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Fair Debt Collection: 16.2.4.4.5 Validation notices and documentation requirements

Some states echo the FDCPA’s requirement of a validation notice.306 Even if the state statute does not require such a notice, misrepresenting or obscuring the consumer’s validation rights under the FDCPA is likely a violation of a general prohibition of deception in the state statute.307 Some states require creditors to provide the debtor specific documentation of the debt upon request.308

Fair Debt Collection: 16.2.4.4.7 Other unfair or deceptive tactics

Filing suit in an improper venue violates a state debt collection statute.313 A collector whose dunning letter referred consumers to a website containing egregious misrepresentations violated the Oregon Unfair Debt Collection Practices Act.314 A collector or creditor violates a state debt collection statute by:

Fair Debt Collection: 16.2.4.5 Unlicensed Collection Activity

Some courts hold that a consumer does not have a direct private cause of action against a collection agency for operating without a license required by state law.319 However, a collection agency’s threat to take action that it cannot legally take because of its lack of a license may be actionable under the state debt collection law as a deceptive tactic.320 A threat of suit by an attorney who is not licensed in the jurisdiction is also deceptive.321

Fair Debt Collection: 16.2.5.2.1 Actual damages

When a private cause of action is available, it universally allows the consumer to recover actual damages.343 Damages may be awarded for the reasonably foreseeable harm caused by the violation regardless of whether the defendant intended to cause injury.344 Actual damages may include payments the debtor made in response to harassment or a false threat345 and expenses incurred in defending against an unfounded collection action.

Fair Debt Collection: 16.2.5.2.2 Statutory damages

Some state debt collection statutes provide for statutory damages.352 Under some of these statutes, actual damages are not a prerequisite to recovering such statutory damages.353 Other state debt collection statutes, however, require a showing of actual injury or damages as a precondition of any action, whether for statutory damages or otherwise.354

Fair Debt Collection: 16.2.5.2.3 Punitive damages

Some debt collection statutes authorize punitive damages.362 These statutes may be interpreted to require the elements necessary to establish punitive damages under the common law.363 When debt collection statutes are silent about the availability of punitive damages, some courts look to common law to determine whether punitive damages are available.364

Fair Debt Collection: 16.2.5.2.4 Attorney fees

Some collection statutes provide for an award of the consumer’s attorney fees in order to make assertion of claims under the statute economically feasible.367 However, some of these statutes, unlike the FDCPA, provide for fee awards to the prevailing party, which could be either the consumer or the debt collector.368

Fair Debt Collection: 16.2.5.2.5 Other relief under state debt collection statutes

Injunctive and declaratory relief may be available under state debt collection statutes.369 Washington’s Collection Agency Act provides that a licensee that commits one of the practices prohibited by the statute is forever barred from recovering any interest, fees, or other charges on the claim, but is limited to the amount of the original claim.370 Class actions are typically allowed.371 Courts may impose individual liability on collection agency

Fair Debt Collection: 16.2.5.3 Defenses

Collectors may attempt to have a state debt collection practices claim dismissed by claiming that a judgment on the underlying debt is res judicata or that the debtor gave up their rights in a settlement agreement with the collector.

Fair Debt Collection: 16.3.3.1 Generally

The typical UDAP statute has a broad initial scope section, covering “trade or commerce” or “consumer transactions,” but then goes on to exempt certain sellers or types of transactions. Many UDAP statutes do not mention debt collection specifically, so courts must construe these general terms to determine whether debt collection is covered.

Fair Debt Collection: 16.3.3.2 Debt Collection Is in Trade or Commerce

UDAP statutes that cover “trade or commerce” are generally construed to cover debt collection.416 Pennsylvania417 and Montana418 courts have held that debt collection activities are “in trade or commerce” even where this term is defined as the advertising, sale, offering for sale, or distribution of services, property, or other things of value.

Fair Debt Collection: 16.3.3.3 Coverage Under Statutes Requiring a “Consumer Transaction” or Acts in Connection with the Sale of Merchandise

A number of UDAP statutes apply only to “consumer transactions”—typically defined as those for personal, family, or household use.422 Many courts recognize that, as long as the underlying transaction is a “consumer transaction,” the UDAP statute applies to all phases of the transaction, including collection.423 Likewise, debt collection is in connection with the sale of merchandise where the underlying transaction arose from such a sale.424 The Mis

Fair Debt Collection: 16.3.3.5 What Consumers Are Protected?

A UDAP statute may protect out-of-state residents,454 although some UDAP statutes are limited to acts that occur in the state.455 Some courts have applied their UDAP statutes to actions that occur outside the state, but that affect state residents.456 Some state UDAP statutes protect businesses as well as consumers, but others protect only consumers.457

Fair Debt Collection: 16.3.7 CFPB Examples of Unfair, Deceptive, or Abusive Debt Collection Practices; Rulemaking

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act663 gives the Consumer Financial Protection Bureau (CFPB) the authority to write rules to prevent unfair, deceptive, and abusive practices in connection with consumer financial services and products.664 While consumers do not have a private right of action to enforce any rules the CFPB issues under this general rulemaking authority,665 courts are likely to give the CFPB’s rules and i

Fair Debt Collection: 16.4.1 Overview

Most states have passed statutes to deal with abuses by credit repair organizations.692 These statutes, often termed the state Credit Services Organization Act, offer strong remedies and have the potential of applying to certain debt collection activities. They typically follow the federal Credit Repair Organizations Act693 closely in some respects, but differ in significant ways, often imposing additional requirements such as registration and bonding.

Fair Debt Collection: 16.4.2 Scope

Like the federal Credit Repair Organizations Act, all or nearly all state credit repair statutes apply to organizations that offer to improve an individual’s credit rating in return for the payment of money or other valuable consideration. This language should be interpreted consistently with the federal statute to encompass debt collectors who represent to debtors that payment will improve their credit records.694