Procedures for State Application for Exemption From the Provisions of the Fair Debt Collection Practices Act

FEDERAL TRADE COMMISSION

16 CFR Part 901

Procedures for State Application for Exemption From the

Provisions of the Fair Debt Collection Practices Act

AGENCY: Federal Trade Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the procedures by which a State may

request that the Commission exempt certain debt collection practices

within that State from the provisions of the Fair Debt Collection

Practices Act. The amendments are intended to make the procedures more

convenient and less burdensome by permitting supporting documents to be

submitted in either paper or electronic form, and by eliminating the

requirement that States submit certain information.

EFFECTIVE DATE: June 28, 1999.

FOR FURTHER INFORMATION CONTACT: Thomas E. Kane, Attorney, Division of

Financial Practices, Federal Trade Commission, 600 Pennsylvania Avenue,

N.W. Washington, D.C. 20580, (202) 326-3224, E-mail [[email protected].].

SUPPLEMENTARY INFORMATION: The Fair Debt Collection Practices Act, 15

U.S.C. 1692 (``FDCPA''), prohibits the use of deceptive, unfair and

unfair and abusive practices by third-party debt collectors. Section

817 of the FDCPA, 15 U.S.C. 1692o, requires that the Commission, by

regulation, exempt from its requirements ``any class of debt collection

practices within any State if the Commission determines that under the

law of that 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.'' Pursuant to that

requirement, the Commission promulgated procedures for State

applications for exemption from the provisions of the FDCPA

(``Procedures''), 44 FR 21005 (Apr. 9, 1979). The Procedures, codified

in 16 CFR Part 901, provide that any State may apply to the Commission

for a determination that, under the laws of that State: (1) a 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. Since the adoption of these Procedures, the

Commission has received one application for exemption, from the State

of Maine, and granted that exemption.\1\

---------------------------------------------------------------------------

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

Practices Act, 60 FR 68173 (Dec. 27, 1995).

---------------------------------------------------------------------------

In accordance with the FDCPA and the Commission's plan for Periodic

Review of Commission Rules,\2\ the Commission published a document in

the Federal Register on April 22, 1998, requesting public comments

regarding the overall costs and benefits and continuing need for the

Procedures.\3\ The Commission received comments from the Maine

Department of Professional and Financial Regulation (``Maine''), the

Massachusetts Commission of Banks (``Massachusetts''), and the Credit

Union National Association, Inc. (``CUNA'').

---------------------------------------------------------------------------

\2\ 46 FR 35118 (July 7, 1981).

\3\ 63 FR 19859.

---------------------------------------------------------------------------

Comments Received and Amendments Adopted

Maine urged the Commission to maintain the Procedures in their

current form. Massachusetts suggested that the Commission streamline

the Procedures to make them less burdensome for states applying for an

exemption. As noted below, the Commission has adopted several

amendments that serve to streamline the Procedures.

CUNA recommended that the Procedures be amended to permit

electronic applications over the Internet. The Commission agrees that

the Procedures can be made more convenient for States by incorporating

the use of current technology in the application process to the extent

possible. Accordingly, the Commission is amending Sec. 901.3 to clarify

that States may submit documents supporting their applications in

either paper or electronic form, thus allowing States to submit

supporting documents, for example, by electronic mail over the Internet

or on a floppy disk if they prefer that method to mailing paper copies

of the documents. The Commission, however, has determined not to amend

Sec. 901.2 of the Procedures to permit States to file the exemption

application itself electronically because that document must be signed,

and the Commission's Rules of Practice require a hand signed signature.

See 16 CFR 4.2(e) (filing requirements).

The Commission is also amending the Procedures to correct a

technical inconsistency and eliminate the need for States to submit

information not essential to the Commission in determining, for

purposes of an exemption application, that State law and administrative

enforcement offers at least as much protection as the FDCPA does.

Specifically, Sec. 901.3(d)(2) and (3) require States to submit

documents showing that civil liabilities for a failure to comply with

their State law are substantially similar to, or more extensive than,

civil liabilities provided for under section 813 of the FDCPA. Section

901.4(b)(2) and (3) of the Procedures require that the Commission then

compare the State civil liability provisions to the section 813

provisions. At the same time, however, Sec. 901.6(d) provides that no

exemption, if any, granted by the Commission shall extend to the civil

liability provisions of section 813. This prohibition renders the

results of the Sec. 901.3(d)(2)-(3) and section 813 comparison

superfluous. Although the Commission received no response to its

request for comments on this issue,\4\ it has deleted

Sec. Sec. 901.3(d)(2) and (3) and 901.4(b)(2) and (3) because they

serve no critical purpose in light of the paragraph 901.6(d)

limitation. Moreover, removing these paragraphs will benefit States

that apply for FDCPA exemptions as well as the Commission by reducing

the number of documents that the states must produce and the

[[Page 34533]]

number of statutory comparisons that the Commission must conduct.

---------------------------------------------------------------------------

\4\ 63 FR at 19860 n.7.

---------------------------------------------------------------------------

Consistent with the Administrative Procedure Act, the Commission is

adopting these amendments as final without further notice or public

comment. See 5 U.S.C. 553(A), (B). To the extent these Procedures

involve a ``collection of information'' within the meaning of the

Paperwork Reduction Act, 44 U.S.C. 3501-3520, that collection has

already been approved by the Office of Management and Budget (OMB) and

assigned control number 3084-0047. The present amendments do not modify

the existing requirements to require any new or additional collection

of information. Furthermore, the requirements of the Regulatory

Flexibility Act also do not apply to these amendments, which will not

have a significant economic impact on a substantial number of small

entities within the meaning of that Act. See 5 U.S.C. 601, 605(b).

List of Subjects in 16 CFR Part 901

Administrative practice and procedure, Consumer protection, Credit,

Intergovernmental relations.

For the reasons set forth in the preamble, Part 901 of Chapter I of

Title 16 of the Code of Federal Regulations is amended as follows:

PART 901--PROCEDURES FOR STATE APPLICATION FOR EXEMPTION FROM THE

PROVISIONS OF THE ACT

1. The authority citation for part 901 continues to read as

follows:

Authority: Pub. L. 95-109, 91 Stat. 874, 15 U.S.C. 1692o; 5

U.S.C. 552.

2. Section 901.3 is amended by revising the introductory text and

paragraph (d) to read as follows:

Sec. 901.3 Supporting documents.

The application shall be accompanied by the following, which may be

submitted in paper or electronic form:

* * * * *

(d) A comparison of the provisions of the State law that provides

for enforcement with the provisions of section 814 of the Act, together

with reasons supporting the claim that such State law provides for

administrative enforcement of the State law referred to in paragraph

(a) of this section that is substantially similar to, or more extensive

than, the enforcement provided under section 814 of the Act.

* * * * *

3. Section 901.4 is amended by revising paragraph (b) to read as

follows:

Sec. 901.4 Criteria for determination.

* * * * *

(b) In determining whether provisions for enforcement of the State

law referred to in Sec. 901.3(a) are adequate, consideration will be

given to the extent to which, under State law, provision is made for

administrative enforcement, including necessary facilities, personnel,

and funding.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 99-15841 Filed 6-25-99; 8:45 am]

BILLING CODE 6750-01-M