Advisory opinion on whether the Fair Debt Collection Practices Act prohibits a debt collector from notifying a consumer of settlement options that may be available to avoid foreclosure

___________________
ADVISORY OPINION
IN THE MATTER OF
U.S. FORECLOSURE NETWORK
FTC File No. P084801 	Opinion, March 19, 2008
Re: 	Whether 	the 	Fair 	Debt 	Collection 	Practices 	Act
(“FDCPA”) prohibits a debt collector from notifying a
consumer of settlement options that may be available to
avoid foreclosure.
Dear Ms. Sinsley and Mr. Newburger:
This is in response to the request from the USFN, formerly
known as the U.S. Foreclosure Network, for a Commission advisory
opinion (“Request”) regarding whether the Fair Debt Collection
Practices 	Act 	(“FDCPA”)1 prohibits 	a 	debt 	collector 	in 	the
foreclosure context from discussing settlement options in the
collector’s initial or subsequent communications with the consumer.
The Request asserts that the receipt of information about settlement
options could enable the consumer to save his or her home from
foreclosure. 	As explained more fully below, the Commission
concludes that debt collectors do not commit a per se violation of the
FDCPA 	when 	they 	provide 	such 	information 	to 	consumers.
Moreover, the Commission believes that it is in the public interest
for consumers who may be subject to foreclosure to receive truthful,
non-misleading information about settlement options, especially in
light of the recent prevalence of mortgage borrowers who are
delinquent or in foreclosure.2
1 15 U.S.C. §§ 1692- 1692p.
2 According to press reports, in 2007, there were an estimated 2.2 million
foreclosure filings in the United States, a 75% increase from 2006. The number of
foreclosure filings increased late in 2007- in December there were 215,749
foreclosure filings, a 97% increase from the number of filings in December 2006.
December was the fifth consecutive month in which foreclosure filings topped
200,000. Associated Press, Home Foreclosure Rate Soars in 2007, N.Y.TIMES,

407	U.S. FORECLOSURE NETWORK
Opinion of the Commission
USFN submitted the Request pursuant to Sections 1.1-1.4 of the
Commission’s Rules of Practice, 16 C.P.R. §§ 1.1-1.4. The Request
focuses on two sections of the FDCPA, Sections 807 and 809, 15
U.S.C. §§ 1692e, 1692g,3 and presents three specific questions for
consideration:
(1) Does a debt collector violate the FDCPA
when he, in conjunction with the sending of a
“validation notice” pursuant to Section 809(a) of the
FDCPA, notifies a consumer of settlement options
that may be available to avoid foreclosure?
(2) 	Does a debt collector violate the FDCPA
when he, subsequent to sending the validation notice
pursuant to Section 809(a) of the FDCPA, notifies a
consumer 	of 	settlement 	options 	that 	might 	be
available to avoid foreclosure?
(3) 	Does 	a 	debt 	collector 	commit 	a 	false,
misleading or deceptive act or practice in violation of
Section 807 of the FDCPA when he presents to a
consumer settlement options that are available to the
consumer to avoid foreclosure?
Jan. 29, 2008, available at www.nytimes.com/aponline/us/AP-Foreclosure
-Rates.html. Mortgage delinquency is also escalating. The number of borrowers
falling behind on first-lien mortgage payments for residences during 2007 was the
highest it has been since 1986-2.64 million borrowers fell behind on payments.
Michael M. Phillips, Serena Ng & John D. McKinnon, Battle Lines Form Over
Mortgage Plan, WALL ST. J., Dec. 7, 2007, at Al.
3 The Commission has considered only these sections in rendering this
opinion and it should not be construed to pertain to any other section of the
FDCPA, to any other law, or to any issue of legal ethics.

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Opinion of the Commission
The Request states that there is no case law addressing these specific
questions. We address the questions seriatim.
USFN’s first two questions specifically reference Section 809(a)
of the FDCPA, 15 U.S.C. § 1692g(a). Section 809(a) provides, in
pertinent part, that a debt collector must, within the first five days
after the initial communication with the debtor, provide a written
notice containing specific information including the amount of the
debt, the debtor’s right to dispute the validity of the debt in writing
within 30 days, and the collector’s obligation to obtain verification
of the debt in response to the consumer’s dispute document.
Congress enacted Section 809 to “eliminate the recurring problem of
debt collectors dunning the wrong person or attempting to collect
debts which the consumer has already paid.”4
Section 809(a) does not expressly prohibit debt collectors from
adding language to the written validation notice with the mandatory
disclosures. 	The statute also does not expressly prohibit debt
collectors 	from 	presenting 	information 	to 	consumers 	about
settlement options in subsequent communications. The Commission
therefore concludes that there is no per se violation of Section
809(a) of the FDCPA if a debt collector includes information
regarding foreclosure settlement options along with a validation
notice or in subsequent communications after that notice is
delivered.
Nevertheless, collectors must take care that communicating
information about settlement options does not undermine the
consumer protections in Section 809(a). The touchstones of Section
809(a) are the consumer’s rights to dispute his or her debt in writing
within 30 days and to obtain verification of that debt from the
collector. 	To protect these rights, in 2006 Congress amended
Section 809(b) to expressly state that “[a]ny collection activities and
4 S. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695,
1698.

409	U.S. FORECLOSURE NETWORK
Opinion of the Commission
communication during the 30-day period may not overshadow or be
inconsistent with the disclosure of the consumer’s right to dispute
the debt. ...”5 This statutory amendment ratified court decisions
holding that debt collectors that provide consumers with information
in addition to the mandatory disclosures violate Section 809(a) if the
additional information effectively obscures the consumer’s right to
dispute his or her debt and obtain verification from the collector.6
Specifically, these cases concluded that providing additional
information is unlawful if it overshadows or contradicts required
disclosures or creates confusion regarding the basic right to dispute
the debt and obtain verification from the collector.7 In making these
determinations, courts considered the communication from the
perspective of an unsophisticated consumer.8
In sum, with respect to USFN’s first two questions presented in
its Request, the Commission concludes that there is no per se
violation of Section 809(a) if a debt collector in the foreclosure
context discusses settlement options in the collector’s initial or
subsequent communications with the consumer. This conclusion,
however, does not prevent a fact-based finding that a specific
communication violates the Act if it overshadows or is inconsistent
with the disclosures of the consumer’s right to dispute the debt
within 30 days.
5 15 U.S.C. § 1692g(b).
6 See, e.g., Swanson v. Oregon Credit Servs., 869 F.2d 1222 (9th Cir. 1988).
7 Id.; See, e.g., Durkin v. Equifax Check Servs., 406 F.3d 410 (7th Cir. 2005);
Shapiro v. Riddle & Assocs., 351 F.3d 63 (2d Cir. 2003); Renick v. Dun &
Bradstreet Receivable Mgmt. Servs., 290 F.3d 1055 (9th Cir. 2002).
8 See, e.g., Sims v. G.C. Servs., 445 F.3d 959 (7th Cir. 2006) (“unsophisticated
consumer”); Smith v. Transworld Sys., 953 F.2d 1025 (6th Cir. 1992) (“least
sophisticated consumer”).

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USFN’s third question asks whether a debt collector commits a
false, misleading or deceptive act or practice in violation of Section
807 of the FDCPA when he presents to a consumer settlement
options that are available to the consumer to avoid foreclosure.
Section 807·of the FDCPA establishes a general prohibition against
the use of any “false, deceptive or misleading representation or
means in connection with the collection of any debt” and provides a
list of 16 specific practices that are per se false, deceptive or
misleading under the Act. In enacting Section 807, Congress noted
that this general prohibition on deceptive collection practices would
“enable the courts, where appropriate, to proscribe other improper
conduct which is not specifically addressed.”9
As a general matter, the Commission concludes that a debt
collector’s communication with a consumer regarding his or her
options 	to 	resolve 	mortgage 	debts 	and 	to 	potentially 	avoid
foreclosure would not necessarily violate either the general or
specific prohibitions of Section 807. However, we also stress that a
particular communication with settlement option information could
be deceptive in violation of Section 807 if it contains a false or
misleading representation or omission of material fact. Determining
whether a specific communication is false or misleading is a fact-
based inquiry that considers all the facts and circumstances
surrounding the particular communication at issue.10
After reviewing the language of the FDCPA, its legislative
history, and relevant case law, as well as the information contained
in the Request, the Commission concludes that a debt collector in
the foreclosure context does not commit a per se violation of
9 S. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1698.
10 See Jeter v. Credit Bureau, Inc., 760 F.2d 1168 (11th Cir. 1985) (noting that
FDCPA expands pre-existing FTC deception authority); see also FTC Policy
Statement on Deception, appended to In re Cliffdale Associates, Inc., 103 F.T.C.
110, 174-84 (1984) (setting forth deception test).

411	U.S. FORECLOSURE NETWORK
Opinion of the Commission
Sections 807 or 809 of the FDCPA when he or she addresses
settlement 	options 	in 	the 	collector's 	initial 	or 	subsequent
communications with the consumer.
By direction of the Commission.