John E. Beekman, Esquire
4020 Winchester Road
Allentown, Pennsylvania 13204

Dear Mr. Beekman:

I am responding to your letter to John LeFevre of this office seeking clarification of several issues regarding the mailing of certain debt collection letters. I must express my regret for the delay in responding to your inquiry. Since, you have asked for a "specific response" to a number of inquiries that recite the procedures (or mechanics, if you will) of the process envisioned, but omit any mention of the substantive content of the letters) involved, it will be necessary to qualify our response to many of them.

Your inquiry is on behalf of a creditor located in Florida that collects from debtors located throughout the United States. You write that "the creditor generally handles all billing, and overdue collections on such billings, from a central location in Florida. All collection activity on overdue accounts is handled by use of the mail and telephone systems out of Florida up to the time an overdue account reaches 12(3 days past-due--at which time the account is referred to outside independent debt collectors..."

You pose a number of questions growing out of a proposed course of action that you describe as follows:

"As part of the creditor's in-house collection activity, the creditor desires to print and mail an attorney letter utilizing a law office letterhead of an independent attorney as opposed to use of an attorney employee type letter ....[T]he attorney would be a fully licensed attorney maintaining a private practice at a location apart from that of'-the creditor."

Your letter primarily seeks clarification of a portion of the Proposed Official Staff Commentary on the Fair Debt Collection Practices Act (51 P.R. 8019) and focuses on the Commentary's treatment of Section 807(3) of that Act ("FDCPA" or "the Act"). Section 807(3) prohibits "the false representation or implication that any individual is an attorney or that any communication is from an attorney." The staff commentary states, "If a creditor uses an attorney's name rather than his own in his collection communications, he loses both his exemption from the [FDCPA's] definition of 'debt collector' (Section 803(6)) and violates this provision [§807(3)]." I will treat your questions in the order in which your letter raises them.

(1)Does "use" by a creditor in this context include the preparation of the attorney letter and the mailing of the attorney letter even though the creditor has entered into an agreement with a privately practicing attorney to prepare and mail the letter only under specific conditions and circumstances specified by the attorney?

In my opinion, creditor use of non-affiliated attorney letterheads would violate Section 807(3) of the Act under the circumstances outlined in your inquiry. A collection letter cannot be "from an attorney" in any bona fide sense if the attorney's only involvement is lending his name and entering into a contract specifying conditions for use of letter, with no other involvement in either the collection process or legal decisions incident to continuing account activity.

You next ask whether the staff comment on Section 807(3), quoted above (51 F.R. 8019 at 8025), applies where an attorney-employee letter is prepared and mailed by the creditor under three varying circumstances. I assume that you mean the letter is in fact generated by the attorney who is an employee of the creditor (in-house counsel). The inquiry includes the following circumstances:

(2) (i) The attorney is a full time employee of the parent corporation of the creditor company and is located at the parent company's headquarters in New York State and licensed to practice only in New York State--not Florida. (For purposes of this inquiry the creditor's regular letter-head would be utilized in the mailing inasmuch as letterhead implying the employee-attorney is engaged in private practice in Florida would be violative of Section 807(1) and the unauthorized practice of law prohibitions of the State of Florida.)

(2) (ii) Do the staff's comments concerning "meaningful participation" in the collection process require the employee-attorney to have involvement in the collection process in addition to lending his name as attorney for the Florida creditor within the body of the letter's:

(2) (iii) Does the employee-attorney's statement (on the creditor's collection letters and letterhead) that he represents the creditor as an attorney create a false and misleading representation to a debtor when the attorney is not engaged in or licensed to practice in Florida? (For purposes of this inquiry Florida is the legal situs of the creditor, the state under which the contracts therein breached by debtors or governed, and the state wherein the contract terms are interpreted.)

Under the facts posited in your letter, the FDCPA would not apply to these activities because the Act's definition of "debt collector" specifically excludes "any officer or employee of a creditor while, in the name of the creditor; collecting debts for such creditor." (Section 803(6)(A).) If, however, the facts are. other than set out in your letter (if, for example, the creditor's letterhead is not used or representations are made in the text of the letter that create an implication that the attorney is independent of the creditor), then the exemption might not operate.⁽¹⁾

I turn now to your final inquiry.

(3)The creditor, after use of all in-house collection procedures have been employed, refers uncollected accounts to outside unaffiliated debt collectors (attorneys and collection companies). Section 812(x), prohibits the use of-deceptive forms such as "pre-collection of letters" without any meaningful participation in collection of the debt. Does meaningful participation require the debt collector handle telephone inquiries and/or collection of the money when the debt collector communicates with the debtor by letter rather than telephone? What other involvement must a debt collector have to comply with the meaningful participation requirement so as not to be deemed a "form seller"?

We do not have a prescribed or sanctioned list of activities that are deemed sufficient to constitute "meaningful participation." The determination very much rests on the facts of a given case. In this case. In this regard, I enclose copies of two prior informal staff interpretations that may assist you in identifying a representative range of such activities.⁽²⁾

I hope that the above discussion has been of assistance. This is an informal staff opinion that represents the present enforcement position of the Division's staff. As such, it is not binding on the Commission.

Very truly yours,

Christopher W. Keller
Attorney
Division of Credit Practices

Enclosures

1. See, e.g., staff commentary on Section 807(10) of the Act, 51 F.R. at 8026 (number 5, "misleading letterhead").

2. Henry A. Sullivan, Esq., February 21, 1984, and Daniel C. Smith, Esq., July 5, 1984; see also enclosed Commentary (51 F.R. 8029).