Collecting that debt might not be a simple, easy thing to do. We may have heard of the federal Fair Debt Collection Practices Act, a statute that places some very strong restrictions on debt collectors; but few are aware of its Pennsylvania counterpart, which imposes similar restrictions upon Creditors collecting their own bills. This counterpart is called the Fair Credit Extension Uniformity Act ("FCEUA"), and it can be found at 73 P.S. § 2270.1 et seq..
Under the FCEUA, the person who owes the debt is referred to as a "Consumer," who can only be a natural person residing in Pennsylvania who owes or is alleged to owe a debt. The term also includes co-makers, sureties, and parents if the consumer is under age 18.
A "Creditor" is a person or business, including agents and employees conducting business under the name of the creditor, to whom a debt is owed. A "Debt" is an actual or alleged past due obligation arising out of a single account for the purchase, lease, or loan of goods, services or real or personal property for personal, family, or household purposes.
The definition of "Debt" does not include a purchase money mortgage concerning real estate, but it does include a home equity loan. It does not include taxes owed to the United States or Pennsylvania, but it does include taxes, interest and penalties owed to the political subdivisions.
Once we understand that the FCEUA applies to creditors and certain types of debt, then we are ready to understand what it is that the act defines as deceptive acts or practices; in other words, what practices are considered illegal, and for which a creditor can be sued.
The first part of the FCEUA concerns debt collectors, and the Pennsylvania law incorporates by reference the federal Fair Debt Collection Practices Act (Public Law 95-109, 15 U.S.C. 1692 et seq.). While the Pennsylvania law applies mainly to persons or businesses collecting their own debts, the federal law applies mainly to those persons or businesses who collect debts for others.
We can now focus on the illegal practices of "Creditors" and the definition of "unfair or deceptive acts or practices" under the Pennsylvania law.
The first area of concern is the effort of the Creditor to discover "location information" - a debtor's place of abode, home telephone number, or his place of employment. When calling for this information, a Creditor must identify him or herself and state that he or she is confirming or correcting location information. If requested, the Creditor must disclose his or her employer. The Creditor may not state that the Consumer owes any debt. He or she may not communicate with a person to secure location information more than once unless such person requests it, or the Creditor reasonably believes that the original information was mistaken and that such person now has correct location information. No communication may take place by post card. Neither the envelope nor letter nor telegram seeking location information may disclose that it is being sent for the purpose of collecting a debt. After the Consumer has an attorney in regard to the debt, the Creditor may not communicate with anyone else regarding the debt unless the attorney fails to respond within a reasonable amount of time.
Communication by a Creditor to a Consumer is also regulated beyond the attempt to secure location information. Unless the Consumer gives prior written consent or the Creditor has secured the permission of a "court of competent jurisdiction" (generally our Courts of Common Pleas), there may be no communication with the Consumer in regard to the collection of the debt at a time or place inconvenient to the Consumer. Communications after 9:00 p.m. and before 8:00 a.m. are generally forbidden, unless the Creditor knows that there is some other more convenient time to contact the Consumer. Also, communication is forbidden if the Creditor knows that the Consumer has an attorney dealing with the debt, unless the attorney fails to respond within a reasonable time. However, the attorney may authorize direct communication with the Consumer. Additionally, there may be no communication at the Consumer's place of employment if the Creditor knows or has reason to know that the employer prohibits the Consumer from receiving such communication.
Other than communication described above concerning location information, communication is further limited, unless prior consent has been given by the Creditor or permission granted by the court or unless reasonably necessary to effectuate post-judgment relief, with any person other than the Consumer, his or her attorney, a consumer reporting agency, a debt collector, the attorney of the debt collector, or the attorney of the Creditor. These are the entire universe of persons with whom the Creditor may communicate.
Any conduct that the natural consequence of which is to harass, oppress or abuse a person in connection with a debt is forbidden. Specifically forbidden are the use or threat of use of violence or other criminal means to harm the person, reputation, or property of any person, the use of obscene or profane language, the publication of a list of Consumers who allegedly refuse to pay debts unless done under the requirements of the federal Fair Credit Reporting Act (Public Law 91-508, 15 U.S.C. 1681 et seq.), and the advertisement for sale of any debt to coerce payment.
Specifically dealing with telephone communication, it is improper to cause a telephone to ring or to engage any person in telephone conversation repeatedly or continuously with the intent to annoy, abuse or harass any person at the called number. Further, the caller's identity must be meaningfully disclosed.
False, deceptive or misleading representations or means in collection of any debt may not be used. Examples of such forbidden means are:
- falsely implying that the Creditor is vouched for, bonded, or affiliated with the United States or any state;
- falsely representing the character, amount, or legal status of any debt;
- falsely implying that an individual is an attorney;
- representing that nonpayment will result in arrest or imprisonment of any person, or the seizure or sale of any property, unless such action is lawful and intended;
- threatening to take any action that cannot be legally taken or is not intended to be taken;
- falsely representing that a sale, referral or transfer of any interest in the debt will cause the Consumer to lose any claim or defense he or she may have;
- falsely representing that the Consumer committed any crime or other conduct in order to disgrace the Consumer;
- communicating to any person credit information known to be false;
- failing to communicate that a debt is disputed;
- using any written communication which simulates a document authorized, issued, or approved by any court, official or agency of the United States, or any state;
- using any false representation or deceptive means to collect or debt or obtain information concerning a Consumer;
- falsely representing that accounts have been turned over to an innocent purchaser for value;
- falsely representing that documents are legal process; and
- falsely representing that documents are not legal process and do not require action.
It should be clear by now that a Creditor may not use unfair or unconscionable means to collect a debt. The FCEUA specifically sets out the following as unconscionable and hence forbidden:
- collection of any amount not agreed to by the agreement creating the debt or authorized by law;
- acceptance of a post-dated check unless the Creditor provides notice to the Consumer not more than ten nor less than three days prior to depositing such check;
- solicitation of post-dated checks;
- depositing or threatening to deposit a post-dated check prior to the date on the check;
- charging any person for communications by concealing the purpose of the communication (for example, collect telephone calls);
- taking or threatening any non-judicial action to dispossess or disable property if there is not a right to possession of the property, or if there is no intention to take possession of the property or if the property is exempt by law from such dispossession;
- communicating with a Consumer regarding a debt by post card; and
- using any language or symbol, other than the Creditor's address on any envelope when communicating with a Consumer by mail.
A violation of the FCEUA constitutes a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and subjects a violator to the sanctions that are set forth in that law, which can be quite severe, and may include treble damages and payment of the Consumer's attorneys' fees. However, the remedies that are available under the Pennsylvania scheme may not be assessed in addition to any remedies that can be assessed under the federal Fair Debt Collection Practices Act.
A Creditor may not be held liable in any action for the violation of the FCEUA if the Creditor can show both that the violation was not intentional and (1) it resulted from a bona fide error or (2) it resulted from good faith reliance upon incorrect information which was supplied by someone other than the Creditor.
The moral of the story is that, regardless of the Consumer's actual ability to pay your bill, collecting your debt may not be as simple as you might think. The everyday practices of some creditors may be fraught with pitfalls for the unwary. It may be prudent to review your collection procedures now, so that you don't run the risk of having to defend a lawsuit for violation of these laws. The attorneys of Wolf, Baldwin & Associates, P.C. have the experience to represent you in your debt collection case through court or arbitration.
Click here now to contact us and to schedule an appointment. We will be happy to advise you about your debt collection rights under Pennsylvania law.
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