SharpThinking

No. 66  Perspectives on Developments in the Law from The Sharp Law Firm, P.C.    June 2012

State Act Limits Debt Collector Misconduct

In addition to requiring registration with the Department of Financial & Professional Regulation (see Sharp Thinking No. 65 (June 2012)), the Illinois Collection Agency Act (225 ILCS 425) contains a plethora of provisions regulating collection agencies’ conduct.  Some of these regulate the agency’s relations with its principal/creditor, but others regulate how agencies may go about attempting to collect the debts assigned to them.  We will focus on the latter as they are more likely to result in claims of concern to Sharp Thinking readers.

Analogies to FDCPA.  Several provisions of the Act are similar to provisions in the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.  Section 9.1, for example, imposes restrictions on “location information” contacts similar to FDCPA § 1692b and § 9.2 parallels FDCPA § 1692c with respect to communications with the debtor.  See generally Sharp Thinking No. 62 (Apr. 2012).  Similarly, § 9.3 parallels § 1692g regarding information which must be provided in connection with the initial contact (see Sharp Thinking No. 63 (May 2012)). 

“Code of Conduct”.  The act in effect provides a code of ethics for debt collectors.  This is so because § 9 prohibits, among other things, a collection agency’s:

► practicing under an unapproved name;

► using force or violence to cause physical harm to a debtor, his family or property;

► instigating an arrest or criminal prosecution where no basis lawfully exists;

► threatening seizure, attachment or sale of a debtor’s property where such action can only be taken pursuant to court order, without disclosing that prior court proceedings are required;

► disclosing false information adversely affecting reputation for credit-worthiness;

► communicating with a debtor’s employer unless there have been a default for at least 30 days and at least 5 days’ prior written notice to the employee, except as permitted by law or court order;

► communicating with the debtor or any member of debtor’s family at such time of day and with such frequency as to constitute harassment;

► using profane, obscene or abusive language;

► disclosing information about the debt to another person except where such person has a legitimate business need for it or disclosure is regulated by law;

► disclosing information known to be reasonably disputed without disclosing it is disputed;

► engaging in conduct which the director of the Department of Financial & Professional Regulation finds was intended to cause and did cause mental or physical illness to the debtor or his family;

► attempting to enforce a right or remedy with reason to know the right or remedy does not exist;

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“Respondents in Discovery” Article Available… 

            An article by Sharp Thinking editor John Hundley exploring the intricacies of Illinois’ Respondents in Discovery Statute (735 ILCS 5/2-402) has been published by the Southern Illinois University Law Journal.  

            Respondents in Discovery: A Beneficent Statute With Traps for the Unwary, 36 S.I.U.L.J. 335 (2012), provides both a thorough history of the legislative development of the statute and a comprehensive survey of case decisions in a variety of areas, including: the nature of the statute, the procedures for invoking it, statute of limitations issues, issues that arise in attempting to extend its six-month deadline for converting respondents to defendants, issues that arise in actually attempting to convert respondents into defendants, issues that arise when attempting to discard use of the statute after it has been invoked, the applicability of the statute in federal cases, and matters of appellate review.          

            If you would like a copy of the article, email Brenda@lotsharp.com.

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► failing to disclose the name under which the collector is engaging in debt collection and which he or she is legally authorized to use;

► using a form of communication which simulates legal or judicial process or which gives the appearance of being authorized, issued or approved by a government agency or attorney when it is not;

► unauthorized use of a badge, uniform, or other indicia of a government agency;

► conducting business under a name or in a manner which falsely suggests that a collector is bonded or is affiliated with any government agency or court if such collector is not;

► failing to disclose, when demanding payment, the name of the person to whom the claim is owed and, at the request of the debtor, the address where payment is to be made and the address of the person to whom the claim is owed;

► misrepresenting the amount of the debt; representing that a debt may be increased by attorney or other fees or charges when such fees or charges may not legally be added;

► representing that the collector is an attorney or an agent for an attorney if he is not;

► attempting to collect interest or other charge or fee in excess of the actual debt unless authorized;

► communicating with a debtor when the collector is informed in writing that an attorney represents the debtor, unless the attorney authorizes the communication or is unresponsive;

► engaging in dishonorable, unethical or unprofessional conduct of a character likely to deceive, defraud or harm the public; and

► merely threatening many of the foregoing. 

            Identity Theft Provisions.  The act contains significant provisions limiting collectors’ activities in cases of identity theft.  § 9.4.  Upon receipt of specified documentation (which is fairly detailed), the collector must make a good-faith determination whether the specific debt in question is the result of identity theft.  If the collector determines that all the information available to it establishes that the specific debt is not the result of identity theft, the collector may recommence collection activity.  If it decides not to recommence activity, but has previously provided adverse information to a credit reporting agency, it is obligated to correct that information.

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