Articles>> Reasons Not to Send a Cease and Desist Letter
Reasons Not to Send a Cease and Desist Letter
The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692c(c), provides for a writing to send "the debt collector to cease further communications with the consumer." Some people refer to this as a Cease and Desist Letter, but the word "desist" does not appear in this section of the FDCPA. People send this to stop a debt collector from contacting them, but I have found it may get the consumer sued in state court on the debt. There are other problems.
The most common misunderstanding occurs when that consumers send a "cease and desist letter" to the original creditor or they send such letter concerning a debt that is not subject to the FDCPA. Except in rare instances, creditors are not subject to the FDCPA. There are also several types of debts that are not subject to the FDCPA. A debt subject to the FDCPA must have resulted from a transaction intended primarily for personal, family, or household purposes. Courts have stated that the collection of taxes, fines, child support, civil shoplifting claims, and torts are not subject to the FDCPA, because there was no consensual transaction involved. Perhaps Congress or some courts will change these more narrow interpretations, but that is the dominant view.
If the consumer sends a "cease communications" letter to the debt collector on a debt that is subject to the FDCPA, the collector must cease communicating on the debt. Thus, they may either sell the debt to another debt collector, which starts the process all over again, or file in court a credit card lawsuit against the consumer. Perhaps the consumer would prefer that the collector not file a debt collection lawsuit, as perhaps the collector may delay filing legal action beyond the statute of limitations period. In California, if a written contract has been in default more than four years since the date of last payment, the debt is barred by the statute of limitations, and the California courts will not enforce it. The deadline may be even shorter, if the account was not based on a written contract or another state's statute of limitations law applies. Indeed, the FDCPA prohibits a debt collector from filing or threatening to file a lawsuit on a time-barred debt. This may require careful analysis, though, as payments or written promises to pay the debt may revive the four-year period.
The better approach, in my opinion, is to promptly (within 30 days of receiving the initial notice from the collector) dispute the debt or, if there is no valid dispute available, to send the debt collector a written request to validate the debt. So, mark your calendar and the envelope (which you should save in a file) to record when you received the letter by mail. If the consumer disputes the debt or asks for validation from the debt collector within 30 days of RECEIPT, the debt collector must cease collection of the debt until it mails a written notice that states they have verified the debt. Unlike a "cease and desist letter," the debt collector may not sue the consumer or sell the account to another debt collector, as these acts constitute collection of the debt. Until they verify the debt in writing, they must stop all collection activity, under 15 U.S.C. § 1692g(b).
Copyright © 2009, 2012 Consumer Law Office of Robert Stempler, APC
>> Disputing Debt Collection
Disputing Debt Collection
If you recently received a letter from a debt collection agency or law firm and wish to prevent or stop further calls from this particular debt collector, read this article. This article is also a must read, if this debt collector or their law firm has threatened to sue you on an old or bogus account.
Using the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692g(b), consumers have a law that may delay or prevent being sued on a credit card lawsuit or harassed. It is so much more effective than a so-called "cease and desist letter," discussed in a separate article.
Before getting into those laws, let's clear away a common misunderstanding about the scope of the FDCPA. Except in limited instances, creditors are not subject to the federal FDCPA. Thus, if you want to stop collection calls from the bank that issued a credit card, the FDCPA will NOT work. Also, many types of debts are not subject to the FDCPA. A debt subject to the FDCPA must have been incurred in a transaction intended primarily for personal, family, or household purposes. Courts have stated that the collection of taxes, fines, child support, civil shoplifting claims, and torts are not subject to the FDCPA, because there was not consensual transaction involved. Perhaps Congress or some courts will change these more narrow interpretations, but that's the dominant view, and the FDCPA have no legal impact, unless the account being collected is a "debt," as defined by the FDCPA.
The FDCPA, at 15 U.S.C. § 1692g(b), gives consumers a fantastic tool to get a debt collector-even a debt collection law firm-backed off, at least temporarily. The most effective way to dispute a debt collection effort is to send a letter to the debt collector, within 30 days of receiving the initial notice of collecting a debt from the debt collector. Sample letter 1.1 has the basic format to follow. It is always better to have proof of delivery from the post office that the consumer's dispute letter was mailed to and received by the debt collector, together with a photocopy of the letter and all enclosures. It is also important for the consumer to know the date on which he or she received the debt collector's initial letter, to prove that their dispute was sent timely. The consumer's dispute letter may request verification of the debt, dispute the debt, or both.
An alternative to a formal dispute letter under § 1692g(b) is to dispute the debt orally within the 30-day period of receiving the initial letter. This is typically during a collection call, though if there is an unusual face-to-face encounter with a debt collector, an oral dispute may be made then. If the consumer is called and disputes a debt on the phone, why not follow this call with a formal dispute letter, to be safe and have the dispute documented in writing?. Perhaps state in the letter what the debt collection representative said on the phone.
Upon receiving a timely dispute, the debt collector must decide whether to continue collecting the debt or not. If the collector wants to continue collection activities, it must obtain verification of the debt or a copy of any judgment, and mail this to the consumer. Thereafter, the debt collector may resume collection activities. The consumer may also request that the debt collector provide the name and address of the original creditor, to which the debt collector must mail such information to the consumer, but this basic information is often provided in the initial collection notice. The courts have currently set a fairly loose standard for debt collectors on what information they must mail to the consumer to verify the debt, but perhaps future cases will sharpen this standard.
The courts have more opinions explaining the FDCPA's directive that collection activities must cease after receipt of the consumer dispute: everything must be put on hold. That means no more calls to the consumer about the debt (or anyone else, for that matter), no filing of any more papers in court, no new reporting the account to a credit reporting agency, nothing. They may not even sell the debt to another debt collector! For failing to follow this directive, the courts have come down pretty hard on debt collectors and debt collection law firms, awarding actual damages, statutory damages, and attorney's fees.
So, when you or a friend receives that first debt collection letter, save the letter and the envelope. Note the date when the letter was actually received, both on the envelope and on your calendar. Then, within 30 days, modify and send sample letter 1.1 and monitor the debt collector's next moves, if any. If they call you after you sent it, you should remind them of your dispute and the letter you sent. Anything that they say after that may be used against them in a court of law, so be sure to keep track (see telephone log) of each call and what they say, as they are probably violating your rights, under the FDCPA. Then, seek experienced legal counsel, but please don't wait a year (365 days), as the FDCPA has a one-year statute of limitations for any consumer claims against a particular debt collector.
Copyright © 2007, 2012 Consumer and Tax Law Office of Robert Stempler, APLC
>> Identity Theft
What is Identity Theft? The California Penal Code, Section 530.5, defines the crime of "Unauthorized Use of Personal Identity Information" as follows:
(a) Every person who willfully obtains personal identifying information, as defined in subdivision (b), of another person without the authorization of that person, and uses that information for any unlawful purpose, including to obtain, or attempt to obtain, credit, goods, services, or medical information in the name of the other person without the consent of that person is guilty of a public offense.
"Personal identifying information," as used in this section, means the name, address, telephone number, driver's license number, social security number, place of employment, employee identification number, mother's maiden name, demand deposit account number, savings account number, or credit card number of an individual person.
In other words, it can be any instance in which someone signs or forges another person's name without their permission or uses their Social Security Number, or any other personal information to apply for or obtain goods, services, or credit. Thus, it is important to safeguard your personal information from others and give out this information only sparingly and to places that you really trust with such information.
If you prefer paying with credit cards, either because you are low on cash or like the rewards that your credit card offers, think twice before charging at places that you don't regularly visit, places out of town, or for a small amount. Of course, never give information to someone who calls you claiming to be from your bank, credit card company, the court, or the police. These are well documented scams, which is why everyone should get caller ID (which the scammers are also capable of falsifying) and an answering machine, then ignore calls unless you know the caller's number as a friend. The biggest reward for using cash (not a check) is that you will not find unauthorized charges to your credit card statement, making you less vulnerable to fraud and identity theft.
Several years ago, I had a consumer complaint. The consumer claimed that he went to a local furniture store to purchase some items for his home. He selected the items and signed a credit application with a bank's name on it. He was given no contract or order to buy the furniture, nor had he paid for the furniture or charged it on his credit card. The customer then received a call from the store saying that he was approved and they can deliver the furniture to his house on a particular date. Not aware that anything was amiss, he agrees to this and receives the furniture. However, days later he receives a notice from the bank declining his credit application, as well as a letter from another large financial institution that his credit was approved, even though he had never applied to that company for credit. He asks the lender about how he was approved, and the lender then sent him documents showing that someone at the store forged his signature on a contract and a credit application, so as to complete the sale, without his knowledge. I advised him to get a copy of the forged documents and obtain a police or sheriff's report for identity theft immediately.
If you find that you are the victim of identity theft, try to gather as much information as you can and prepare the Federal Trade Commission's ID Theft Affidavit. Here is a link to the FTC's ID Theft Affidavit page: http://www.ftc.gov/bcp/edu/resources/forms/affidavit.pdf. Section 22 of the ID Theft Affidavit suggests the victim obtain a police report, either from your local police or sheriff's department, but there are other government agencies that can prepare a similar report, such as the U.S. Postal Inspector, the Secret Service, and the FBI. It does not matter that the actual crime occurred in another city or state, as the crime is also deemed to have taken place against you where you live, and your local authorities can work with the authorities in other jurisdictions, if they pursue the criminal case. A California identity theft police report should refer to Penal Code Section 530.5 and to the accounts that were illegally opened or used with your personal identity information.
Be aware that some police and sheriff's departments or certain individuals within such departments may say that they cannot provide you a police report and argue about whether you are entitled to obtain such report. Be prepared, not surprised. May I suggest that you first call the department where you wish to file the report and ask to speak with the person who handles identity theft. Briefly explain to them the facts and find out if they will prepare a report and what information they need from you. Make their job easy and bring what they need, even if you have to order certain documents from a financial institution or a credit reporting agency. Be sure to bring a good copy and keep the originals, as it is unlikely that they will find and prosecute the ID thief, so you will need these documents in case of a civil lawsuit involving the financial institutions, their debt collectors, and credit reporting agencies. Also, bring a copy of California Penal Code, Section 530.5, and read it before you contact the department. Sometimes even the authorities need to be reminded of these laws
Once you have prepared the ID Theft Affidavit and have an identity theft police report, start a file and make several photocopies of both. The plan is to send a copy to the companies who are attempting to collect the account(s) (whether they are debt collectors or the creditor). The preferred address for notice, under California law, is the address used by the company for "complaints related to credit report issues." (Cal. Civil Code §, 798.93.) Such notices should be sent by Certified Mail, Return Receipt Requested and you should always keep a copy of your correspondence, because companies often claim they did not receive such notices. It costs an extra $5 in postage and a trip to the post office, but it's the best way to protect yourself and your credit.
Finally, if the debt collectors or the creditor continues to hound you for the debt, please do NOT pay any part of it or offer to pay. This is not your debt, if you did not authorize that person to use your personal identification information to open the account, so why would you pay any of it? Such payments may later be used to show that you admitted it was your debt or that you had something to do with approving the account. Even if the debt collectors stop calling, they may still try to report it for years to come on the consumer's personal credit reports. Or debt collectors may show (or not) the payment and assign the rest of the account to yet another debt collector, who starts the process anew.
Contact a consumer attorney, such as Consumer Law Office of Robert Stempler, APC; get specific advice and send more dispute notices and identity theft reports. Sometimes it takes two or three letters and several phone calls to convince the financial institution or debt collector to note the account as disputed and stop contacting you. Be polite, but firm. You have no reason to back down or to fear answering the phone, if you are a victim of identity theft. It is certainly better to answer the call and politely explain the situation, than to receive many calls per day that you feel obliged to ignore. They still disturb you and those around you with the phone ringing. I would not answer the call of a telemarketer, but do answer the calls of a debt collector, if they claim you owe them a debt that you do not.
In addition to the Sample Letters and Articles on this Web site, contact attorney, author, consumer advocate, and former victim of identity theft:
Mari J. Frank
Laguna Niguel, Ca. 92677
Copyright © 2007, 2012 Consumer Law Office of Robert Stempler, APC
>> Old Debts
If a debt has been proven to be unpaid for longer than the statute of limitations period, a court should dismiss the case, even if the creditor or collection agency plaintiff proves to the court that the debt is otherwise a valid and binding debt of the defendant. Attorneys refer to such as debt as being “time barred.” It does not matter when the account was opened, though if there is a written contract between the parties, then under California law, the debt may be enforced for up to four years from date that the account went delinquent and was last paid. However, if the debt agreement adopts the laws of another state, and that state has a shorter statute of limitations for the particular debt, then if the lawsuit is filed in a California court, the shorter limitations period of the other state should be used. For example, if the credit card agreement adopts the laws of the State of New Hampshire or the State of Delaware, the unpaid debt of that credit card must be filed in court within a three-year limitations period
How do the foregoing rules apply to a consumer and debt collectors collecting a consumer debt? If the consumer's debt is time barred, then the debt collector may not threaten to sue the consumer, such as threatening to refer the case to their debt collection lawyers. Also, the debt collection agency may not file in court a debt collection lawsuit against the consumer on a time-bared debt. As the U.S. Supreme Court stated in 1995 in the case Heintz v. Jenkins: “[L]itigating . . . seems simply one way of collecting a debt.”
However, to be able to make such claims against the debt collector, the consumer must timely file such claims of harassment in court or the court can dismiss them as time bared. Thus, keeping track of the harassment and promptly filing such claims in court is necessary, if the consumer wishes to preserve their right to sue the debt collector for harassment.
Copyright © 2012 Consumer Law Office of Robert Stempler, APC