[Federal Register Volume 63, Number 77 (Wednesday, April 22, 1998)]
[Proposed Rules]
[Pages 19859-19861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10699]


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FEDERAL TRADE COMMISSION

16 CFR Part 901


Request for Comments Concerning Procedures for State Application 
for Exemption From the Fair Debt Collection Practices Act

AGENCY: Federal Trade Commission.

ACTION: Request for public comments.

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SUMMARY: The Federal Trade Commission (``Commission'') requests public 
comments about the overall costs and benefits and the continuing needs 
for its Procedures for State Application for Exemption from the 
Provisions of the Fair Debt Collection Practices Act (``FDCPA''), 
hereinafter known as ``Procedures.''

DATES: Written comments will be accepted until June 22, 1998.

ADDRESSES: Comments should be directed to: Secretary, Federal Trade 
Commission, Room H-159, Sixth Street and Pennsylvania Ave., N.W., 
Washington, D.C. 20580. Comments should be identified as ``Procedures 
for Exemption from FDCPA, 16 CFR Part 901--Comment.''

FOR FURTHER INFORMATION CONTACT:
John F. LeFevre, Attorney, Federal Trade Commission, Washington, D.C. 
20580, telephone number (202) 326-3209 or Tom Kane, Attorney, Federal 
Trade Commission, Washington, D.C. 20580, telephone number (202) 326-
2304, E-mail [[email protected]].

SUPPLEMENTARY INFORMATION:

I. Background

A. The Fair Debt Collection Practices Act

    The Fair Debt Collection Practices Act, 15 U.S.C. Sec. 1691 et seq. 
(``FDCPA''), prohibits a number of deceptive, unfair and abusive 
practices by third party debt collectors. Section 817 of the FDCPA 
requires that the Commission exempt from its requirements ``any class 
of debt collection practices within any state if the Commission 
determines that under the law of the state, the class of debt 
collection practices is subject to requirements substantially similar 
to those imposed by [the FDCPA], and that there is adequate provision 
for enforcement.'' The Commission has received one application for 
exemption from Sections 803-812 of the FDCPA from the State of Maine 
for debt collection practices conducted within that State and granted 
that exemption.\1\
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    \1\ Notice of Maine Exemption from the Fair Debt Collection 
Practices Act, 60 Fed. Reg. 68173 (December 27, 1995).
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    The FDCPA prohibits debt collectors from using false or misleading 
statements, harassing or abusive conduct or any unfair methods to 
collect debts. Among the practices which are specifically prohibited 
are making false threats to coerce payment (such as false threats of 
suit); using deceptive collection notices that falsely appear to be 
from an attorney or court; and engaging in any sort of harassment, such 
as threatening violence, using profanity and obscenities, or making 
continuous phone calls. The FDCPA also restricts the extent to which 
debt collectors may call a consumer at work and prohibits them from 
making calls to consumers

[[Page 19860]]

very early in the morning or late at night. With a few narrow 
exceptions, it prohibits collectors from contacting third parties and 
revealing the existence of a consumer's debt. In addition, the FDCPA 
prohibits collectors from adding charges to a debt unless the consumer 
involved agrees to them or they are permitted by law, and from filing 
suit against a consumer outside of the district of the consumer's 
residence or where the contract creating the debt was signed.
    Under the FDCPA, if a consumer disputes the debt in writing, the 
collector is required to stop all collection efforts until the debt is 
verified. The FDCPA also states that if the consumer demands in writing 
that the debt collector cease all further collection efforts, the debt 
collector must comply even if the debt is valid. Finally, the FDCPA 
gives a consumer the right to bring suit against a debt collector in 
any court for violations of the FDCPA, and, if successful, to receive 
actual damages and additional damages up to $1,000, as well as costs 
and attorney's fees.
    The FDCPA is enforced primarily by the Federal Trade Commission. A 
violation of the FDCPA is deemed an unfair or deceptive practice in 
violation of the Federal Trade Commission Act. All of the functions and 
powers of the Federal Trade Commission Act are available to the 
Commission to enforce compliance with the FDCPA. The Commission may 
enforce the provisions of the FDCPA in federal court, seeking civil 
penalties and injunctive relief, as appropriate.

B. The Procedures

    The Commission promulgated procedures in 1979 for state 
applications for exemption from the provisions of the FDCPA, which are 
published in 16 CFR 901 (1995) (``Procedures''). Section 901.2 of the 
Procedures provides that any state may apply to the Commission for a 
determination that, under the laws of that State, (1) any class of debt 
collection practices within that State is subject to requirements that 
are substantially similar to, or provide greater protection for 
consumers than, those imposed under Sections 803 through 812 of the 
FDCPA; and (2) there is adequate provision for state enforcement of 
such requirements. Section 901.4 of the Procedures describes the 
criteria for making the determination. Section 901.4(a) requires that 
(1) the definitions and rules of construction in the state law import 
the same meaning and have the same application as those prescribed by 
the FDCPA; (2) debt collectors provide all the applicable notifications 
under the state law that are required by the FDCPA; (3) debt collectors 
under the state law take all affirmative actions and abide by 
obligations substantially similar to, or more extensive than, those 
prescribed by the FDCPA; (4) debt collectors under the state law abide 
by the same or more stringent prohibitions as are prescribed by the 
FDCPA; (5) obligations and responsibilities imposed on consumers under 
the state law are no more costly, lengthy, or burdensome than 
corresponding obligations or responsibilities imposed on consumers by 
the FDCPA; and (6) consumers' rights and protections under the state 
law are substantially similar to, or more favorable than, those 
provided by the FDCPA. Section 901.4(b) requires that the Commission 
consider (1) the facilities, personnel and funding devoted to 
administrative enforcement of the state law; (2) provisions in the 
state law for civil liability for actions brought in the private sector 
as compared with Section 813 of the FDCPA; and (3) the statute of 
limitations for civil liability in the state law (for actions brought 
in the private sector) which should be substantially similar or longer 
than that in the FDCPA. The Commission must consider each provision of 
the state law in comparison with each corresponding provision in 
Sections 803 through 812 of the FDCPA, and not the state law as a whole 
in comparison with the FDCPA as a whole.
    Section 901.3 of the Procedures requires that an application be 
accompanied by a variety of documents including (1) the state law; (2) 
a comparison of the provisions of the state law with various sections 
of the FDCPA; (3) a copy of the full text of the law that provides for 
its enforcement; (4) a comparison of provisions of the law that 
provides for enforcement with the provisions of Section 814 of the 
FDCPA; and (5) a statement identifying the state office designated to 
administer the state law, along with a description of the ability of 
that office to effectively administer the statute. If an application is 
filed in accordance with the Procedures, Section 901.5 states that the 
filing shall be published in the Federal Register. Section 901.6 
provides that the Commission may grant an exemption under the 
provisions of the Procedures.

II. Regulatory Review Program

    The Commission has determined to review all current Commission 
regulations periodically. These reviews seek information about the 
costs and benefits of the Commission's regulations and their regulatory 
and economic impact. The information obtained assists the Commission in 
identifying regulations that warrant modification or rescission. 
Therefore, the Commission solicits comments on, among other things, the 
economic impact of and the continuing need for the Procedures; possible 
conflict between the Procedures and state, local, or other federal 
laws; and the effect on the Procedures of any technological, economic, 
or other industry changes.

III. Request for Comment

    The Commission solicits written public comments on the following 
questions:
    (1) Is there a continuing need for the Procedures?
    (a) What benefits have the Procedures provided to consumers covered 
by the FDCPA?
    (b) Have the Procedures imposed costs on consumers?
    (2) What changes, if any, should be made to the Procedures to 
increase the benefits of the Procedures to consumers covered by the 
FDCPA?
    (a) How would these changes affect the benefits to consumers 
covered by the FDCPA?
    (b) How would these changes affect the costs the Procedures impose 
on states considering applying for exemption?
    (3) What significant burdens or costs, including costs of 
compliance, have the Procedures imposed on any state that has 
considered applying for exemption, or that has actually applied for 
exemption?
    (a) Have the Procedures provided benefits to such states? If so, 
what benefits?
    (4) What changes, if any, should be made to the Procedures to 
reduce the burdens or costs imposed on states considering applying for 
an exemption?
    (a) How would these changes affect the benefits provided by the 
Procedures?
    (5) Do the Procedures overlap or conflict with other federal, 
state, or local laws or regulations?
    (6) Since the Procedures were issued, what effects, if any, have 
changes in new technology, such as the Internet or E-mail, or changes 
in other economic conditions, had on the Procedures?
    (7) Section 901.4 of the Procedures requires that the Commission 
compare civil liability provisions of private suits in the state law 
and those contained in Section 813 of the FDCPA, but Section 901.6(d) 
prohibits the Commission from exempting any state from the provision of 
Section 813. Should Section 901.4 be changed to remove the requirement 
that civil liability provisions in the state law

[[Page 19861]]

and those contained in Section 813 of the FDCPA be compared?
    (8) Are there any other changes that should be made to the 
Procedures? If so, please specify and state reasons for the changes.

Lists of Subjects in 16 CFR Part 901

    Fair Debt Collection Practices Act.

    Authority: 15 U.S.C. 41-58.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 98-10699 Filed 4-21-98; 8:45 am]
BILLING CODE 6750-01-M