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Debt Collectors Are Not Always "Debt Collectors"

posted by Bob Lawless

This just in from our Tampa bureau: a debt collector threatens a debtor and his family, including the lovely threat "I'm going to f*** you up" if you don't pay. Abusive debt collection practices seem to be pretty widespread but are rarely the subject of much enforcement or litigation. This time it might be different because the debtor recorded the call. The debtor has filed a lawsuit against the creditor, Jacksonville Check Cashers. The Consumerist was all over this story as well as a local TV news channel which has the original audio.

Here's the catch -- it is not clear that this particular situation violated the federal Fair Debt Collection Practices Act (FDCPA). Although that law prohibits abusive phone calls and threats, it also defines a "debt collector" as someone who collects debts on behalf of another. In this case, it was an employee of the creditor, which the FDCPA specifically says is not considered collecting debts on behalf of another. Florida has its own state law, but it seems to have the same definition. Because the creditor was acting on its behalf, these laws do not apply. The bottom line is that a debt collector is not always a "debt collector" for purposes of the law.

That is not to say the debt collector and his employer will avoid any penalties. The actions might constitute an assault (but probably not) or intentional infliction of emotional distress (but what are the damages?). Maybe there are other causes of action under Florida state law? Similarly, there may be regulatory consequences from the state licensing authorities. It would be much better, however, if the debtor could enforce his rights under the debt collection laws. The whole episode is another reminder that it is time to revisit the FDCPA and bring it up-to-date with modern commercial reality.


Fortunately, in this case, I think they will be reachable. This company is licensed with the Florida Office of Financial Regulation as a “money services business,” and accordingly they are bound by Fla. Stat. § 560.309(10), which provides:

“If a check is returned to a licensee from a payor financial institution due to lack of funds, a closed account, or a stop-payment order, the licensee may seek collection pursuant to s. 68.065. In seeking collection, the licensee must comply with the prohibitions against harassment or abuse, false or misleading representations, and unfair practices in the Fair Debt Collections Practices Act, 15 U.S.C. ss. 1692d, 1692e, and 1692f. A violation of this subsection is a deceptive and unfair trade practice and constitutes a violation of the Deceptive and Unfair Trade Practices Act under part II of chapter 501. In addition, a licensee must comply with the applicable provisions of the Consumer Collection Practices Act under part VI of chapter 559, including s. 559.77.”

Additionally, I think that even absent this provision, I could easily convince a Florida court that threatening to “f!@# [someone] up” should be considered a deceptive and unfair trade practice, and as such will subject this company to damages under the always useful Florida Deceptive and Unfair Trade Practices Act (FDUPTA).”

With respect to the Federal FDCPA, however, I could not agree with you more. Creditors should be subject in general to the Fair Debt Collection Practices Act, and we should not be forced to look to additional provisions of law in order to prohibit this sort of conduct.

Excellent. Thanks for the analysis, Mr. Lewis. Because the state licensing statute makes this a deceptive and unfair trade practice, I take it that the debtor has a right of action to enforce it? I'm all for regulatory enforcement, but regulators are often busy, underfunded, and have different incentives than private actors. It's the private rights of action that makes these statutes work, and it sounds like Florida gives that here.

On the FDUPTA, I suppose there is an interesting statutory question of whether to create a cause of action out of a more general prohibition against deceptive and unfair act when a more specific statute does not reach the conduct. One could argue that the legislature already has determined not to reach the conduct here, and courts should not use a more general UDAP law as an end run around that legislative determination. But, that legal argument is more theoretical than practical given the facts of this case.

What difference does it matter if they violated a debt-collection specific law?

As far as I know, making threatening and/or harassing phone calls is illegal regardless of the circumstances, so the recipient of the call should have every right to press appropriate charges.

Now, assuming the debit was legitimate (regardless of the abusive means the creditor used to collect it), he will still have to pay the debt, and it wouldn't seem appropriate for them to get awarded a bazillion dollars for 'pain and suffering' or any such nonsense.

It is possible, if he is able to successfully initiate a harassment/threats case, he might wish to consider offering 'dropping the charges', in return for some consideration toward his debit. How much would probably depend on what the likely penalty for harassing/threatening phone calls is.

No idea about Florida law, but in the great State of Washington that is harassment under RCW 9A.46.020. Harassment is either a gross misdemeanor or a class C felony. I've got a few clients on the criminal side who, in different circumstances, have used the same words much to their chagrin. There is some controversy over whether a threat to f*** someone up rises to the level of felony harassment or is merely gross misdemeanor harassment.

Let's see... he's an employee of the creditor and making harassing calls, to collect on a debt, on behalf of that creditor.

Are we sure he's not "someone who collects debts on behalf of another"?

Quite so, but shouldn't a debtor pay his debts?

On Confused Nerd's comment, in everyday speak we might say the employee is collecting debts on behalf of another, namely his employer. In this instance, however, the statute itself defines the phrase "collects debts on behalf of another" and specifically says it excludes persons acting as employees for the creditors.

On Martin's comment, yes, we all agree debtors should pay their debts when they are able to do so. We also all would agree (I would hope) that creditors cannot use any tactic they want--physical violence, extortion, and so forth. State and federal laws define those boundaries, and the debt collection statutes are part of that. They specifically prohibit harrassment.

Finally, to all the comments mentioning criminal enforcement, yes, over-the-top collection actions can sometimes constitute criminal acts. But, they don't always. Moreover, the enforcement action is in the hands of the prosecutor, not the debtor who was wronged. We still need to rethink the debt collection laws to bring them into line with the current realities in the industry.

After Advanta Declared Bankruptcy, all credit card holders were notified and further business was suspended.
I had a dispute for $70.00. The product was returned, yet Advanta would not credit my account and continued to charge me including late fees. They are now threatening to ruin my credit if I don't pay up immediately! I refuse to pay because the charges are bogus and unwarranted. Employees in India are also now calling my home 8 to 10 times a day...and into the evening. Any suggestions on how I can rectify this or what action I can take?

I am constantly hearing stories of how debt collectors harrass people and the stories are just crazy and sometimes unbelievable. Most people will not take them to court and pursue it and until that happens, I think the problem is just going to continue.

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