Todd M. Kwait, Esquire
Dear Mr. Kwait:
I am writing in response to your December 22, 1988, letter requesting an advisory opinion(1) on several questions concerning the Fair Debt Collection Practices Act ("FDCPA" or "Act").(2) For purposes of our response, you ask us to assume that your client is a "debt collector" as defined in the Act.
Your first two questions pertain to your client's obtaining "location information." Location information means a consumer's residence, home phone number and place of employment. It does not include work phone numbers, names of supervisors and their telephone numbers, salaries or dates of paydays.(3)
You ask whether, upon receiving an account for collection, a debt collector can contact third parties for purposes of verifying employment information appearing in the consumer's account file. In your example, the debt collector questions the accuracy of the information because it is more than a year old and, thus, may be stale.
We believe that, in the circumstances you described, the Act allows a debt collector to communicate with third parties for purposes of obtaining the consumer's place of employment. Section 804 requires that a debt collector, in seeking location information, to "state he is confirming or correcting location information." This requirement suggests that Congress envisioned situations where a debt collector may be provided, upon referral of an account, with dated or stale information. Because Section 804 (1) of the Act specifically requires debt collectors to state that they are "confirming or correcting" location information, it is reasonable to presume that the Act allows them to do so in fact. Your example is clearly distinguishable from the circumstances precipitating the staff comment referred to in your letter.(4) As noted in the Act's legislative history, in enacting Section 804, Congress intended to protect consumers from "serious invasions of privacy as well as the loss of jobs" while recognizing a debt collector's "legitimate need" to seek prescribed information about the debtor consistent with statutory guidelines.(5)
You next ask whether a debt collector, prior to bringing legal action against the consumer, can write to the consumer's employer in order to "obtain location information regarding the place of employment" of the consumer. The written communication would identify the debt collector but would not disclose that the consumer owes any debt. According to your letter, the employer contact is necessary in re-examining the appropriateness of bringing the lawsuit if the consumer is no longer employed.
In our opinion, this communication with the employer would violate the Act. Firstly, Section 804 (5) prohibits a debt collector, when seeking location information from third parties, from using his actual name in his letterhead or elsewhere in a written communication, if the name indicates collection activity (such as a name containing the word "debt," "collector" or "collection").(6) Secondly, assuming that your client, relying on our affirmative response to your first question, previously has contacted the employer to verify the consumer's place of employment, Section 804 (3) prohibits communicating with that employer again for the purpose you stated.
Your remaining questions pertain to the venue requirements in Section 811 of the Act.(7)
The first question(8) relates to timing and is two-fold. In your example, a consumer resides in the same judicial district where services are rendered. No contract exists for the debt. You ask whether venue is proper in the judicial district where the services were provided if the consumer subsequently moves out of the district: (1) after service of legal process but before the suit is filed; or (2) after suit is filed but before perfection of service.
Under Section 811, in the absence of a contract, a debt collector may "bring an action" only where the consumer resides at the "commencement" of the action. Although the definitions of "bring an action" and "commencement" as used is Section 811 are not defined in the Act, we believe that Congress intended these phrases to be construed in the context of their customary legal meaning. Accordingly, when an action is "commenced" will depend upon the rules of procedure applicable to the judicial district. For example, in judicial districts where an action is commenced upon filing a complaint together with service of the complaint and summons upon the consumer, then the date on which both of these requirement are met will dictate whether venue is proper under the Act. Under such rules for "commencing" an action, venue would not be proper in your first example because, at the time the complaint is filed, the consumer no longer resides in the judicial district. In the second example, the action would not commence, in any event, because of inability to perfect service.
Your last question, which is two-fold, concerns a consumer for whom the debtor collector's only location information consists of the place of employment. You ask whether the debt collector can bring a lawsuit against the consumer in the judicial district where the consumer's place of employment is located. As previously stated, Section 811 prohibits a debt collector from bringing suit in a judicial district other than where the consumer either signed the contract or resided at the time the action is commenced. Therefore, the debt collector cannot bring the lawsuit in the judicial district where the consumer is employed if it is not one of the two locations specified in Section 811.
You also ask whether the debt collector can communicate with the consumer by sending correspondence to the consumer at his place of employment. The envelope would not "identify the communications as a debt collection attempt." Further, you ask us to assume that the employer does not prohibit the consumer from receiving such communications. The Act does not prohibit such written communications. However, they must be made in accord with the limitations of Section 805.(9)
Among other things, Section 805 (b) requires that the debt collector not send written messages that are easily accessible to third parties, such as computerized billing statements that can be seen on the envelope itself. Further, once a debt collector receives written notice from a consumer that he wants the collector to stop such further communications, the debt collector must cease.
The views expressed in this letter constitute an informal staff opinion and as such is not binding on the Commission or any court. They do, however, represent the staff's present enforcement position.
1. Please note that the procedures for requesting a formal advisory opinion from the Commission are set out in Part I, Subpart A, Section 1.1 et seq. of the Commission's Rules of Practice, 16 C.F.R. 1.1 et seq.
2. 15 U.S.C. § 1692 at et seq., as amended by Pub. L. No. 99361, 100 Stat. 768 (1986).
3. Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed. Reg. 50097, 50103 (Dec. 13, 1988) ("Commentary").
4. Although a debt collector's search for information concerning the consumer's location (provided for in § 804) is expressly excepted from the ban on third part contacts, a debt collector may not call third parties under the pretense of gaining information already in his possession. Id. at 50104, Comment 2 on Section 805 (b).
5. S. Rep. No. 382, 95th Cong., lst Sess. 4, reprinted in 1977 U.S. Code Cong. Ad. News 1695, 1699.
6. 15 U.S.C. § 1692b (5); Commentary, supra note 3, at 10103, Comment 4 on Section 804.
7. 15 U.S.C. § 1692i. This section prohibits a debt collector from filing suit (except to enforce an interest in real property) in a judicial district other than where the consumer either signed the contract sued upon or resides at the time the action is commenced.
8. Based on our January 12 and 17, 1989, telephone conversations, there is no need to respond to question three on page two of your letter. This question, which has three parts, concerns hospital debts. Prior to the hospitals rendering services, the consumer signs a personal guaranty agreeing to pay any charges not covered by insurance. It is now your understanding that the personal guaranty is, in fact, a written agreement signed by the consumer at the location where hospital services are rendered. Accordingly, the issues raised in this question are moot given that, regardless of where the consumer resides, the debt collector has the option of suing the consumer where services were rendered because this venue is also where the consumer signed the contract.
9. 15 U.S.C. § 1692c.