The Federal Trade Commission has issued an advisory opinion responding to questions posed by the U.S. Foreclosure Network.
The questions generally inquire whether the Fair Debt Collection Practices Act prohibits a debt collector in the foreclosure context from discussing settlement options in the collector’s initial or subsequent communications with the borrower.
The first issues addressed are:
Does a debt collector violate the FDCPA when he, either in conjunction with the sending of a “validation notice” pursuant to Section 809(a) of the FDCPA or subsequent to such notice, notifies a consumer of settlement options that may be available to avoid foreclosure?
In its opinion, the FTC stated that “there is no per se violation of Section 809(a) of the FDCPA if a debt collector includes information in these communications. However, the conclusion does not prevent a finding that the communications, on a case-by-case basis, violate the FDCPA if they overshadow or are inconsistent with the disclosures of the consumer’s right to dispute the debt.
The second issue addressed is:
Does a debt collector commit a false, misleading or deceptive act or practice in violation of Section 807 of the FDCPA when he presents a consumer with information about settlement options available to the consumer to avoid foreclosure?
The FTC opinion provides that there is no per se violation of Section 807 in presenting such information. However, particular information could be found on a case-by-case review to violate the Act if it contained a false or misleading representation or omission of material fact.