Collecting a Debt from a Susceptible Consumer

QUESTION 

Our compliance department received a complaint from a borrower about being harassed. She is overdue in her payments, her escrow is going negative, and we have tried to get her to respond to letters and calls. Our attorney is now involved in replying to her. 

But it is very frustrating when we try to contact the borrower in every way, and then she accuses us of harassment. The main threat she has is that we intimidated her and used threatening language. I doubt it. 

We have received debt collection training and know what we’re doing, what to say and what not to say. Nevertheless, this complaint happened! 

Maybe you can provide guidance by discussing the prohibitions against harassment to collect a debt. 

What are some prohibitions regarding harassment in debt collection? 

ANSWER 

Over the years, we have handled disputes like the one you describe. Indeed, generally, your situation is rather common, though each case is reflective of particular facts. 

Some of the abusive acts my firm has encountered in connection with collecting a debt are:

 

·  using threat or use of violence or other criminal means to harm a person;

·  using obscene or profane language;

·  advertising for a debt to coerce payment of a debt;

·  repeatedly contacting a debtor with an obvious intent to annoy, abuse, or harass  them; and,

·  placing calls without any meaningful disclosure of the caller’s identity. 

And, believe it or not, we’ve encountered an attempt to collect a debt by publishing a list of consumers who allegedly refuse to pay debts! 

Proverbs (22:7) says, “the borrower is servant to the lender.” But such harassing and abusive acts are morbidly extreme and straight-out violations of the Fair Debt Collection Practices Act (FDCPA).  

The FDCPA aims to protect consumers from harassment or abuse concerning debt collections.[i] There are five specific types of prohibited conduct that constitute harassment or abuse. I’ll list them below. 

Before listing them, I will note the following provision in the FDCPA: 

“… a debt collection may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.”[ii]

[Emphasis added.] 

You might think this is subjective, but you would be wrong. The purpose of the provision, as stated by Congress in the Senate report regarding the consideration of the FDCPA, is to “enable the courts, where appropriate, to proscribe other improper conduct which is not specifically addressed.”[iii]

Thus, a debt collector may be liable even if its actions do not fall under the five prohibitions. If you want to wind up in court, be my guest. There’s a huge body of case law that will get you focused real quickly. 

Alternatively, seek competent, professional guidance to ascertain if your plans to collect a debt are potentially liable, especially if they seem to fall outside the five specific prohibitions. 

Here are the five examples of conduct – and note the word “examples,” meaning these are not meant to be exclusively comprehensive – that fall under the prohibition:[iv]

 

1.  Threatening to contact third parties;

2.  Communicating unnecessarily with third parties when the consumer can be reached directly;

3.  Using intimidating or insulting language;

4.  Repeated and frequent personal contact with the consumer; or

5.  Continuing to collect after multiple notices of bankruptcy discharge.

The terms “harass,” “oppress,” and “abuse” are not defined under FDCPA, and so are given their plain meaning. Note the phrase quoted above – “the natural consequence of which is to harass, oppress, or abuse” – uses all three terms. Therefore, a standard is used to determine the issue, and whether or not the consumer actually believes they are being harassed, oppressed, or abused is not relevant. 

The term for a standard that courts often use is the “susceptible consumer” standard. That standard is not “subjective” and can be applied objectively. Under the “susceptible consumer” standard, courts look to a consumer who is “relatively more susceptible to harassment, oppression, or abuse” based on their circumstances.[v] 

A final point: the FDCPA applies to the harassment or abuse of not only consumers but also “any person” in connection with debt collection. Thus, a debt collector may be liable for the natural consequences of its actions on family members, friends, or others. 

Jonathan Foxx, Ph.D., MBA

Chairman & Managing Director 

Lenders Compliance Group

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[i] 15 USC § 1692d

[ii] Idem

[iii] Senate Report # 382, 95^th Congress, First Session 4 at 4 (1977)

[iv] FTC Staff Commentary on FDCPA § 806

[v] Jeter v Credit Bureau, Inc., 760 F.2d 1168, 1179 (11^th Circuit 1985)