FTC Proposes Policy Statement Clarifying How to Collect Decedents' Debts

The Federal Trade Commission is seeking public comment on a proposed policy statement clarifying when the FTC will take action under the Fair Debt Collection Practices Act (FDCPA) and the FTC Act against companies trying to collect the debts of deceased consumers.

In collecting these debts, the FDCPA generally allows collectors to contact only the decedent’s spouse, or the executor or administrator of the decedent’s estate. Since the FDCPA was enacted in 1977, state probate laws have expanded the types of persons who are authorized to pay a decedent’s debts from assets in the decedent’s estate, beyond the categories expressly permitted under the FDCPA. In the proposed enforcement policy statement issued today for public comment, the Commission seeks to reconcile the FDCPA’s requirements with state probate law developments.

Under the proposed policy statement, the FTC would not take law enforcement action alleging that a collector violated the FDCPA by communicating about the decedent’s debts with the decedent’s spouse, the executor or administrator of the decedent’s estate, or anyone else who is authorized to pay the debts from assets in the decedent’s estate. The statement also provides guidance about what collectors must do to identify persons with whom they may communicate about paying the decedent’s debt without improperly revealing the debt to others. In addition, the statement emphasizes that, in communicating with someone who is authorized to pay the debts from assets of the decedent’s estate, collectors must avoid creating the misleading impression that the person is personally liable or could be required to pay using his own assets or assets held jointly with the decedent. The proposed statement notes that to avoid this misleading impression collectors may have to disclose that this is not the case.

The proposed 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 is accepting public comments on the proposed policy statement until November 8, 2010. Comments should include the reference “Deceased Debt Collection Policy Statement.” Instructions for submitting comments are found in the Federal Register notice. The Commission vote authorizing the Federal Register notice was 5-0.

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