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FTC Staff Commentary: Fair Debt Collection Practices Act
Section 808
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Section 808--Unfair Practices
Section 808 prohibits a debt collector from using "unfair or unconscionable means" in his debt collection activity. It provides eight examples of unfair practices.
1. Scope. Prohibited actions are not limited to the eight subsections listed as examples of activities that violate this provision.
2. Elements of unfairness. A debt collector's act in collecting a debt may be "unfair" if it causes injury to the consumer that is (1) substantial, (2) not outweighed by countervailing benefits to consumers or competition, and (3) not reasonably avoidable by the consumer.
Section 808(1) prohibits collecting any amount unless the amount is expressly authorized by the agreement creating the debt or is permitted by law.
1. Kind of amount covered. For purposes of this section, "amount" includes not only the debt, but also any incidental charge, such charges, interest, service charges, late fees, and bad check handling charges.
2. Legality of charges. A debt collector may attempt to collect a fee or charge in addition to the debt if either (a) the charge is expressly provided for in the contract creating the debt and the charge is not prohibited by state law, or (b) the contract is silent but the charge is otherwise expressly permitted by state law. Conversely, a debt collector may not collect an additional amount if either (A) state law expressly prohibits collection of the amount or (B) the contract does not provide for collection of the amount and state law is silent.
3. Legality of fee under state law. If state law permits collection of reasonable fees, the reasonableness (and consequential legality) of these fees is determined by state law.
4. Agreement in writing. A debt collector may establish an "agreement" without a written contract. For example, he may collect a service charge on a dishonored check based on a posted sign on the merchant's premises allowing such a charge, if he can demonstrate that the consumer knew of the charge.
Section 808(2) prohibits accepting a check postdated by more than five days unless timely written notice is given to the consumer prior to deposit.
Section 808(3) prohibits soliciting any postdated check for purposes of threatening or instituting criminal prosecution.
Section 808(4) prohibits depositing a postdated check prior to its date.
1. Postdated checks. These provisions do not totally prohibit debt collectors from accepting postdated checks from consumers, but rather prohibit debt collectors from misusing such instrument.
Section 808(5) prohibits causing any person to incur telephone or telegram charges by concealing the true purpose of the communication.
1. Long distance calls to the debt collector. A debt collector may not call the consumer collect or ask a consumer to call him long distance without disclosing the debt collector's identity and the communications's purpose.
2. Relation to other section. A debt collector who conceals his purpose in asking consumers to call long distance may also violate section 807(11), which requires the debt collector to disclose his purpose in some communications.
Section 808(6) prohibits taking nonjudicial action to enforce a security interest on property, or threatening to do so, where (A) there is no present right to the collateral, (B) there is no present intent to exercise such rights, or (C) the property is exempt by law.
1. Security Enforcers. Because the FDCPA's definition of "debt collection" includes parties whose principal business is enforcing security interests only for section 808(6) purposes, such parties (if they do not otherwise fall within the definition) are subject only to this provision and not to the rest of the FDCPA.
Section 808(7) prohibits "Communicating with a consumer regarding a debt by a post card."
1. Debt. A debt collector does not violate this section if he sends a post card to a consumer that does not communicate the existence of the debt. However, if he had not previously disclosed that he is attempting to collect a debt, he would violate section 807(11), which requires this disclosure.
Section 808(8) prohibits showing anything other than the debt collector's address, on any envelope in any written communication to the consumer, except that a debt collector may use his business name if it does not indicate that he is in the debt collection business.
1. Business names prohibited on envelopes. A debt collector may not put on his envelope any business name with "debt" or "collector" in it, or any other name that indicates he is in the debt collection business. A debt collector may not use the American Collectors Association logo on an envelope.
2. Collector's name. Whether a debt collector/consumer reporting agency's use of his own "credit bureau" or other name indicates that he is in the collection business, and thus violates the section, is a factual issue to be determined in each individual case.
3. Harmless words or symbols. A debt collector does not violate this section by using an envelope printed with words or notations that do not suggest the purpose of the communication. For example, a collector may communicate via an actual telegram or similar service that uses a Western Union (or other provider) logo and the word "telegram" (or similar word) on the envelope, or a letter with the word "Personal" or "Confidential" on the envelope.
4. Transparent envelopes. A debt collector may not use a transparent envelope, which reveals language or symbols indicating his debt collection business, because it is the equivalent of putting information on an envelope.
