debt collector is tacking on add'l fee

My 18-yr-old daughter bounced a $40 check a few months ago (she's married, they have their own account). The matter was immediately referred to a collection agency, which asked for the $40 plus a $20 fee for a total of $60. Now the debt has been referred to the agency's law firm, which is demanding a total of $168 as a "settlement" (I have no evidence that they've initiated any legal proceeding, and their letter - the first from this firm - is dated 4/15). I have no problem with the $60, but feel that the extra $108 violates the FDCPA (esp. Sec 1692f) and New York State law. We've sent them a letter disputing that portion of the debt and demanding that they document it. Am I right that the extra charge is illegal? Any advice on how to proceed?

[JETX]

Q: "I have no problem with the $60, but feel that the extra $108 violates the FDCPA (esp. Sec 1692f) and New York State law. We've sent them a letter disputing that portion of the debt and demanding that they document it. Am I right that the extra charge is illegal? Any advice on how to proceed?"

A: The FDCPA doesn't apply. It only applies to debt collectors trying to collect a consumer debt for 3rd parties. And if the attorney is acting as a representative of the merchant, he is exempt.

As for any civil penalties, the following applies:
NY Gen Ob:
"S 11-104. Additional liability of drawer.
1. Notwithstanding any contrary provision of law, a drawer negotiating a check who knows or should know that payment of such check will be refused by the drawee bank either because the drawer has no account with such bank or because the drawer has insufficient funds on deposit with such bank shall be liable, except as provided in subdivision four of this section, to the payee who has presented such check for payment, not only for the face
amount of the check but also for additional, liquidated damages, where the check is dishonored and the drawer fails to pay the face amount of
such check within thirty days following the date of mailing by the payee of the second written demand for payment as provided in this section.
2. In the case of a drawer negotiating a check who knows or should know that payment of such check will be refused by the drawee bank
because the drawer has no account with such bank, such additional, liquidated damages shall be in an amount to be determined by the court in light of the circumstances, but in no event shall such amount be greater than twice the face amount of the check or seven hundred fifty dollars, whichever is less.
3. In the case of a drawer negotiating a check who knows or should know that payment of such check will be refused by the drawee bank
because the drawer has insufficient funds on deposit with such bank, such additional, liquidated damages shall be in an amount to be determined by the court in light of the circumstances, but in no event shall such amount be greater than twice the face amount of the check or four hundred dollars, whichever is less."
Source: [url]http://caselaw.lp.findlaw.com/nycodes/law49/art30.html[/url]
NOTE: I suggest you read the entire statute cited above since it provides for specific requirements in the demand.

Thanks for your swift reply. Forgive my puzzlement -- I'm not an atty, though am related to several -- but I'm not clear on why you think the FDCPA does not apply here. First, I don't see where in Sec. 1692(a)6 there is such an exemption (see [url]http://www4.law.cornell.edu/uscode/15/1692a.html[/url]).

Secondly, a Federal Trade Commission guidance document ([url]http://www.ftc.gov/os/statutes/fdcpa/commentary.htm#803[/url])states that the definition of "debt collector" includes:

"An attorney or law firm whose efforts to collect consumer debts on behalf of its clients regularly include activities traditionally associated with debt collection, such as sending demand letters (dunning notices) or making collection telephone calls to the consumer."

This Utah firm says it "represents [name of collection agency] on behalf of [name of store]" and has sent a demand letter and made calls to my daughter. Also, when I spoke to them on the phone (daughter authorized me to do so), their rep prefaced the conversation by saying that she was legally required to tell me that "this is an attempt to collect on a debt."

As I read the FTC commentary, the exemption for attorneys only applies if their activities are limited strictly to the judicial sphere (simply filing suit would meet this test, but engaging in traditional debt-collection activities beforehand would not). Admittedly, this FTC document is old (1988) and I don't know how well it has stood up over time.

Thanks for the NY reference, it is helpful, will read statute. My previous point re belief that extra charges are illegal in NYS is based in part on public statements from the NYS AG's office to that effect (see, e.g., [url]http://www.oag.state.ny.us/consumer/tips/debt_collectors.html[/url]). Note that this web site also states that the FDCPA "includes attorneys who collect debts on a regular basis."

Thanks again!

[JETX]

Okay, lets take this one at a time....

1) Debt. What was the check written for?? The FDCPA specifically defines debt as "any obligation or alleged obligation 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."
[url]http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#803[/url]

So, if the check wasn't clearly written for personal, family or household purposes, it doesn't qualify for FDCPA 'protection'.

2) Creditor: The FTC (in their opinion dated 12/13/1988) found that "An attorney whose practice is limited to legal activities (e.g., the filing and prosecution of lawsuits to reduce debts to judgment)" is exempt from the definition of 'debt collector'.

3) Communication:
The FDCPA specifically states "the term does not include formal legal action (e.g., filing of a lawsuit or other petition/pleadings with a court; service of a complaint or other legal papers in connection with a lawsuit, or activities directly related to such service). Similarly, it does not include a notice that is required by law as a prerequisite to enforcing a contractual obligation between creditor and debtor, by judicial or nonjudicial legal process."
The demand notice from the attorney is both excluded by definition and by the fact that it is required by law.

Thanks again. Your previous info on NY law seems to point to a practical course of action for our particular case. However, I still don't see how this firm is not a debt collector under any "plain language" interpretation of the FDCPA itself or of the FTC commentary. I think the "debt collector or not" issue is important and may be of interest to other readers. I thus respond to your points:

1. The check in question absolutely meets this FDCPA criterion.

2. I'm aware of this exemption, but I don't see how it applies in this case. First, the law firm's letter makes reference to provisions of federal law (30 days to dispute validity of debt, etc.) and refers to "our efforts (through litigation or otherwise) to collect the debt." They don't even say they will sue, simply that they can/might. How is this any different from a collection agency writing to say, "Under the law you can dispute this debt, request verification, etc., but assuming it's valid, we may sue you"? And since when does setting forth a "settlement amount" constitute "a formal legal action"? A settlement is by definition a voluntary arrangement entered into as an alternative to formal legal action. Are you saying that proposing one is a formal legal action?

In my perhaps naive view, the intent of the law seems to be to exempt attorneys who are hired by collection agencies simply to file suit (and take legally required preliminary/ancillary action), if it comes to that. Without such an exemption, any agency that doesn't have in-house attorneys to do the purely legal work would transfer the "debt collector" status, to its hired counsel -- which would mean process servers would also be so designated, and the formal complaint documents would be "communications," and so on. Clearly the Act is designed to avoid the complications that this would entail.

But if a law firm engages in activities like sending notices, making calls, etc., how can simply threatening to file suit -- even if, later on, it actually does so -- earn it the "purely legal work" exemption?

3. The first part of your citation doesn't apply here, since the communications so far have not been part of any "formal legal action" (e.g., service of process or something like that). The second sentence you cite is rather opaque to the non-specialist, but I don't see how it can mean what you suggest it means. For one thing, the FTC guidance specifically cites "demand notices (dunning letters)" as an example of an activity traditionally associated with debt collection. If some sort of demand notice is required by law in debt-collection efforts, then how can such a letter be considered a communication if it's sent by a collection agency, but not one if it's sent by an attorney?

But even if the letter were not a "communication," what about the phone calls??!!

Maybe I'm totally missing something here. Again, I'm not a specialist in this area, or even an attorney. But I've read where the broad "attorney-at-law collecting a debt" exemption that used to be in the federal law was repealed in 1986, over the strenuous objections of said sub-profession. Are we talking about some sort of back-door, loophole-type situation, in which a law firm can legally gain the exemption as long as it (a) increases the amount demanded, (b) calls this a "settlement," and (c) occasionally sues some people?

[JETX]

The purpose of this forum is not to debate points or interpretations of law.... and we have already spent far too much time and bandwidth on this issue.

So, in order to bring this to a close, you win. The attorney is clearly in violation of the FDCPA. File a complaint with the FTC and take the SOB to court.

But, lets not forget one issue that has been pushed aside in your attempts to 'niggle the law'. Your daughter wrote a hot check and still hasn't made good on it!!! The merchant who mistakenly allowed her to steal from him is the loser here. Hopefully, she will realize that she won't win this one and that she could be liable for both civil and possibly criminal action.

Simply, your anger and claims of injustice are misdirected... they should be aimed at your deadbeat daughter and NOT at the merchant (or his attorney) who is trying to be 'made right'. If you had taken half the time it took you to research and write your 'my interpretation is' responses and spent it teaching your daughter the rights and wrongs of society, she would have been far better off. (Oh, and before you flame... I know, I am a callous, insensitive SOB who doesn't 'understand'!).

Case closed!

[bigun]

JETX,

You bring up a point I've been trying to reconcile in my own mind. Given there is a violation of FDCPA in a given colection activity beittentional or otherwise. I find nothing in FDCPA that says this is a reason for the debtor to be automatically allowed relief on the plantiffs claim. Of course, I'm excluding things like the SOL or, a dispute as to the ownership of a credit card and they can't produce a signed app. etc. Am I in error?

[JETX]

Bigun: if by relief you are meaning a free pass on the debt, you are correct that would not be one of the allowed 'penalties'.

The FDCPA is fairly clear on what penalties can be assessed for violation of the Act, and even then they are not 'automatic', but must be adjudicated:
"§ 813. Civil liability [15 USC 1692k]
(a) Except as otherwise provided by this section, any debt collector who 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 by such person as a result of such failure;
(2)(A) in the case of any action by an individual, such additional 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 foregoing 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 frequency 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 noncompliance 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 evidence that the violation was not intentional and resulted from a bona 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 jurisdiction, within one year from the date on which the violation occurs.
(e) No 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."

Dear JETX,

I don't have enough info to know if you're a "callous, insensitive SOB," but it is clear that you don't understand me or what's gone on here. You assume, based on zero hard evidence, (a) that my daughter is not willing to pay, (b) that I am unconcerned about her basic legal/ethical responsibilities here and have not counseled her on their importance, and (c) we basically want to get out of paying anything, because we're "deadbeats." You are dead wrong all counts. I did not go into the circumstances that led to this situation, my daughter's earlier attempts to resolve it, or my admonitions to her re taking care of this matter and avoiding similar ones in the future -- precisely because these are all personal matters and not appropriate for this forum. Why would I or anyone else use this space to talk about parental advice or the civil and moral obligation to settle unpaid debts?

Based on written and oral info I received from state and federal sources, it seemed to me that the AMOUNT now being demanded was questionable and that this case WAS covered by the FDPCA. When you indicated otherwise, I simply wanted to understand why (quite apart from the way forward on our particular matter, which your kind provision of the NYS statute helped clarify for me). Your responses elicited additional questions about this important statute which I thought other nonspecialists might like to have answered. Perhaps I was wrong, but that's no need to slander me or my daughter. And if my phraseology seemed overly combative or insulting to your profession, that was not my intent.

Frankly I find it troubling that you think that trying to understand and avail oneself of one's legal rights is "niggling the law." And the matter that YOU seem to be forgetting is one that the Congress, the courts and state AGs deem important: that just because you owe money, debt collectors don't get to treat you any way they want.

Anyway, peace.

[JETX]

[JETX]

Ivan: I see that you purchased some of those lower case keys I recommended, well done!!

However, in reading your post, you clearly show that you still have no idea what you are talking about.

And in posting your drivel on top of someone elses thread, you are showing that you are both rude and inconsiderate!

Have a happy day!!