Mr. Chairman and Members of the Committee, the National Consumer Law Center(1) thanks you for inviting us to testify today regarding the impact of S. 1405 on consumers. We offer our testimony here today on behalf of our low income clients, as well as the Consumer Federation of America(2) and the U.S. Public Interest Research Group.(3)
There should be no misunderstanding: S. 1405 provides no benefits to consumers. Although
there are many updates and improvements to federal consumer protection laws that are needed,
not one has been included in this bill.(4) Instead, in its present form S. 1405 would seriously undermine two of the most important federal consumer protections: the Real Estate Settlement Procedures Act and the Fair Debt Collections Practices Act:
I. Amendment to Real Estate Settlement Procedures Act. Section 206 would have the effect of increasing the cost of homes and home lending by allowing affinity groups to receive referral
fees as a major exception to RESPA's Section 8 prohibitions against kickbacks.
II. Fair Debt Collection Practices Act Amendments. Section 207 would seriously reduce protections for consumers against unfair, deceptive and harassing debt collection practices. This
section proposes four anti-consumer amendments which would 1) exempt any communication
made under state or federal rules of civil procedure from the FDCPA; 2) exempt the collection
of checks from coverage under FDCPA; 3) dismantle the protections from confusing messages
regarding the consumer's right to request verification of the debt; and 4) exempt all efforts to
collect loans made under the Higher Education Act of 1965 from coverage under the FDCPA.
III. Truth in Lending Act Amendments. Section 401 would replace the historical table on APR changes for open end variable rate home loans.
I. RESPA Amendment - Affinity Group Exception. The main problem is that allowing affinity groups to receive kickbacks for referrals and endorsements of settlement services would
open the door for significant consumer abuses, and would unequivocally have the effect of
increasing the costs of settlement services for consumers. The original purpose of RESPA was to
ensure fair and open competition in the marketplace to keep the costs of settlement services as
low as possible.
RESPA currently allows anyone to be paid for services that are actually rendered. RESPA's
section 8 only prohibits the payment of "referral fees." Section 206 of S. 1405 would allow an
affinity group to be established -- for a common purpose -- by anyone other than a settlement
service provider. (Does anyone really know what an affinity group is?) Then the affinity group
could make endorsements of settlement service providers and receive payment for the
endorsements so long as disclosures are provided to consumers.
The effect of this amendment would be to allow the payment of a fee to an affinity group for
something other than services actually rendered. As a result, endorsement fees could be paid in
large sums to anyone, (including realtors) for referrals to lenders, title insurance companies, and
others. While home buyers might believe that the endorsement was a true recommendation about
the value of the services provided by the settlement service provider to whom they were referred,
in fact the only reason the referral would have been made was because the referring party was
receiving a kickback for making it. This was exactly the reason for the original prohibition in
RESPA's section 8.
There are a number of problems with this proposal:
1) There is no requirement that the consumer receive the benefit of, or indeed any benefit from
the referral made as the result of the endorsement. Given this, the consumer could believe that
the endorsement is made for his benefit, when the actuality of the situation could be that because
of the endorsement the settlement service is more expensive than it would have been if the
consumer had gone to the provider directly. For example, the referral could be provided by a
group (such as a church, an alumni association, a trade association, an employer) -- in the guise
of providing good advice to the consumer -- that a certain settlement service provider is the best
one to use. Yet under the language in the amendment, if the referral were made by an affinity
group, there would be nothing to prohibit the settlement service provider from increasing the
price charged to the consumer and splitting the increased price with the affinity group.
2) There is no prohibition against affinity groups being established by affiliates, subsidiaries or
parent organizations of settlement service providers. So long as that loophole exists, the
limitation against settlement service providers setting up the affinity group is effectively
meaningless. So for example, an affiliate of a corporate realtor which is not itself a settlement
service provider could establish an affinity group. The realtor could then endorse a particular
lender. Once the consumer uses that lender, at the suggestion of the realtor, the affiliate of the
lender -- the affinity group -- would receive a kickback, or referral or endorsement fee. Such a
system would clearly undermine the purposes for which RESPA was created: to protect
consumers from unnecessarily high settlement charges and certain abusive practices (12 U.S.C. §
2601). The payment of a fee for steering should remain illegal, otherwise the referral could still
be made to the detriment of the consumer.
The potential for abuse that could result from an affinity group endorsement that section 206
would allow should be contrasted with the allowable activities of affinity groups under current
law. (See appendix I: article from Saturday, January 24, 1998, Washington Post.) Under current
law, affinity groups make endorsements of settlement services which are generally considered to
be legal. Current law allows endorsements of settlement service providers by affinity groups so
long as the consumer receives the benefit of the referral. In the Long & Foster- Costco
relationship described in the article, the consumer would have a received a rebate from the realty
company as the result of the referral from the affinity group. Clearly consumers will benefit from
this type of arrangement (although realtors may not). This arrangement is considered to be legal
because of the exception to the definition of "required use" in 24 C.F.R. § 3500.2(b):
However, the offering of a package (or combination of settlement services) or the offering of
discounts or rebates to consumers for the purchase of multiple settlement services does not
constitute a required use. . . . The discount must be a true discount below the prices that are
otherwise generally available, and must not be made up by higher costs elsewhere in the
settlement process. (Emphasis added.)
Given that this language is already in RESPA, and thus endorsements by affinity groups which
result in a discount to the consumer are currently legal, the only reason to change the law would
be to allow endorsements by affinity groups which do not result in a benefit to the consumer.
Passing S. 206 will increase the costs of settlement services to consumers.
Additionally, the Mortgage Reform Working Group, comprised of representatives of any industry
and consumer group that wants to join, has been meeting regularly and extensively for the past
seven months in an effort to comprehensively draft a rewrite of RESPA, as well as the Truth in
Lending Act. Section 8 protections are very much on the table in these discussions. If the
Working Group is to have any real hope of accomplishing reform, it does not make sense for
Congress to pass piece meal legislation amending either of these two laws at this point. For that
reason alone this amendment should be rejected.
Finally, while eviscerating the major substantive protection of the Real Estate Settlement
Procedures Act (RESPA) -- the prohibition against unearned referral fees -- this amendment
would not even appear in the U.S. Code within the statute it amends. As such, there would be no
enforcement mechanism to ensure compliance even with the minimal standards of the proposed
II. Fair Debt Collection Practices Act Amendments. When considering proposed changes to
the Fair Debt Collections Practices Act (FDCPA), one should keep in mind that the FDCPA does
not make it possible for consumers to avoid paying the debts that they owe. This law only stops
abusive, deceptive collections practices by debt collectors. As Congress recognized when it
passed the Fair Debt Collection Practices Act in 1977:
(a) There is abundant evidence of the use of abusive, deceptive, and unfair debt collection
practices by many debt collectors. Abusive debt collection practices contribute to the number of
personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual
Further, the FDCPA only stops the bad actions of debt collectors:
(e) It is the purpose of this subchapter to eliminate abusive debt collection practices by debt
collectors, to insure that those debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote consistent State action to protect
consumers against debt collection abuses.
15 U.S.C. § 1692.
Section 207 of S. 1405 would make it much easier for abusive debt collection practices to occur
without redress throughout the United States.
1) Section (a) would exempt all communications made under state or federal Rules of Civil
Procedure from the FDCPA. This is overly broad, and would clearly result in abusive and
deceptive collections practice.
For example, currently in § 1692(e)(15) the FDCPA makes the "false representation or
implication that documents are not legal process forms or do not require action by the consumer"
a violation. This provision prohibits a collector from misleading a consumer who has been sued
into believing that the consumer need only send payments to the collector, when in fact legal
inaction will result in a default judgment.
Consider why it is so important that all communications from a debt collector be covered by the
FDCPA, even those made pursuant to the rules of civil procedure. In one survey of judgment
debtors in Washington D.C. a finance company was found to have frequently misled consumers
into believing that they need not respond formally to legal process. Consumers reported that they
called the finance company or its lawyer after a receiving a summons and offered to catch up on
their payments if the suit was dropped. The consumers were assured that everything would be
taken care of once the back payments were received. Then, after accepting the promised post-summons payments from the consumers and assuring the consumers that their payments would
obviate the need to defend the creditor's suit, the finance company took default judgments against
these consumers.(5) Another survey found that this type of false advice was prevalent in the collection industry.(6) This representation by a debt collector that the consumer need not respond to a summons violates § 1692e(15). Such activity would not be illegal under the FDCPA if § 207 of S. 1405 passes.
Further, it is violation under current law for collection agencies to file suit for an inflated amount,
or to include an illegal fee, or to fail to rebate unearned interest or credit insurance premiums in
the requested relief.(7) This amendment would presumably make this activity perfectly legal, as
2) Section 207(b) would exclude the collection of bad checks from the FDCPA. There is no good reason for excluding the collection of bad checks from coverage under the FDCPA. Many courts have considered the issue, and have held that dishonored checks are debts covered by the Act.(8) Moreover, even if one could distinguish between a check and a debt, there is no good policy reason not to prohibit abusive practices in the collection of bad checks.
Given the high potential for abusive practices during the collection efforts for bad checks, it is
particularly important that FDCPA protections apply. For example, a well known, but
troublesome collection tactic is to threaten consumers with prosecution under criminal bad check
statutes. Some collectors even solicit checks from financially distressed consumers, with
complete indifference to the sufficiency of funds to cover the check, knowing that the possibility
of a bad check prosecution provides the collector with powerful collection leverage.(9)
There are a variety of situations in which bad checks are written. They vary from the professional
criminal check kiter, to the embezzling employee, to the financially desperate parent buying food
without funds, to the consumer who gives a check not expecting it to be cashed, to the consumer
who made an inadvertent error in balancing the checkbook and cannot immediately cover the
check, to the person who expected their check to be covered by a deposited check that
bounced.(10) Surely, this Congress does not want to condone abusive collection tactics against all of these consumers.
Also, it is a violation of the FDCPA for a debt collector to collect "any amount (including any
interest, fee, charge, or expense incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or permitted by law."(11) One example of a potentially illegal charge that is disallowed by this provision is a dishonored check fee. Despite the provision in the FDCPA, there are numerous cases holding collection agencies violated the law by attempting to collect illegal fees when collecting on dishonored checks.(12) Should that activity now be made legal? Consumers would be considerably harmed if this amendment passed.
3) Section 207(c) would add language to the FDCPA specifying that collection activities and
communications can continue during the 30-day period during which the consumer has the
right to request verification of the debt. This amendment is the same as was added to and then
deleted from the "regulatory relief" bill introduced in 1995 (S.650) and there are still the same
problems with it. The proposed language is subtle but bad for consumers.
Currently, the FDCPA provides consumers the essential right to ensure that the debt which the
collector is seeking them to pay is really owed by that consumer, or has not already been paid.
This right is referred to as "the right to validation." The law requires that in the initial
communication with the consumer, the debt collector must provide consumers with a statement
that the consumer has thirty days to notify the collector and request verification of the debt.(13) This is intended to minimize instances of mistaken identity of a debtor or mistakes over the amount or existence of a debt.
The problem arises when the information providing the consumer notice of this important right is
accompanied by insistent demands for payment of the debt within that 30 days. In many cases,
the overriding message the consumer receives is that the debt must be paid immediately, not that
the consumer has 30 days in which to request verification of the debt to assure that the consumer
really owes the requested amount.
In the leading case on the placement of a validation rights notice,(14) the U.S. Court of Appeals
required that the validation notice "must be large enough to be easily read and sufficiently
prominent to be noticed--even by the least sophisticated debtor. Furthermore, to be effective, the
notice must not be overshadowed or contradicted by other messages or notices appearing in the
initial communication from the collection agency."(15)
In that case the validation rights notice failed these tests because it was dwarfed and contradicted
by the dunning message. As the court said:
The required debt validation notice is placed at the very bottom of the form in small, ordinary
face type, dwarfed by a bold faced, underlined message three times the size which dominates the
center of the page. More importantly, the substance of the language stands in threatening
contradiction to the text of the debt validation notice.(16)
Other examples in the courts of overshadowing and misleading notices include:
The effect of the amendment in S. 1405 would be to overrule these cases prohibiting the
overshadowing. The collection activities would proceed in such a way as to obliterate the
consumers' notice of the essential right to obtain validation.
While it would clearly be preferable for there to be no amendments to this section of the FDCPA,
there is, however, a compromise possible. The debt collectors want to be able to continue to
collect a debt during the 30 day waiting period. Consumer advocates want to ensure that while
the debt collectors are pursuing these debt collection efforts, the notice of the right to validation
is not overshadowed. Both these goals can be accomplished by rewriting the new subparagraph
(d) of § 1692g as follows:
(d) so long as they do not overshadow or contradict the information provided in subsection (a) of
this section, collection activities and communications may continue during the 30-day period.
4) Section 207(d) would exclude from the FDCPA all communications to collect debts owed
under the Higher Education Act. This proposed amendment to the Fair Debt Collection
Practices Act (FDCPA) would exclude from coverage any collection abuse relating to a student
loan made pursuant to the Higher Education Act (HEA), no matter how egregious that practice
and even when the abuse is perpetrated by a private for-profit collector hired by a private
Student loan debtors in default are many types of people with many reasons for their default.
Perhaps the most common category is low income consumers who went to for-profit trade
schools that swindled them and then closed down, leaving the students without any of the
promised job skills and thus with no financial ability to repay the loans. Other borrowers in
default are those who have become disabled, lost their job, or who are otherwise financially
unable to keep up with loan payments. Those financially able should repay their student loans,
but no American should be subjected to illegal debt collection harassment.
Private student loan collectors generally engage in some of the worst collection abuses.
Consumers from all over the country report some of the worst collection abuses by private
collectors hired on a commission basis to collect on student loans. These private bill collectors
can have portfolios exceeding 100,000 loans; their only interest is to recover as much money at
as little cost to them as possible.
Collectors are already flaunting congressional directives. The last reauthorization of the Higher
Education Act and subsequent Congressional legislation created mechanisms to reduce defaults
and also provided students in default with various rights, protections, and repayment plans.
Private collectors typically are the only entities providing initial information to students about
these rights and repayment plans. Unfortunately, we have seen evidence that private collectors
are systematically misrepresenting and concealing these basic rights -- reasonable and affordable
payment plans, closed school and false certification discharges, consolidation loans, the ability to
avoid garnishment and tax intercepts through repayment plans, and the like. This is not surprising
because collectors make little money if a student makes small affordable payments over a period
of years or if the student receives a loan discharge because the school defrauded the student.
These collectors instead try to squeeze out unaffordable amounts right away.
The effect of the amendment in S. 1405 would not be to protect the Student Loan Program, only
abusive private debt collectors. Already the FDCPA does not apply to federal or state agencies,
and there is thus no question of the FDCPA applying to the Department of Education or a state-run guaranty agency. The only parties who would profit by this amendment would be private
entities who are in the business of collecting debts in default and who violate the standards set
out in the federal statute. 31 United States Code § 3718(a)(2) requires that all private collectors
hired by executive or legislative agencies of the United States must be subject to all federal laws
relating to debt collection. There is no reason to provide special treatment to collectors hired by
the Department of Education, when private collectors hired by other federal agencies must
comply with the FDCPA. In addition, all private collectors in their contracts with the Department
of Education agree to be bound by the FDCPA, and the Department has had no difficulty in
finding collectors to sign such contracts. Why deprive Americans of this important protection
from debt collection harassment when collectors readily agree to this liability?
There are a number of rationales offered for exempting communications made to collect loans
made under the Higher Education Act, none survive close scrutiny:
(b) Communication with third parties--Except as provided in section 1692b of this title, without
the prior consent of the consumer given directly to the debt collector, or the express permission
of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment
judicial remedy, or a prejudgment administrative wage garnishment permitted under 20 U.S.C. §
1095a, a debt collector may not communicate, in connection with the collection of any debt, with
any person other than the consumer, his attorney, a consumer reporting agency if otherwise
permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
It would be unseemly for the United States to sanction worse collector behavior when these
collectors represent the United States or a state guaranty agency then when these collectors
represent credit card issuers, finance companies, and banks. The United States certainly wants to
recover on defaulted student loans, but it need not do so by encouraging private entities to lie and
harass America's youth and others seeking to improve themselves through education.
The FDCPA is the only federal control over private collectors collecting on student loans. The
exclusion proposed in S. 1405 would provide carte blanche to these collectors. Even if the
Department of Education could effectively regulate the collectors the Department hires when
they collect on millions of accounts, the amendment also gives free reign to the even larger group
of collectors hired by guaranty agencies, schools, and lenders.
The proposed amendment would exempt all private collectors collecting under the HEA, even
those working for private entities. The exemption would insulate from liability for abusive,
harassing, deceptive or unfair collection activities:
III. Truth in Lending Act Amendments.
1) Section 401 would replace the historical table on APR for open end variable rate home loans
with the rather meaningless statement that periodic payments may increase substantially. This
change mirrors that which occurred for variable rate closed end home loans in S. 650 (amending
TILA § 128(a)(14)) in 1996. While we have never maintained that historical information
provided for an imaginary $10,000 loan was all that valuable, it does still provide some useful
information to those consumers who are willing to study it. The replacement language in S. 650
and in this bill, really serves only one purpose -- to reduce creditor compliance burdens.
If one truly wanted to make the disclosure of the risks involved in variable rate open end credit secured by the home meaningful to the consumer, in addition to the change proposed in § 401 of this bill, subsection (H)(ii) of § 127A(2) would be replaced with information about the highest annual percentage rate, and the highest minimum payment based on the actual loan terms. In addition, information about how long it could take to repay the outstanding balance at the highest interest rates, as well as the total possible cost should be included. To do this, the amendment would rewrite subsection (H) as follows:
(H) a statement of
(i) the maximum annual percentage rate which may be imposed under each repayment option of the plan;
(ii) the minimum amount of any periodic payment which may be required, based on
outstanding balance the maximum amount which can be withdrawn under each such option
when such maximum annual percentage rate is in effect; and
(iii) the earliest date by which such maximum annual interest rate may be imposed; and
(iv) the total number of payments, and the total amount of the payments it would take to repay the outstanding credit if the maximum amount were withdrawn and the maximum annual percentage rate were applied to this amount under each such repayment option of the plan.
Thank you for your consideration of these issues on behalf of low income consumers. I would be happy to respond to any questions.
FDCPA Student Loan Case History #1
Borrower took out student loans to attend university. He was only able to go to school for a year,
quitting in order to work and support his family. He later suffered a disability that kept him from
working for a few years. During this time, he was unable to make the payments on the loan.
When he was able to return to work, borrower contacted the holder of his loan, a California-based guaranty agency, and requested a reasonable and affordable payment plan. The guaranty
agency refused to deal with him and referred him to a collection agency
The collection agency would only agree to a payment plan with monthly payments beyond what the borrower could afford. Even so, he tried for a number of years to make the payments, sometimes sending the full amount, sometimes a little less. This arrangement continued for a number of years. After about four years, the collection agency suddenly began a series of escalating demands and threats. Among other egregious threats, the collection agency claimed they would turn the borrower over to the local authorities and cause him public embarrassment. They contacted his wife at her employment, at times leaving messages with fellow employees about her husband's debt. They also contacted borrower at work, using threatening and insulting language, telling him he could be criminally liable if he failed to pay back the debt. The collection agency incorrectly claimed they could add over 40% of the amount of the debt as additional collection costs.
FDCPA Student Loan Case History #2
Consumer was being dunned by collection agency on behalf of a state guaranty agency. The
consumer requested an application for discharge of the debt based on the school's false
certification -- a right provided to student loan debtors when the vocational schools they attended
falsely or fraudulently admitted them to the school. The collection agency advised the consumer
that there was no such thing as a discharge for false certification and told her that she had better
borrow some money from relatives to start paying off her loan. The consumer's legal services
attorney then called the collector on her behalf, and indentified himself as her attorney. He was
told repeatedly by the collection agency that they had never heard of the right to a discharge
based on a school's false certification.
After repeated attempts to deal with the collector, the attorney was referred back to the guaranty
agency. The guaranty agency finally agreed that the student loan regulations permit a loan
discharge based on a school's false certification, but consistently refused even to provide her with
an application. Without investigating the facts, the guaranty agency kept insisting that she was
not eligible for this discharge. Eventually, because of the demands of her legal services attorney,
she was allowed to apply.
1. The National Consumer Law Center is a nonprofit organization specializing in consumer credit issues on behalf of low-income people. We work with thousands of legal services, government and private attorneys around the country, representing low-income and elderly individuals, who request our assistance with the analysis of credit transactions to determine appropriate claims and defenses their clients might have. The National Consumer Law Center, Inc. (NCLC) is a nonprofit Massachusetts corporation founded in 1969 at Boston College School of Law and dedicated to the interests of low-income consumers. NCLC provides legal and technical consulting and assistance on consumer law issues to legal services, government and private attorneys across the country. Cost of Credit (NCLC 1995), Truth in Lending (NCLC 1996) and Unfair and Deceptive Acts and Practices (NCLC 1991), three of twelve practice treatises published and annually supplemented by NCLC, and our newsletter, NCLC Reports Consumer Credit & Usury Ed., describe the law currently applicable to all types of consumer loan transactions.
2. The Consumer Federation of America is a nonprofit association of some 250 pro-consumer groups, with a combined membership of 50 million people. CFA was founded in 1968 to advance consumers' interests through advocacy and education.
3. The U.S. Public Interest Research Group is the national lobbying office for state PIRGs, which are non-profit, non-partisan consumer advocacy groups with half a million citizen members around the country.
4. Examples of needed updates and improvements to federal consumer protection laws include 1) the expansion of the jurisdiction limits of the Truth in Lending Act to cover extensions of credit over $25,000; 2) an increase in the statutory damages recoverable under the Truth in Lending Act to reflect the impact of inflation on the statutory amount which was established in 1968; 3) providing protections from unfair, harassing and deceptive collection activities of creditors, as the Fair Debt Collection Practices Act only covers the efforts of debt collectors collecting the debts of others; and 4) basic consumer protections for consumers from the high costs of credit in rent to own transactions and pay day loans.
5. H. Sterling & P. Shrag, Default Judgments Against Consumer: Has the System Failed? 67 Denver U.L. Rev. 357, 370-372 (1990).
6. D. Caplovitz, Consumers In Trouble, note 3 at 205 (Free Press 1974).
7. 15 U.S.C. § 1692e(2)(A): "The false representation of the ...the character, amount . . . or any debt."
8. See, e.g. Ryan v. Wexler & Wexler, 113 F.3d 91 (7th Cir. 1997); Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C. 111 F.3d 1322 (7th Cir. 1997); Draper v CRA Sec. Systems, Inc. 117 F.3d 1424 (9th Cir 1997); Ditty v. Check Rite, Ltd., ___F. Supp. ___, 1997 WL 471115 (D. Utah 1997); Johnson v. CRA Security Systems, 1997 WL 241861 (N.D. Cal. 1997).
9. See e.g. United States v. Central Adjustment Bureau, Inc., 667 F.Supp. 370 (N.D. Tex. 1986) (collector violated 15 U.S.C. § 1692f(3) by soliciting postdated checks with the purpose of threatening criminal prosecution), aff'd per curiam, 823 F. 2d 880 (5th Cir. 1987); G.C. Services Corp., 83 FTC 1521 (1974) (complaint alleged that collection agency solicited postdated checks and later threatened criminal prosecution if the check was dishonored.
10. On a nationally administered test, 99% of 17 year olds and 84% of adults were not able to correctly balance a sample checking account. National Assessment of Educational Progress, Consumer Math (GPO 1975). One percent of checks are dishonored; of those 71.2% are for insufficient funds, 2.7% drawn on uncollected funds, 4.4% drawn on closed accounts, 2.7% stop payment orders, 4.9% ,missing endorsements. and 14.1% for other reasons, including bank errors. Statement of Preston Martin to House Banking Subcommittee, 70 Fed. Res. Bull. 319 (1984). One of 5245 returned checks (2 or every 1 million checks written) are a loss to a bank. W. Stafeil, The Impact of Exception Items on the Check Collection System, A Quantitative Description (Bank Admin. Instit. 1970).
11. 15 U.S.C. § 1692f(1).
12. See, e.g. Newman v. Checkrite California, Inc., 912 F. Supp. 1354 (E.D. Cal. 1995) (lawyers collecting debts for a check collection agency violated 15 U.S.C. § 1692e and 1692f by adding an $85 charge that was not authorized by the contract or state law and labeling it a "legal notice" fee and misrepresenting that the fee was legally due); West v. Costen, 558 F.Supp. 564 (W.D.Va. 1983) (imposition of $15 service charge on each bad check it collected violated 15 U.S.C. § 1692f(1) since there was no evident of contract providing for the charge and the charge was not expressly permitted by state or federal law. Attempt to collection such charges violated 15 U.S.C. § 1692e(2)); FTC Official Staff Commentary § 808(11).
13. 15 U.S.C. § 1692g(a)(4)..
14. Swanson v. Southern Oregon Credit Service, 869 F.2d 1222 (9th Cir. 1988).
15. Swanson at 1225.
16. Swanson at 1226.
17. Miller v. Payco General American Credits, Inc., 943 F.2d 482, 484 (4th Cir. 1991) .
18. United States v. National Financial Services, Inc., Clearinghouse No. 47,970 (D. Md. 1993).
19. United States v. National Financial Services, Inc., 98 F.3d 131 (4th Cir. 1996).
20. 15 U.S.C. §1692a(6)(C) exempts "any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties."
21. See Brannon v. United Student Aid Funds, 94 F.3rd 1260 (9th Cir. 1996) holding that student debtor may obtain damages from a guaranty agency for abusive collection practices in violation of FDCPA. For other examples of allegations of abusive collection practices of guaranty agencies, see Beaulieu v. American Nat'l Educ. Corp., CV 79-L-271, Clearinghouse No. 30892 (D. Neb. 1981); Coppola v. Connecticut Student Loan Found., 1989 WL 33707 (D.Conn. 1989) (holding student loan servicing agency was not a debt collector since it obtained loan before default); Games v. Cavazos, 737 F. Supp. 1368 (D. Del. 1990) (U.S.A. Funds, a private federal student loan guarantee agency, exempted by §1692a(6)(C).
22. The §1692g notice requires collectors to provide notice to the consumer of:
23. 20 U.S.C. § 1078(c), 34 C.F.R. § 682.410(b)(5).
24. 34 C.F.R. § 682.410(b)(6)(iii).
25. § 1692c(c) provides:
26. § 1692c(c).
27. § 1692b.
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