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APPLICABLE FEDERAL LAW

In this section, we will provide information on the various federal laws that impact the
self-help repossession process. It is imperative to the success of the Recovery Agency owner
and the Recovery Agent that they be knowledgeable of these laws in order to manage the
risks associated with the self-help repossession process, ensure the public safety, and avoid
costly federal litigation that could devastate a business.

Fair Debt Collection Practices Act (FDCPA)

The FDCPA and the Self-Help Repossession Process
The Fair Debt Collection Practices Act (FDCPA) was signed into law in July, 1977, and was
created primarily to regulate the activities of third-party debt collectors. However, Wrongful
Repossession lawsuits being filed in federal courts under the FDCPA have greatly escalated
in the past few years. One of the primary reasons for filing these lawsuits in federal courts
is that monetary awards in federal lawsuits can be double the amounts awarded in state Courts
so more and more lawyers are opting to bring Wrongful Repossession litigation to the federal
level.

Lawsuits on the federal level alleging Wrongful Repossession are usually filed under Section
1692 f (6) (a) of the FDCPA. Federal court rulings within the past few years involving
Wrongful Repossession lawsuits have made the FDCPA more relevant to the self-help
repossession process so understanding this federal law and how it impacts self-help
repossession activity is one of the primary compliance mandates for recovery agents.

The FDCPA is regulated and defined by the Federal Trade Commission (FTC). Since this
Act was created primarily for third-party debt collectors many in the collateral recovery
industry may think that they are not subject to this federal law because they are not defined
as third-party debt collectors.

Following is the FTC’s definition of a third-party debt collector: “Any person who uses any
instrumentality of interstate commerce or the mails, the Principal Purpose of which is
the collection of any debts, or who Regularly Collects, or Attempts to Collect, directly
or indirectly, debts owed or due or asserted to be owed or due to another.” According
to this definition, an employee of the company that is owed the debt and is attempting to
collect the debt is not considered a third-party debt collector since he/she would be
attempting to collect the debt for their employer.

Regarding repossession services, according to the FTC, those who service repossession
assignments are defined as Security Enforcers and therefore are “subject to only the
requirements of Section 1692 f (6) (a) (b) (c).” Violations of this Section reads as follows:

“Taking or threatening to take any non-judicial (self-help) action to effect dispossession or
disablement of property if:

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