FTC Issues Final Policy Statement on Collecting Debts of the Deceased

The Federal Trade Commission has finalized a policy statement clarifying that the agency will not take enforcement action under the Fair Debt Collection Practices Act (FDCPA) or the FTC Act against companies that are attempting to collect the debts of deceased consumers, if the companies communicate with someone who is authorized to pay debts from the estate of the deceased. The policy statement also emphasizes that debt collectors may not mislead relatives to believe that they are personally liable for a deceased consumer’s debts, or use other deceptive or abusive tactics.

Family members typically are not obligated to pay the debts of a deceased relative from their own assets. The FDCPA limits whom debt collectors may contact after a loved one has died to people such as the deceased person’s spouse and the executor or administrator of the deceased person’s estate. Since the FDCPA was enacted in 1977, state probate laws have changed, and now, less formal procedures often govern the appointment or selection of those who are responsible for the disposition of the estate. In many instances, there may be no formal executor or administrator of an estate. In the enforcement policy statement issued today, the Commission seeks to reconcile the FDCPA’s requirements with current trends in state probate law.

In keeping with the FTC’s October 2010 proposed policy statement, the final policy statement specifies that the agency will not take law enforcement action under the FDCPA if a debt collector communicates about a deceased person’s debts with that person’s spouse, the executor or administrator of the deceased person’s estate, or anyone else who is authorized to pay the debts from assets in the estate. The final policy statement also:

• describes how debt collectors may communicate with family members and others to locate someone who is authorized to pay the deceased person’s debts from the estate, and specifies that collectors may not mislead individuals into believing that they have the authority to pay the decedent’s debts when they do not.
• specifies that, in seeking to locate someone who is authorized to pay the deceased person’s debts from the estate, collectors may not reveal or refer to the debts, but may say they wish to discuss payment of the deceased person’s bills.
• states that in keeping with the FDCPA’s prohibition on unfair, deceptive, or abusive collection practices, debt collectors may not contact family members and others at unusual or inconvenient times or places.
• emphasizes that, in communicating with someone who is authorized to pay the debts from assets of the deceased person’s estate, collectors 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 FTC has information for consumers about what to do when a loved one dies and debt collectors are calling. To learn more see: Paying the Debts of a Deceased Relative: Who Is Responsible?

The final policy statement will be published in the Federal Register. An enforcement policy statement describes the Commission’s future enforcement plans, goals, and objectives with respect to a particular industry or practice. Enforcement policy statements do not have the force or effect of law, but they may reflect the Commission’s interpretation of a legal requirement. The FTC vote approving the final policy statement was 5-0.

Commissioner Julie Brill issued a concurring statement that urged close monitoring and aggressive enforcement to assure that the expanded contact with bereaved families authorized by the policy does not result in abuse by the debt collection industry. “A consumer in this vulnerable condition may mistakenly identify himself as the person with whom the debt collector should be speaking,” she wrote.

(FTC File No. P104806; the staff contact is Christopher Koegel, Bureau of Consumer Protection, 202-326-2761.)

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