Question

Fair Debt-Collection Practices

Keith Richardson was an employment lawyer looking to make some money without the headaches of practicing law. He formed Debt Recovery, Inc., which bought more than 2.2 million uncollectible checks (written on accounts with insufficient funds) with an estimated face value of about $348 million, for pennies on the dollar. This allowed creditors who had been unable to collect to recover some of the debt owed and not suffer a total loss. This also made Debt Recovery the new creditor on those checks, and the company aggressively pursued the debtors. Richardson trained Debt Recovery’s employees to falsely accuse the debtors of being criminals and to threaten them with arrest and prosecution. The employees contacted the debtors’ family members and used "saturation phoning"—phoning a debtor numerous times in a short period. They used abusive language, referring to drawers as "deadbeats," "thieves," and "idiots." In approximately two years, Debt Recovery netted more than $10.2 million from its efforts. The Federal Trade Commission filed a suit in a federal district court against Debt Recovery and Richardson, alleging violations of the Fair Debt Practices Act (FDCPA). Was Debt Recovery a "debt collector," collecting "debts," within the meaning of the FDCPA and were its actions legal?

1. The Fair Debt Collection Practices Act attempts to prevent abuses by (creditors/collection agencies/government employees).

2. Specialized (debt-collection agencies/creditors) and (attorneys/bankers) who regularly attempt to collect debts on behalf of someone else are considered debt collectors under the FDCPA.

3. Creditors (are/are not) covered by the act unless they cause debtors to believe they are collection agencies.

4. Richardson (was/was not) an attorney who regularly attempts to collect debts on behalf of someone else.

5. Debt Recovery (was/was not) set up as a debt-collection agency.

6. Debt Recovery (was/was not) covered by the FDCPA.

7. If Debt Recovery was covered by the FDCPA, it could not legally contact the debtor at the debtor's place of employment if the (debtor/debtor's employer) objects.

8. Debt Recovery (did/did not) do this activity.

9. If Debt Recovery was covered by the FDCPA, it could not legally contact the debtor at (inconvenient/busy) or unusual times.

10. Debt Recovery (did/did not) do this activity.

11. If Debt Recovery was covered by the FDCPA, it could not legally contact the debtor’s (spouse/family/neighbor) about the payment of a debt without court authorization.

12. Debt Recovery (did/did not) do this activity.

13. If Debt Recovery was covered by the FDCPA, it could not legally (harass/contact) or intimidate the debtor using (abusive/legalistic) language or (threats/telephones).

14. Debt Recovery (did/did not) do this activity.

15. Because of its behavior, Debt Recovery likely (did/did not) violate the FDCPA.

Answer 1

Answer= As per FDCPA guidelines, Debt Recovery is not a "debt collector, as it violated the norm of the FDCPA. The illegal action of Debt recovery are as below=

It continued to call the third party using saturation calling which is prohibited in FDCPA

No threat should be given to any individual but the employees falsely accuse the debtors of being criminals and to threaten them with arrest and prosecution.

Answer 1= 1. The Fair Debt Collection Practices Act attempts to prevent abuses by collection agencies

Reason= The objective of FDCPA is to prevent the cases of exploitation of debtor from the collecting agencies

Answer 2= Specialized ……. and …………  who regularly attempt to collect debts on behalf of someone else are considered debt collectors under the FDCPA.

Correct option= debt-collection agencies and attorneys

Reason= Only specialized debt-collection agencies and attorneys are permitted by FDCPA to contract the debtor for the debt collection

Answer 3= 3. Creditors (are/are not) covered by the act unless they cause debtors to believe they are collection agencies.

Correct option= Are not

Reason= Creditor should not misrepresent themselves as the collecting agencies

Answer 4- 4. Richardson (was/was not) an attorney who regularly attempts to collect debts on behalf of someone else

Answer = Was not

Reason- He was not contacting the debtors on behalf of his clients for debt collection

ONLY 4 QUESTIONS ARE TO BE ANSWERED IN A POST AS PER CHEGG GUIDELINES