Request for Comments Concerning Procedures for State Application for Exemption From the Fair Debt Collection Practices Act

FEDERAL TRADE COMMISSION

16 CFR Part 901

Request for Comments Concerning Procedures for State Application

for Exemption From the Fair Debt Collection Practices Act

AGENCY: Federal Trade Commission.

ACTION: Request for public comments.

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SUMMARY: The Federal Trade Commission (``Commission'') requests public

comments about the overall costs and benefits and the continuing needs

for its Procedures for State Application for Exemption from the

Provisions of the Fair Debt Collection Practices Act (``FDCPA''),

hereinafter known as ``Procedures.''

DATES: Written comments will be accepted until June 22, 1998.

ADDRESSES: Comments should be directed to: Secretary, Federal Trade

Commission, Room H-159, Sixth Street and Pennsylvania Ave., N.W.,

Washington, D.C. 20580. Comments should be identified as ``Procedures

for Exemption from FDCPA, 16 CFR Part 901--Comment.''

FOR FURTHER INFORMATION CONTACT:

John F. LeFevre, Attorney, Federal Trade Commission, Washington, D.C.

20580, telephone number (202) 326-3209 or Tom Kane, Attorney, Federal

Trade Commission, Washington, D.C. 20580, telephone number (202) 326-

2304, E-mail [[email protected]].

SUPPLEMENTARY INFORMATION:

I. Background

A. The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act, 15 U.S.C. Sec. 1691 et seq.

(``FDCPA''), prohibits a number of deceptive, unfair and abusive

practices by third party debt collectors. Section 817 of the FDCPA

requires that the Commission exempt from its requirements ``any class

of debt collection practices within any state if the Commission

determines that under the law of the state, the class of debt

collection practices is subject to requirements substantially similar

to those imposed by [the FDCPA], and that there is adequate provision

for enforcement.'' The Commission has received one application for

exemption from Sections 803-812 of the FDCPA from the State of Maine

for debt collection practices conducted within that State and granted

that exemption.\1\

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\1\ Notice of Maine Exemption from the Fair Debt Collection

Practices Act, 60 Fed. Reg. 68173 (December 27, 1995).

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The FDCPA prohibits debt collectors from using false or misleading

statements, harassing or abusive conduct or any unfair methods to

collect debts. Among the practices which are specifically prohibited

are making false threats to coerce payment (such as false threats of

suit); using deceptive collection notices that falsely appear to be

from an attorney or court; and engaging in any sort of harassment, such

as threatening violence, using profanity and obscenities, or making

continuous phone calls. The FDCPA also restricts the extent to which

debt collectors may call a consumer at work and prohibits them from

making calls to consumers

[[Page 19860]]

very early in the morning or late at night. With a few narrow

exceptions, it prohibits collectors from contacting third parties and

revealing the existence of a consumer's debt. In addition, the FDCPA

prohibits collectors from adding charges to a debt unless the consumer

involved agrees to them or they are permitted by law, and from filing

suit against a consumer outside of the district of the consumer's

residence or where the contract creating the debt was signed.

Under the FDCPA, if a consumer disputes the debt in writing, the

collector is required to stop all collection efforts until the debt is

verified. The FDCPA also states that if the consumer demands in writing

that the debt collector cease all further collection efforts, the debt

collector must comply even if the debt is valid. Finally, the FDCPA

gives a consumer the right to bring suit against a debt collector in

any court for violations of the FDCPA, and, if successful, to receive

actual damages and additional damages up to $1,000, as well as costs

and attorney's fees.

The FDCPA is enforced primarily by the Federal Trade Commission. A

violation of the FDCPA is deemed an unfair or deceptive practice in

violation of the Federal Trade Commission Act. All of the functions and

powers of the Federal Trade Commission Act are available to the

Commission to enforce compliance with the FDCPA. The Commission may

enforce the provisions of the FDCPA in federal court, seeking civil

penalties and injunctive relief, as appropriate.

B. The Procedures

The Commission promulgated procedures in 1979 for state

applications for exemption from the provisions of the FDCPA, which are

published in 16 CFR 901 (1995) (``Procedures''). Section 901.2 of the

Procedures provides that any state may apply to the Commission for a

determination that, under the laws of that State, (1) any class of debt

collection practices within that State is subject to requirements that

are substantially similar to, or provide greater protection for

consumers than, those imposed under Sections 803 through 812 of the

FDCPA; and (2) there is adequate provision for state enforcement of

such requirements. Section 901.4 of the Procedures describes the

criteria for making the determination. Section 901.4(a) requires that

(1) the definitions and rules of construction in the state law import

the same meaning and have the same application as those prescribed by

the FDCPA; (2) debt collectors provide all the applicable notifications

under the state law that are required by the FDCPA; (3) debt collectors

under the state law take all affirmative actions and abide by

obligations substantially similar to, or more extensive than, those

prescribed by the FDCPA; (4) debt collectors under the state law abide

by the same or more stringent prohibitions as are prescribed by the

FDCPA; (5) obligations and responsibilities imposed on consumers under

the state law are no more costly, lengthy, or burdensome than

corresponding obligations or responsibilities imposed on consumers by

the FDCPA; and (6) consumers' rights and protections under the state

law are substantially similar to, or more favorable than, those

provided by the FDCPA. Section 901.4(b) requires that the Commission

consider (1) the facilities, personnel and funding devoted to

administrative enforcement of the state law; (2) provisions in the

state law for civil liability for actions brought in the private sector

as compared with Section 813 of the FDCPA; and (3) the statute of

limitations for civil liability in the state law (for actions brought

in the private sector) which should be substantially similar or longer

than that in the FDCPA. The Commission must consider each provision of

the state law in comparison with each corresponding provision in

Sections 803 through 812 of the FDCPA, and not the state law as a whole

in comparison with the FDCPA as a whole.

Section 901.3 of the Procedures requires that an application be

accompanied by a variety of documents including (1) the state law; (2)

a comparison of the provisions of the state law with various sections

of the FDCPA; (3) a copy of the full text of the law that provides for

its enforcement; (4) a comparison of provisions of the law that

provides for enforcement with the provisions of Section 814 of the

FDCPA; and (5) a statement identifying the state office designated to

administer the state law, along with a description of the ability of

that office to effectively administer the statute. If an application is

filed in accordance with the Procedures, Section 901.5 states that the

filing shall be published in the Federal Register. Section 901.6

provides that the Commission may grant an exemption under the

provisions of the Procedures.

II. Regulatory Review Program

The Commission has determined to review all current Commission

regulations periodically. These reviews seek information about the

costs and benefits of the Commission's regulations and their regulatory

and economic impact. The information obtained assists the Commission in

identifying regulations that warrant modification or rescission.

Therefore, the Commission solicits comments on, among other things, the

economic impact of and the continuing need for the Procedures; possible

conflict between the Procedures and state, local, or other federal

laws; and the effect on the Procedures of any technological, economic,

or other industry changes.

III. Request for Comment

The Commission solicits written public comments on the following

questions:

(1) Is there a continuing need for the Procedures?

(a) What benefits have the Procedures provided to consumers covered

by the FDCPA?

(b) Have the Procedures imposed costs on consumers?

(2) What changes, if any, should be made to the Procedures to

increase the benefits of the Procedures to consumers covered by the

FDCPA?

(a) How would these changes affect the benefits to consumers

covered by the FDCPA?

(b) How would these changes affect the costs the Procedures impose

on states considering applying for exemption?

(3) What significant burdens or costs, including costs of

compliance, have the Procedures imposed on any state that has

considered applying for exemption, or that has actually applied for

exemption?

(a) Have the Procedures provided benefits to such states? If so,

what benefits?

(4) What changes, if any, should be made to the Procedures to

reduce the burdens or costs imposed on states considering applying for

an exemption?

(a) How would these changes affect the benefits provided by the

Procedures?

(5) Do the Procedures overlap or conflict with other federal,

state, or local laws or regulations?

(6) Since the Procedures were issued, what effects, if any, have

changes in new technology, such as the Internet or E-mail, or changes

in other economic conditions, had on the Procedures?

(7) Section 901.4 of the Procedures requires that the Commission

compare civil liability provisions of private suits in the state law

and those contained in Section 813 of the FDCPA, but Section 901.6(d)

prohibits the Commission from exempting any state from the provision of

Section 813. Should Section 901.4 be changed to remove the requirement

that civil liability provisions in the state law

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and those contained in Section 813 of the FDCPA be compared?

(8) Are there any other changes that should be made to the

Procedures? If so, please specify and state reasons for the changes.

Lists of Subjects in 16 CFR Part 901

Fair Debt Collection Practices Act.

Authority: 15 U.S.C. 41-58.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 98-10699 Filed 4-21-98; 8:45 am]

BILLING CODE 6750-01-M