Fair Debt Collection Practices Act (FDCPA) staff letter: Dunn
Aug. 17, 1992 · Section 803(5) [1692a(5)]
Topic: Definition of "debt"
Staff opinion letters are informal views of FTC staff, not binding Commission rulings, and some were later superseded by statutory amendments (including the 2006 FDCPA amendments) or later guidance. Check current law before relying on any letter.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Division of Credit Practices Bureau of Consumer Protection
August 17, 1992
Lawrence A. Dunn
Knight, Dudley, Dezern & Clarke
6160 Kempsville Circle
Norfolk, Virginia 23506-3109
Dear Mr. Dunn:
This is in response to your request for an informal staff opinion concerning whether certain practices by your law firm comply with the Fair Debt Collection Practices Act ("FDCPA" or "Act"), which this agency enforces. I apologize for the delay in responding.
The practices at issue may be summarized in the following manner. An individual insured by one of your client insurance companies is injured in an automobile accident. The insurance company is subrogated to the rights of the injured individual, and your firm files a subrogation action against the defendant. If a judgment is obtained and the judgment debtor fails to satisfy the judgment, your firm takes certain actions, including docketing the judgment in the city in which the judgment debtor resides and garnishing the judgment debtor's wages. Your firm files all of these cases in the Norfolk General District Court, regardless of where in the Tidewater area the auto accident occurred or where the defendant resides. You ask whether these practices violate the FDCPA. For purposes of the FDCPA, a "debt" is defined as
any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
The Commission Staff Commentary on the FDCPA, published in the Federal Register in December 1988 (copy enclosed), states that the definition of "debt" does not include tort claims "because they are not debts incurred from a [transaction] (involving purchase of) property ... or services ... for personal, family or household purposes." (The Federal Register notice contains a typographical error, using the word "transportation" where the word "transaction" was intended.) It is my understanding that all of the judgments that your firm is attempting to enforce involve tort claims. If this is the case, the FDCPA does not apply to the firm's actions because the firm is not attempting to collect "debts" as the term is defined in the Act.
The views expressed herein represent an informal staff opinion. As such, they are not binding on the Commission. They do, however, reflect the staff's current enforcement position.
Sincerely,
Thomas E. Kane
Attorney
Division of Credit Practices
Enclosure
Source: FTC staff letter as archived by the U.S. National Archives web harvest, archived copy. Works of the U.S. government.