FTC Issues Advisory Opinion to ACA Regarding Responding to Disputes

July 1, 2009

Federal Trade Commission clarifies a conflict between the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.

Video: FTC Issues Advisory Opinion to ACA Regarding Responding to Disputes

The Federal Trade Commission (FTC), for only the fourth time in its history, recently released an important advisory opinion to ACA International clarifying a conflict between the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).

The FTC states in its opinion a debt collector does not violate Section 805(c) of the FDCPA, which prohibits a debt collector from communicating with a consumer after receiving a written request to cease communications except under certain circumstances, if the consumer directly disputes information in his or her consumer report after sending the cease communication request, and the debt collector informs the consumer of the results of its investigation.

In December 2007, federal agencies with authority to promulgate rules and regulations implementing the FCRA issued a notice of proposed rulemaking regarding the accuracy and integrity of information furnished to consumer reporting agencies (CRAs) and the circumstances under which a data furnisher is required to investigate a direct dispute from a consumer concerning the accuracy of information contained in his or her consumer report.

ACA submitted comments in February 2008 in response to the proposed rule, and among other things, specifically requested the rule make two clarifications. First, the rule should clarify the act of responding to a consumer dispute is not an attempt to collect a debt under the FDCPA. Second, the rule should clarify a consumer who requests a debt collector cease communication under Section 805(c) of the FDCPA, but subsequently sends the collector notice disputing information in his or her consumer report, has revoked his or her cease communication request for purpose of allowing the debt collector to respond to the consumer's notice of dispute.

With the imminent release by the agencies of the final rule concerning the above-described obligations of data furnishers under the FCRA, the FTC released its advisory opinion addressing ACA's concerns over the statutory conflict between the FDCPA and FCRA.

The FTC states in its opinion that if a consumer directly disputes information in his or her consumer report with a debt collector after sending a written cease communication request to the collector, the debt collector does not violate Section 805(c) of the FDCPA if the collector's communication to the consumer is solely to inform the consumer of the result of the debt collector's investigation or to inform the consumer his or her dispute is frivolous or irrelevant in compliance with the rules under the FCRA.

ACA is delighted to have received this rare advisory opinion from the FTC clarifying a critical matter to ACA's membership. View the advisory opinion. 

ACA is hosting a teleseminar on July 9, 2009 to discuss how the new direct dispute and accuracy and integrity rules affect the credit and collection industry. Register today.