This summer, the Federal Trade Commission (FTC) issued a policy statement making clear the responsibilities of debt collectors when collecting the debts of a decedent. The FTC (along with private plaintiff attorneys) is tasked with enforcement of the Fair Debt Collection Practices Act (FDCPA) regulating third-party debt collectors collecting consumer debts. Of particular interest to epilawg.com readers is this policy statement applicable to the collection of decedents outstanding consumer debts.
The FDCPA explicitly forbids speaking to third parties regarding the collection of a debt outside the acquisition or correction of location information without the prior consent of the debtor, the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy. The FTC policy statement recognizes that this prohibition may lead to violations of the FDCPA when debt collectors seek to collect the debts of a decedent either prior to probate or through a states informal or formal probate processes.
Specifically the policy statement seeks to clarify that when collectors are collecting the debt of a descendent that the following guidelines apply (if these guidelines are followed, the FTC will not take enforcement action against the debt collector):
- Debt collectors may not mislead relatives to believe that they are personally liable for a decedent’s debts, or use other deceptive or abusive tactics
- Debt collectors may not mislead individuals into believing that they have the authority to pay the decedent’s debts when they do not.
- Debt collectors may not contact family members and others at unusual or inconvenient times or places.
- Debt collectors may communicate with family members and others to locate someone who is authorized to pay the decedent’s debts from the estate
- Debt collectors, when seeking to locate someone who is authorized to pay the deceased person’s debts from the estate, may not reveal or refer to the debts, but may say they wish to discuss payment of the deceased person’s bills.
- Debt collectors, when communicating with someone who is authorized to pay the debts from assets of the decedent’s estate, must avoid creating the misleading impression that the individual is personally liable or could be required to pay using his or her own assets, or assets held jointly with the deceased person.
The collection industry must abide by the FDCPA and FTC policy statement when collecting the consumer debts of a decedent. Violations provide for up to $1,000 in statutory damages, actual damages if proven, attorneys fees and costs. In addition to the decedent’s estate, any person whose rights have been violated under the FDCPA has standing to bring an action in federal court.
