Research
The amounts a collector may not add to a debt
One sentence in the collection rules does most of the work on money. A collector may not collect any amount unless it is expressly authorised by the agreement that created the debt or permitted by law, and that test covers interest, fees, charges and expenses alike.
The rule, and both halves of its test
The section opens with a general prohibition. A debt collector must not use unfair or unconscionable means to collect or attempt to collect any debt, including but not limited to the conduct then listed.
The first listed item is about amounts. A collector must not collect any amount unless that amount is expressly authorised by the agreement creating the debt, or permitted by law.
Two things about the wording matter. The authorisation has to be express, which is a higher bar than consistent with. And it has to come from the agreement that created the debt, or from law, rather than from a later schedule the collector applies.
The rule then closes an obvious gap by defining its own term. For the purposes of that paragraph, "any amount" includes any interest, fee, charge or expense incidental to the principal obligation.
So the test is not limited to the principal. It reaches everything stacked on top, and each addition is subject to the same two-limb question.
What this article does not do is decide what any agreement says. The rule points at the agreement; reading a particular agreement is a separate exercise, and one that belongs to the person who signed it.
Payments, and where they are applied
A related provision sits in a different section and answers a question the amounts rule does not.
Where a consumer makes a single payment to a collector with respect to multiple debts owed to that collector, the collector must not apply the payment to any debt that is disputed by the consumer.
And where applicable, the collector must apply the payment in accordance with the consumer's directions.
Those two together mean that paying something does not hand the collector a free hand over allocation. A disputed item is off limits as a destination, and the consumer's instructions govern where the money goes.
This matters most where a course of purchases has produced more than one balance, which is an ordinary situation in a subscription-shaped category.
Payment instruments and the calendar around them
Three prohibitions concern postdated instruments, and all three are about timing rather than about the instrument itself.
A collector must not accept from any person a check or other payment instrument postdated by more than five days unless that person is notified in writing of the collector's intent to deposit it. That notice has to arrive not more than ten, and not less than three, days before the deposit, excluding Saturdays, Sundays and legal public holidays.
A collector must not solicit any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.
And a collector must not deposit, or threaten to deposit, any postdated check or other postdated instrument before the date on it.
The notice window in the first of those is worth reading as arithmetic rather than as a phrase. It is a range with a floor and a ceiling, and the excluded days mean the calendar days available are fewer than the number of days named. A notice sent too early fails the ceiling; one sent too late fails the floor.
A fourth provision addresses a subtler cost. A collector must not cause charges to be made to any person for communications by concealment of the true purpose of the communication, and the rule names collect telephone calls and telegram fees as examples rather than as the whole of it.
That provision is about a charge the communication itself generates rather than about anything added to the balance. It sits in the same section as the amounts rule because both describe money a consumer ends up paying that the underlying agreement never contemplated.
Property, and the media the rules close off
One provision concerns taking things rather than charging for them.
A collector must not take or threaten to take any nonjudicial action to effect dispossession or disablement of property in three situations: where there is no present right to possession of the property claimed as collateral through an enforceable security interest, where there is no present intention to take possession, or where the property is exempt by law from such dispossession or disablement.
A separate group closes off particular channels because of who else can see them. A collector must not communicate with a consumer regarding a debt by postcard.
On envelopes, it must not use any language or symbol other than the collector's address, except that it may use its business name if that name does not indicate it is in the debt collection business.
It must not communicate or attempt to communicate by sending an email to an address the collector knows was provided to the consumer by the consumer's employer, unless the address qualifies under one of the routes in the communications rules.
And it must not communicate or attempt to communicate through a social media platform if the communication or attempt is viewable by the general public or by the person's social media contacts.
Where a case may be brought, and what the rules do not authorise
Two venue rules limit where a collector may sue, and they are among the shortest provisions in the part.
A collector bringing a legal action to enforce an interest in real property securing the debt must bring it only in the judicial district or similar legal entity in which the property is located.
For any other legal action, it must bring the action only in the judicial district or similar legal entity in which the consumer signed the contract sued upon, or in which the consumer resides at the commencement of the action.
The rules then add a sentence that is easy to skip and worth reading: nothing in this part authorises debt collectors to bring legal actions. The venue provisions constrain where a case may be filed; they do not create a right to file one.
A safe harbour closes the section on communications. A collector that sends an email or text message following the procedures in the communications rules does not violate the general unfairness prohibition merely by revealing, in that message, its name or other information indicating that the communication relates to collecting a debt.
For a reader of this corpus, the useful summary is that the money question and the conduct question are separate. Whether an amount may be collected turns on the agreement and on law. Whether the collecting was done unfairly turns on the list above and on the general prohibition standing behind it.
Key takeaways
- A collector may not collect an amount unless it is expressly authorised by the agreement creating the debt or permitted by law.
- That test covers interest, fees, charges and expenses incidental to the principal, not just the principal itself.
- A single payment across multiple debts may not be applied to a disputed debt, and consumer directions govern where applicable.
- A postdated instrument more than five days out requires written notice of intent to deposit, three to ten days ahead.
- Postcards, revealing envelope markings, employer email addresses and publicly viewable social media are closed off.
- Venue rules limit where an action may be brought, and the rules state they do not authorise bringing one.
Frequently asked questions
Can a collector add fees to a balance?
The rule states that a collector must not collect any amount unless the amount is expressly authorised by the agreement creating the debt or permitted by law, and that "any amount" includes any interest, fee, charge or expense incidental to the principal obligation. Both limbs are alternatives: express authorisation in the agreement, or a permission in law. This article does not interpret any particular agreement.
If several balances are outstanding, who decides where a payment goes?
The rules answer this directly. Where a consumer makes a single payment with respect to multiple debts owed to the same collector, the collector must not apply the payment to any debt the consumer disputes, and where applicable must apply the payment in accordance with the consumer's directions.
What are the rules on postdated payments?
Three prohibitions. A collector must not accept an instrument postdated by more than five days unless the person is notified in writing of the intent to deposit it, not more than ten and not less than three days before the deposit, excluding Saturdays, Sundays and legal public holidays. It must not solicit a postdated instrument for the purpose of threatening or instituting criminal prosecution. And it must not deposit or threaten to deposit one before the date on it.
Can a collector contact someone through social media?
Not where the communication or attempt to communicate is viewable by the general public or by the person's social media contacts. The same group of prohibitions bars communicating about a debt by postcard, using anything but the collector's address on an envelope apart from a business name that does not indicate it is in the debt collection business, and emailing an address the collector knows the consumer's employer provided unless it qualifies under the communications rules.
Where can a collector file a lawsuit?
An action to enforce an interest in real property securing the debt has to be brought only where the property is located. Any other action has to be brought only in the judicial district or similar legal entity where the consumer signed the contract sued upon, or where the consumer resides at the commencement of the action. The rules also state that nothing in the part authorises debt collectors to bring legal actions at all.
Is the list of unfair practices complete?
No. The section opens with a general prohibition on using unfair or unconscionable means to collect or attempt to collect any debt, "including, but not limited to" the listed conduct. The specific items illustrate the prohibition rather than defining its limits, so conduct outside the list is not for that reason outside the rule.
Sources
Each document below is named as it names itself, with the date printed on that document rather than the day it was read.
- Title 12 Code of Federal Regulations Section 1006.22, Unfair or unconscionable means, Regulation F, read paragraph (a) through paragraph (g) — the general prohibition at (a), the collection of unauthorized amounts and the definition of any amount at (b), the postdated payment instrument rules at (c), charges from concealment of purpose at (d), the nonjudicial action conditions at (e), the postcard, envelope, employer-email and social media restrictions at (f), and the safe harbour at (g) — Electronic Code of Federal Regulations, Office of the Federal Register, November 2020
- Title 12 Code of Federal Regulations Section 1006.30, Other prohibited practices, Regulation F, read at paragraph (c), Multiple debts, and paragraph (d), Legal actions by debt collectors, including the two venue rules and the statement that nothing in the part authorizes debt collectors to bring legal actions — Electronic Code of Federal Regulations, Office of the Federal Register, January 2021