Drafting an Effective Cease Communication Policy is Important for Debt Collectors

Rozanne Andersen

If you are like most third party debt collectors, you probably think the cease and desist provision of the Fair Debt Collection Practices Act (FDCPA) is one of the easiest sections of the Act to apply. In fact, I suspect most debt collectors think their duty to cease all further communications with the consumer is only triggered upon receipt of a written notice from a consumer advising the debt collector to stop all further communications.

Unfortunately, this is not the case. Third party debt collectors must cease all communications, both written and verbal, in two instances:

• Upon receipt of a written notice from a consumer advising the debt collector to stop all further written and oral communications; or
• Upon receipt of a written notice from a consumer advising the debt collector he or she refuses to pay a debt.

To complicate matters, the cease communication provision of the FDCPA, entitled Communication in Connection with Debt Collection, 15 U.S.C. §1692c, expands the definition of consumer beyond  any natural person obligated or allegedly obligated to pay any debt to include the consumer’s spouse, parent (if the consumer is a minor), guardian, and executor or administrator. This means receipt of a written notice from the consumer or any one of these additional parties triggers the debt collector’s duty to stop all further communication with the consumer except to:

• Advise the consumer that the debt collector’s further efforts are being terminated;
• Notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or
• Where applicable, to notify the consumer that the debt collector of creditor intends to invoke a specified remedy.

The FDCPA is a strict liability statute which means there is no room for error when it comes to compliance. Failure to comply with any section of the Act can result in liability for the violation as well as the consumer’s legal fees. Collection agencies and debt purchasers who collect the debts they purchase are well served by a carefully drafted cease communication policy and corresponding procedures.

8 Drafting Tips:

When crafting your company’s cease communication policy remember to include:

1.    A description of the process your agency will use to notify the collection floor that a cease communication hold has been placed on an account. Courts will presume your agency was in receipt of a cease communication notice within three days of the date of the letter’s postmark. There is no defense of ignorance. Email communications pose even greater challenges because delivery of the consumer’s cease and desist notice is virtually immediate.

2.    A description of the process your agency will use to notify your letter vendor that a cease communication hold has been placed on an account.

3.    A description of the process your agency will use to remove the consumer’s phone number from a dialer, email or text messaging campaign.

4.    A description of the process your agency will use to promptly notify any consumer reporting agencies to which you have reported the debt that the consumer has disputed the debt.

5.    A clear explanation that the ban on communication with the consumer following your receipt of a cease communication notice applies to all written and verbal communications and therefore extends to text messages, email messages, voice mail messages, calls to nearby’s and certainly calls to the consumer’s place of employment.

6.    An acknowledgement that there is no obligation on the part of a consumer to spell out the words “cease” and “desist” in order to invoke the protection afforded him or her  under the FDCPA. Any combination of words that suggest, request, direct or imply the consumer wants no further communication of any sort initiated by the debt collector will trigger the debt collector’s duty to cease all further communications with the consumer.

7.    An acknowledgement your agency will treat any written statement received from a consumer, which includes any combination of words that suggest, request, direct or imply the consumer has no intention of paying the debt, as a cease communication notice. This would include statements written across a collection notice and returned to you and statements written on the outside of an envelope and addressed to you.

8.    A list of those individuals, who along with the consumer, have the right to notify the debt collector to cease communication in connection with collection of the debt. This list includes, and is limited to: the consumer’s spouse, parent (if the consumer is a minor), guardian, and executor or administrator. Be aware, no other person can direct a debt collector to cease communication unless such person has been granted power of attorney by way of a duly notarized power of attorney authorization. This means a cease communication notice from the consumer’s attorney, a debt settlement company or a consumer credit counseling service does NOT trigger the protections afforded consumer’s under 15 U.S.C. §1692c.

As an aside, I must disclose that I am not a huge fan of the cease communication notice. Though I certainly understand its purpose, I think its overuse is actually the root cause of many problems plaguing the industry today. I am a big believer in communication. The cease communication notice effectively cuts off all communication between the debt collector and the consumer. It leaves the credit grantor who is owed the debt no option other than to authorize a collection lawsuit, and the consumer who owes the debt with no option other than to appear in court or face entry of a default judgment. Since nothing on the legislative or regulatory horizon suggests these impediments to communication will be lifted anytime soon, debt collectors should review their cease communication policy to ensure they have processes in place to prevent the inadvertent violation of the law.