FTC GUIDANCE ON POTENTIAL CONFLICT BETWEEN FDCPA AND FACTA
The FTC recently issued an advisory opinion on a potential conflict between Section 805(c) of the federal Fair Debt Collection Practices Act (FDCPA) and a new rule implementing the Fair and Accurate Credit Transactions Act of 2003 (FACTA) that takes effect July 1, 2010. See Alert dated July 2, 2009 for additional information on the final rules and guidelines implementing Section 312 of FACTA. Section 805(c) of the FDCPA provides that if a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, subject to certain limited exceptions the debt collector may not communicate further with the consumer with respect to such debt. The new FACTA Rule requires furnishers of information to consumer reporting agencies to report the results of a direct dispute to the consumer or notify the consumer if the furnisher determines the dispute is frivolous or irrelevant. 16 C.F.R. § 660.4(e)(3), (f)(2). There is a potential conflict in that Section 805(c) of the FDCPA arguably prohibits a debt collector from
providing the notice required by the Rule if the consumer previously has notified the debt collector in writing to cease communication. In its advisory opinion, however, the FTC indicated that providing the
FACTA Rule notice in these circumstances would not undermine the purpose of Section 805(c), which is to free consumers from the burden of being subject to unwanted communications. According to
the FTC, the notice does not create such a burden, but rather benefits consumers by providing them with information demonstrating that collectors have been responsive to their disputes. Thus, the FTC concluded that a debt collector does not violate Section 805(c) of the FDCPA if the consumer directly disputes information after sending a written “cease communication” to the collector, and the collector complies with the Rule by means of a communication that has no purpose other than complying with the
Rule by stating (i) the results of the investigation or (ii) the collector’s belief that the communication is frivolous or irrelevant.
- Margaret Stolar and Chuck Gall