt collector in writing within
the thirty-day period descril>ed in subsection (a) that the debt, or
any portion thereof, is disputed, or that the consumer requests the
name and address of the original creditor, the debt collector shall cease
collection of the debt, or any disputed portion thereof, until the debt
collector obtains ver ification of the debt or a copy of a judgment, or
the name and address of the original creditor, and a copy of such
verification or judgment, or name and address of the original creditor,
is mailed to the consumer by the debt collector.
“ (c) The failure of a consumer to dispute the validity of a debt
under this section may not be construed by any court as an admission
of liability by the consumer.
15 USC 1692h.

Ҥ 810. Multiple debts

“If any consumer owes multiple debts and makes any single pay­
ment to any debt collector with respect to such debts, such debt col­
lector may not apply such payment to any debt which is disputed
by the consumer and, where applicable, shall apply such payment in
accordance with the consumer's directions.

15 USC 1692i.

Ҥ 811. Legal actions by debt collectors

“ (a) Any debt collector who brings any legal action on a debt
against any consumer shall—
“ (1) in the case of an action to enforce an interest in real prop­
erty securing the consumer’s obligation, bring such action only in
a judicial district or similar legal entity in which such real
property is located; or
“ (2) in the case of an action not described in paragraph (1),
bring such action only in the judicial district or similar iegal
entity—
“ (A) in which such consumer signed the contract sued
upon; or
“ (B) in which such consumer resides at the commencement
of the action.
“ (b) Nothing in this title shall be construed to authorize the bring­
ing of legal actions by debt collectors.

15 USC 1692j.




Ҥ 812. Furnishing certain deceptive forms

“ (a) It is unlawful to design, compile, and furnish any form know­
ing that such form would be used to create the false belief in a con­
sumer that a person other than the creditor of such consumer is
participating in the collection of or in an attempt to collect a debt
such consumer allegedly owes such creditor, when in fact such person is
not so participating.
“ (b) Any person who violates this section shall be liable to the same
extent and in the same manner as a debt collector is liable under sec­
tion 813 for failure to comply with a provision of this title.

19

PUBLIC LAW 95-109—SEPT. 20, 1977
Ҥ 813. Civil liability

91 STAT. 881
15 USC 1692k.

“ (a) Except as otherwise provided by this section, any debt col­
lector w-ho fails to comply with any provision of this title with respect
to any person is liable to such person in an amount equal to the sum
of—

“ (1.) any actual damage sustained bv such person as a result
of such failure;
‘‘(2) (A) in the case of any action by an individual, such addi­
tional damages as the court may allow, but not exceeding $1,000;
or
“ (B) in the, case of a class action, (i) such amount for each
named plaintiff as could be recovered under subparagraph (A),
and (ii) such amount as the court may allow for all other class
members, without regard to a minimum individual recovery, not
to exceed the lesser of $500,000 or 1 per centum of the net worth
of the debt collector; and
“ (3) in the case of any successful action to enforce the fore­
going liability, the costs of the action, together with a reasonable
attorney’s fee as determined by the court. On a finding by the
court that an action under this section was brought in bad faith
and for the purpose of harassment, the court may award to the
defendant attorney’s fees reasonable in relation to the work
expended and costs.
“ (b) In determining the amount of liability in any action under
subsection (a), the court shall consider, among other relevant factors—
“ (1) in any individual action under subsection (a) (2) (A ), the
frequency and persistence of noncompliance by the debt collector,
the nature of such noncompliance, and the extent to which such
noncompliance was intentional; or
“ (2) in any class action under subsection (a) (2) (B ), the fre­
quency and persistence of noncompliance by the debt collector, the
nature of such noncompliance, the resources of the debt collector,
the number of persons adversely affected, and the extent to which
the debt collector’s nonconipliance was intentional.
“ (c) A debt collector may not be held liable in any action brought
under this title if the debt collector shows by a preponderance of evi
dence that the violation was not intentional and resulted from a l>ona
fide error notwithstanding the maintenance of procedures reasonably
adapted to avoid any such error.
“ (d) An action to enforce any liability created by this title may be
brought in any appropriate United States district court without regard
to the amount in controversy, or in any other court of competent juris­
diction, within one year from the date on which the violation occurs.
“ (e) Xo provision of this section imposing any liability shall apply
to any act done or omitted in good faith in conformity with any
advisory opinion of the Commission, notwithstanding that after such
act or omission has occurred, such opinion is amended, rescinded, or
determined by judicial or other authority to be invalid for any reason.

Ҥ 814. Administrative enforcement

“ (a) Compliance with this title shall be enforced by the Commis­
sion, except to the extent that enforcement of the requirements imposed
under this title is specifically committed to another agency undersubsection (b). For purpose of the exercise by the Commission of its
functions and powers under the Federal Trade Commission Act, a
violation of this title shall be deemed an unfair or deceptive act or
practice in violation of that Act. All of the functions and powers of




Jurisdiction.

15 USC 1692 1.

15 USC 58.

20

91 STAT. 882
15 USC 58.

12 USC 1818.

12 USC 1464.
12 USC 1730.
12 USC 1426,
1437.

12 USC 1751.

49 USC 1301
note.
7 USC 181.
7 USC 226, 227.

15 USC 1692m.




PUBLIC LAW 95-109—SEPT. 20, 1977

the Commission under the Federal Trade Commission Act are avail­
able to the Commission to enforce compliance by any person with this
title, irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests in the Federal Trade Commission
Act, including the power to enforce the provisions of this title in the
same manner as if the violation had been a violation of a Federal
Trade Commission trade regulation rule.
“ (b) Compliance with any lequirements imposed under this title
shall be enforced under—
“ (1) section 8 of the Federal Deposit Insurance Act. in the case
of—
“ (A) national banks, by the Comptroller of the Currency:
•‘(B) member banks of the Federal Reserve System (other
than national banks), by the Federal Reserve Board; and
“ (C) banks the deposits or accounts of which are insured
by the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), by the Board of
Directors of the Federal Deposit Insurance Corporation;
“ (2) section 5(d) of the Home Owner- Loan Act of 1?>;’»:». sec­
tion 4<)7 of the National Housing Act. and sections 0(i) and 17
of the Federal Home Loan Bank Act, by the Federal Home Loan
Bank Board (acting directly or through the Federal Savings and
Loan Insurance Corporation), in the ease of any institution sub­
ject to any of those provisions:
“ (3) the Federal Credit Union Act, by tin* Administrator of
the National Credit Union Administration with respect to any
Federal credit union;
“ (4) the Acts to regulate commerce, by the Interstate Commerce
Commission with respect to any common carrier subject to those
Acts;
“ (5) the. Federal Aviation Act of 15)58, by the Civil Aeronautics
Board with respect to any air carrier or any foreign air carrier
subject to that Act; and
•‘((i) the Packers and Stockyards Act. 1921 (except as provided
in section 406 of that Act), by the Secretary of Agriculture with
respect to any activities subject, to that Act.
“ (c) For the purpose of the exercise bv any agency referred to in
subsection (b) of its powers under anv Act referred to in that sub­
section. a violation of any requirement imposed tinder this title shall
be deemed to be a violation of a requirement imposed under that Act.
In addition to its powers under anv provision of law specifically
referred to in subsection (b). each of the agencies referred to in that
subsection may exercise, for the purpose of enforcing compliance with
any requirement imposed under this title any other authority con­
ferred on it by law, except as provided in subsection (d).
“ (d) Neither the Commission nor any other agency referred to in
subsection (b) may promulgate trade* regulation rules or other regula­
tions with respect to the collection of debts by debt collectors as defined
in this title.

Ҥ815. Reports to Congress by the Commission

“ (a) Not later than one year after the effective date of this title and
at one-year intervals thereafter, the Commission shall make reports to
the Congress concerning the administration of its functions under this
title, including such recommendations as the Commission deems neces­
sary or appropriate. In addition, each report of the Commission shall
include its assessment of the extent to which compliance with this title

21

PUBLIC LAW 95-109—SEPT. 20, 1977

91 STAT. 883

is being achieved and a summary of the enforcement actions taken by
the Commission under section 814 of this title.
“ (b) In the exercise of its functions under this title, the Commis­
sion may obtain upon request the views of any other Federal agency
which exercises enforcement functions under section 814 of this title.

Ҥ 816. Relation to State laws

15 USC 1692n.

“This title does not annul, alter, or affect, or exempt any person sub­
ject to the provisions of this title from complying with the laws of any
State with respect to debt collection practices, except to the extent
that those laws are inconsistent with any provision of this title, and
then only to the extent of the inconsistency. For purposes of this
section, a State law is not inconsistent with this title if the protection
such law affords any consumer is greater than the protection provided
by this title.

Ҥ 817. Exemption for State regulation

15 USC 1692o.

“The Commission shall by regulation exempt from the requirements
of this title any class of debt collection practices within any State if
the Commission determines that under the law of that State that class
of debt collection practices is subject to requirements substantially
similar to those imposed by this title, and that there is adequate pro­
vision for enforcement.

Ҥ818. Effective date

“This title takes effect upon the expiration of six months after the
date of its enactment, but section 809 shall apply only with respect to
debts for which the initial attempt to collect occurs after such effective
date.”.
Approved September 20, 1977.

LEGISLATIVE HISTORY:
HOUSE REPORT No. 95 -1 3 1 (Comm, on Banking, Finance, and Urban Affairs).
SENATE REPORT No. 9 5 -3 8 2 (Comm, on Banking, Housing, and Urban Affairs)
CONGRESSIONAL RECORD, Vol. 123 (1977):
Apr. 4, considered and passed House.
Aug. 5, considered and passed Senate, amended.
Sept. 8, House agreed to Senate amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 13, No. 39:
Sept. 20, Presidential statement.




o

15 USC 1692
note.