Sent validation letters and most have deleted but...

fdcpa Staff Opinion: LeFevre-Cass http://www.ftc.gov/os/statutes/fdcpa/letters/cass.htm
1 of 2 5/6/2007 12:51 PM
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Federal Trade Commission
December 23, 1997
Robert G. Cass
Compliance Counsel
Commercial Financial Services, Inc.
2448 E. 81st Street, Suite 5500
Tulsa, OK 74137-4248
Dear Mr. Cass:
Mr. Medine has asked me to reply to your letter of October 28, 1997, concerning the
circumstances under which a debt collector may report a "charged-off debt" to a consumer
reporting agency under the enclosed Fair Debt Collection Practices Act. In that letter, you
pose four questions, which I set out below with our answers.
I. "Is it permissible under the FDCPA for a debt collector to report charged-off debts
to a consumer reporting agency during the term of the 30-day validation period
detailed in Section 1692g?" Yes. As stated in the Commission's Staff Commentary on the
FDCPA (copy enclosed), a debt collector may accurately report a debt to a consumer
reporting agency within the thirty day validation period (p. 50103). We do not regard the
action of reporting a debt to a consumer reporting agency as inconsistent with the
consumer's dispute or verification rights under ???? 1692g.
II. "Is it permissible under the FDCPA for a debt collector to report, or continue to
report, a consumer's charged-off debt to a consumer reporting agency after the debt
collector has received, but not responded to, a consumer's written dispute during the
30-day validation period detailed in ???? 1692g?" As you know, Section 1692g(b) requires
the debt collector to cease collection of the debt at issue if a written dispute is received
within the 30-day validation period until verification is obtained. Because we believe that
reporting a charged-off debt to a consumer reporting agency, particularly at this stage of the
collection process, constitutes "collection activity" on the part of the collector, our answer to
your question is No. Although the FDCPA is unclear on this point, we believe the reality is
that debt collectors use the reporting mechanism as a tool to persuade consumers to pay, just
like dunning letters and telephone calls. Of course, if a dispute is received after a debt has
been reported to a consumer reporting agency, the debt collector is obligated by Section
1692e(8) to inform the consumer reporting agency of the dispute.
III. "Is it permissible under the FDCPA to cease collection of a debt rather than
respond to a written dispute from a consumer received during the 30-day validation
period?" Yes. There is nothing in the FDCPA that requires a debt collector to continue
collecting a debt after a written dispute is received. Further, there is nothing in the FDCPA
that requires a response to a written dispute if the debt collector chooses to abandon its
collection effort with respect to the debt at issue. See Smith v. Transworld Systems, Inc., 953
F.2d 1025, 1032 (6th Cir. 1992).
IV. "Would the following action by a debt collector constitute continued collection
FDCPA Staff Opinion: LeFevre-Cass http://www.ftc.gov/os/statutes/fdcpa/letters/cass.htm
2 of 2 5/6/2007 12:51 PM
activity under ???? 1692g(b): reporting a charged-off consumer debt to a consumer
reporting agency as disputed in accordance with ???? 1692e(8), when the debt collector
became aware of the dispute when the consumer sent a written dispute to the debt
collector during the 30-day validation period, and no verification of the debt has been
provided by the debt collector?" Yes. As stated in our answer to Question II, we view
reporting to a consumer reporting agency as a collection activity prohibited by ???? 1692g(b)
after a written dispute is received and no verification has been provided. Again, however, a
debt collector must report a dispute received after a debt has been reported under
???? 1692e(8).
I hope this is responsive to your request.
Sincerely,
John F. LeFevre
Attorney
Enclosure