Chapter 07-427

Chapter 427

2007 -- S 0034 SUBSTITUTE A

Enacted 07/07/07

A N A C T

FINANCIAL INSTITUTIONS - RHODE ISLAND FAIR DEBT COLLECTION PRACTICE ACT

Introduced By: Senators Walaska, McCaffrey, Ruggerio, Goodwin, and McBurney

Date Introduced: January 12, 2007

It is enacted by the General Assembly as follows:

SECTION 1. Title 19 of the General Laws entitled "FINANCIAL INSTITUTIONS" is

hereby amended by adding thereto the following chapter:

CHAPTER 14.9

RHODE ISLAND FAIR DEBT COLLECTION PRACTICES ACT

19-14.9-1. Short Title. -- This chapter shall be known and may be cited as the "Rhode

Island Fair Debt Collection Practices Act".

19-14.9-2. Purpose. -- The purpose of this chapter is to establish standards, by defining

unfair or deceptive acts or practices, for the collection of debts from consumers within the state of

Rhode Island, and to establish requirements for the registering and supervision of debt collectors.

19-14.9-3. Definitions. -- For the purposes of this chapter, the following terms shall have

the following meaning unless the context otherwise requires:

(1) “Consumer” means any person obligated or allegedly obligated to pay any debt, as

defined by 15 U.S.C. 1692a.

(2) “Consumer Reporting Agency” means any person which, for monetary fees, dues, or

on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of

assembling or evaluating consumer credit information or other information on consumers for the

purpose of furnishing consumer reports to third parties.

(3)“Creditor” means any person who offers or extends credit creating a debt or to whom a

debt is owed, but the term shall not include a person to the extent that he/she receives an

assignment or transfer of a debt in default solely for the purpose of facilitating collection of the

debt.

(4) “Debt” means any obligation or alleged obligation of a consumer to pay money

arising out of a transaction in which the money, property, insurance, or services which are the

subject of the transaction are primarily for personal, family, or household purposes, whether or

not the obligation has been reduced to judgment.

(5) “Debt collector” means any person who uses an instrumentality of interstate

commerce or the mails in any business 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 another. Notwithstanding the exclusion provided by clause (f) below,

debt collector shall include a creditor who, in the process of collecting his/her own debt, uses any

name other than his/her own which would indicate that a third person is collecting or attempting

to collect the debt. Debt collector shall also include a person who uses an instrumentality of

interstate commerce or the mails in a business the principal purpose of which is the enforcement

of security interests. Debt collector shall not include:

(a) An officer or employee of a creditor while, in the name of the creditor, collecting

debts for the creditor;

(b) A person while acting as a debt collector for another person, both of whom are related

by common ownership or affiliated by corporate control, if the person acting as a debt collector

does so only for a person to whom it is so related or affiliated and if the principal business of the

person is not the collection of a debt;

extent that collecting or attempting to collect a debt is in the performance of his/her official duty;

(d) A person while serving or attempting to serve legal process on another person in

connection with the judicial enforcement of a debt;

(e) A nonprofit organization which, at the request of a consumer, performs bona fide

consumer credit counseling and assists the consumer in the liquidation of debts by receiving

payments from the consumer and distributing the amounts to creditors;

(f) A person collecting or attempting to collect a debt owed or due or asserted to be owed

or due another to the extent the activity:

(1) Is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement, or;

(2) Concerns a debt which was originated by the person;

(3) Concerns a debt which was not in default at the time it was obtained by the person or

in connection with a debt secured by a mortgage, when first serviced by the person;

(4) Concerns a debt obtained by the person as a secured party in a commercial credit

transaction involving the creditor;

(g) Attorneys-at-law collecting a debt on behalf of a client.

(h) An agent or independent contractor employed for the purpose of collecting a charge

or bill owed by a tenant to a landlord or owed by a customer to a corporation subject to the

supervision of the department of business regulation insofar as the person collects charges or bills

only for the landlord or supervised corporations.

“Department” means the department of business regulation.

“Director” means the director of the department of business regulation or the director’s

designee.

“Obligor” means an individual or company that owes the debt created by the issuing of a

bond required under section 19-14.9-13.

"Registrant" means an entity registered under this chapter.

19-14.9-4. Acquisition of Location Information. -- Any debt collector communicating

with any person, other than the consumer, for the purpose of acquiring location information about

the consumer shall:

(a) Identify himself/herself, state that he/she is confirming or correcting location

information concerning the consumer, and, only if expressly requested, identify his/her employer;

(b) Not state that such consumer owes any debt;

such person or unless the debt collector reasonably believes that the earlier response of such

person is erroneous or incomplete and that such person now has correct or complete location

information;

(d) Not communicate by post card;

(e) Not use any language or symbol on any envelope or in the contents of any

communication effected by the mails or telegram that indicates that the debt collector is in the

debt collection business or that the communication relates to the collection of a debt; and

(f) After the debt collector knows the consumer is represented by an attorney with regard

to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and

address, not communicate with any person other than that attorney, unless the attorney fails to

respond within a reasonable period of time to communication from the debt collector.

19-14.9-5. Communication in Connection with Debt Collection. -- (1) Without the

prior consent of the consumer given directly to the debt collector or the express permission of a

court of competent jurisdiction, a debt collector may not communicate with a consumer in

connection with the collection of any debt:

(a) At any unusual time or place or a time or place known or which should be known to

be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a

debt collector shall assume that the convenient time for communicating with a consumer is after 8

o'clock A.M. and before 9 o'clock PM local time at the consumer's location;

(b) If the debt collector knows the consumer is represented by an attorney with respect to

such debt and has knowledge of, or can readily ascertain, such attorney's name and address,

unless the attorney fails to respond within a reasonable period of time to a communication from

the debt collector or unless the attorney consents to direct communication with the consumer; or

know that the consumer’s employer prohibits the consumer from receiving such communication;

(2) Except as provided in section 19-14.9-4, 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, a debt collector may not

communicate, in connection with the collection of any debt, with any person other than the

consumer, his/her attorney, a consumer reporting agency if otherwise permitted by law, the

creditor, the attorney of the creditor, or the attorney of the debt collector.

(3) If a consumer notifies a debt collector in writing that the consumer refuses to pay a

debt or that the consumer wishes the debt collector to cease further communication with the

consumer, the debt collector shall not communicate further with the consumer with respect to

such debt, except:

(a) To advise the consumer that the debt collector's further efforts are being terminated;

(b) To notify the consumer that the debt collector or creditor may invoke specified

remedies which are ordinarily invoked by such debt collector or creditor; or

invoke a specified remedy.

If such notice from the consumer is made by mail, notification shall be complete upon

receipt.

(4) For the purpose of this section, the term "consumer" shall also include the consumer's

spouse, parent (if the consumer is a minor), guardian, executor, or administrator.

19-14.9-6. Harassment or Abuse.-- A debt collector may not engage in any conduct the

natural consequence of which is to harass, oppress, or abuse any person in connection with the

collection of a debt. Such conduct shall include, but not be limited to:

(a) Using or threatening to use violence or other criminal means to harm the physical

person, reputation, or property of any person;

(b) Using obscene or profane language or language the natural consequence of which is

to abuse the hearer or reader;

(d) Causing a telephone to ring or engaging any person in telephone conversation

repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number;

(e) Except as provided in section 19-14.9-4, placing telephone calls without meaningful

disclosure of the caller's identity.

19-14.9-7. False or Misleading Representations. -- A debt collector may not use any

false, deceptive, or misleading representation or means in connection with the collection of any

debt. Such false or misleading means shall include, but not be limited to:

(a) The false representation or implication that the debt collector is vouched for, bonded

by, or affiliated with the United States or any State, including the use of any badge, uniform, or

facsimile thereof;

(b) The false representation of:

(1) The character, amount, or legal status of any debt;

(2) Any services rendered or compensation which may be lawfully received by any debt

collector for the collection of a debt;

communication is from an attorney;

(d) The representation or implication that nonpayment of any debt will result in the arrest

or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or

wages of any person unless such action is lawful and the debt collector or creditor intends to take

such action;

(e) The threat to take any action that cannot legally be taken or that is not intended to be

taken;

(f) The false representation or implication that a sale, referral, or other transfer of any

interest in a debt shall cause the consumer to:

(1) Lose any claim or defense to payment of the debt;

(2) Become subject to any practice prohibited by this chapter;

(g) The false representation or implication that the consumer committed any crime or

other conduct in order to disgrace the consumer;

(h) The communicating or threatening to communicate to any person credit information

which is known or which should be known to be false, including the failure to communicate that a

disputed debt is disputed;

(i) The use of distribution of any written communication which simulates or is falsely

represented to be a document authorized, issued, or approved by any court, official, or agency of

the United States or any State, or which creates a false impression as to its source, authorization,

or approval;

(j) The use of any false representation or deceptive means to collect or attempt to collect

any debt or to obtain information concerning a consumer;

(k) The failure to disclose in the initial written communication with the consumer and, in

addition, if the initial communication with the consumer is oral, in that initial oral

communication, that the debt collector is attempting to collect a debt and that any information

obtained will be used for that purpose, and the failure to disclose in subsequent communications

that the communication is from a debt collector, except that this paragraph shall not apply to a

formal pleading made in connection with a legal action;

(l) The false representation or implication that accounts have been turned over to

innocent purchasers for value;

(m) The false representation or implication that documents are legal process;

(n) The use of any business, company, or organization name other than the true name of

the debt collector's business, company, or organization;

(o) The false representation or implication that documents are not legal process forms or

do not require action by the consumer;

(p) Communicating by telephone without disclosure of the name of the debt collector and

without disclosure of the personal name of the individual making such communication; provided,

however, that any such individual utilizing an alias shall use only one such alias at all times and

provided that a mechanism is established by the debt collector to identify the person using such

alias; the debt collector shall submit a list of all such aliases and the persons using same to the

director;

(q) The false representation or implication that a debt collector operates or is employed

by a consumer reporting agency.

19-14.9-8. Unfair Practices. -- A debt collector may not use unfair or unconscionable

means to collect or attempt to collect any debt. Such unfair or unconscionable means shall

include, but not be limited to:

(a) Collecting 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;

(b) Publishing or causing to be published, for general circulation, the name of a consumer

or any lists of consumers, or threatening to do so;

withdrawal or other similar instrument in payment for the debt or any portion thereof, or

negotiating such instrument before the due date of the instrument;

(d) Depositing or threatening to deposit any postdated check or other postdated payment

instrument prior to the date on such check or instrument;

(e) Causing charges to be made to any person for communications by concealment of the

true purpose of the communication. Such charges include, but are not limited to, collect telephone

calls and fees. However, this section shall not prohibit a debt collector from communicating with

a consumer by way of a consumer’s wireless telephone;

(f) Taking or threatening to take any nonjudicial action to effect dispossession or

disablement of property if:

(1) There is no present right to possession of the property claimed as collateral through an

enforceable security interest;

(2) There is no present intention to take possession of the property;

(3) The property is exempt by law from such dispossession or disablement;

(g) Communicating with a consumer regarding a debt by post card;

(h) Using any language or symbol, other than the debt collector's address, on any

envelope when communicating with a consumer by use of the mails or by telegram, except that a

debt collector may use his/her business name if such name does not indicate that he/she is in the

debt collection business;

(i) Representing that an existing obligation of a consumer may be increased by the

addition of attorney's fees, investigation fees, service fees, or any other fees or charges, if in fact

such fees or charges may not legally be added to the existing obligation;

(j) Soliciting or obtaining of any written statement or acknowledgment in any form

containing an affirmation of any obligation by a consumer who has been adjudicated bankrupt,

without clearly and conspicuously disclosing the nature and consequences of such affirmation;

(k) Reporting to a consumer reporting agency on its transactions or experiences with a

consumer in the debt collector's name. However, a debt collector may, with the express written

authorization of the creditor, report to a consumer reporting agency in the creditor's name.

19-14.9-9. Validation of debts. -- (1)Within five (5) days after the initial communication

with a consumer in connection with the collection of any debt, a debt collector shall, unless the

following information is contained in the initial communication, or the consumer has paid the

debt, send the consumer a written notice containing:

(a) The amount of the debt;

(b) The name of the creditor to whom the debt is owed;

notice, disputes that validity of the debt, or any portion thereof, the debt will be assumed to be

valid by the debt collector;

(d) A statement that if the consumer notifies the debt collector in writing within the thirty

(30) day period that the debt, or any portion thereof, is disputed, the debt collector will obtain

verification of the debt or a copy of a judgment against the consumer and a copy of such

verification or judgment will be mailed to the consumer by the debt collector; and

(e) A statement that, upon the consumer's written request within the thirty (30) day

period, the debt collector will provide the consumer with the name and address of the original

creditor, if different from the current creditor.

(2) If the consumer notifies the debt collector in writing within the thirty (30) day period

described in paragraph (d) of subsection (1) of this section that the debt, or any portion thereof, is

disputed, or that the consumer requests the name and address of the original creditor, the debt

collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector

obtains verification of the debt or a copy of a judgment, or the name and address of the original

creditor, and a copy of such verification or judgment, or name and address of the original

creditor, is mailed to the consumer by the debt collector.

(3 The failure of a consumer to dispute the validity of a debt under this section shall not

be construed by any court as an admission of liability by the consumer.

19-14.9-10. Multiple debts. -- If any consumer owes multiple debts and makes any

single payment to any debt collector with respect to such debts, such debt collector may not apply

such payment to any debt which is disputed by the consumer and, where applicable, shall apply

such payment in accordance with the consumer's directions.

19-14.9-11. Furnishing certain deceptive forms. -- It is unlawful to design, compile,

and furnish any form knowing that such form would be used to create the false belief in a

consumer that a person other than the creditor of such consumer is participating in the collection

of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact

such person is not so participating.

19-14.9-12. Registration required. -- (1) After July 1, 2008, no person shall engage

within this state in the business of a debt collector, or engage in soliciting the right to collect or

receive payment for another of an account, bill or other indebtedness, or advertise for or solicit in

print the right to collect or receive payment for another of an account, bill or other indebtedness,

without first registering with the director or the director’s designee.

(2) The application for registration shall be in writing, shall contain information as the

director may determine and shall be accompanied by a registration fee of two hundred dollars

($200).

(3) The registration shall be for a period of three (3) years. Each registration shall plainly

state the name of the registrant and the city or town with the name of the street and number, if

any, of the place where the business is to be carried on; provided that the business shall at all

times be conducted in the name of the registrant as it appears on the registration.

(4) No person registered to act within this state as a debt collector shall do so under any

other name or at any other place of business than that named in the registration. The registration

shall be for a single location but may, with notification to the director, be moved to a different

location. A registration shall not be transferable or assignable.

(5) This section shall not apply:

(a) To the servicor of a debt by a mortgage; or

(b) To any debt collector located out of this state; provided that the debt collector:

(1) Is collecting debts on behalf of an out-of-state creditor for a debt that was incurred

out-of-state; and

(2) Only collects debts in this state using interstate communication methods, including

telephone, facsimile, or mail.

association, federal savings bank, federal savings and loan association, federal credit union, or

any bank, trust company , savings bank, savings and loan association or credit union organized

under the laws of this state, or any other state of the United States, or any subsidiary of the above;

but except as provided herein, this section shall apply to a subsidiary or affiliate, as defined by the

director, of an exempted entity and of a bank holding company established in accordance with

state or federal law.

19-14.9-13. Remedies and penalties. -- (1) Any person who engages in the business of a

debt collector without a registration as required by section 19-14.9-12 of this chapter, shall, upon

conviction, be fined not more than two thousand dollars ($2,000) or imprisoned not more than

one year, or both.

(2) Any debt collector who fails to comply with the provisions of sections 19-14.9-4

through 19-14.9-11 of this chapter with respect to a consumer may be subject to revocation of

registration and shall be civilly liable to such consumer in an amount equal to the sum of:

(a) Any actual damages sustained by such consumer as a result of such failure;

(b) In the case of any action by an individual, such additional damages as the court may

allow, but not to exceed one thousand dollars ($1,000);

(1) Such amount for each named plaintiff as could be recovered under paragraph (b) of

this subsection;

(2) Such amount as the court may allow for all other class members, without regard to a

minimum individual recovery, not to exceed five hundred thousand dollars or one percent of the

net worth of the debt collector, whichever is the lesser;

(d) In the case of any successful action to enforce such liability, the costs of the action,

together with such reasonable attorney fees as may be determined by the court.

(3) In determining the amount of liability in any action under paragraph (2), the court

shall consider, among other relevant factors:

(a) In any individual action under paragraph (b), the frequency and persistence of

noncompliance by the debt collector or, the nature of such noncompliance, and the extent to

which such noncompliance was intentional;

(b) In any class action under paragraph (c), the frequency and persistence of

noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt

collector, the number of persons adversely affected, and the extent to which the debt collector's

noncompliance was intentional.

(4) A debt collector may not be held liable in any action brought pursuant to the

provisions of this chapter if:

(a) The debt collector shows by a preponderance of evidence that the violation was not

intentional or negligent and which violation resulted from a bona fide error, notwithstanding the

maintenance of procedures reasonably adapted to avoid any such error; or

(b) Within fifteen (15) days, either after discovering a violation which is able to be

cured, or after the receipt of a written notice of such violation, the debt collector notifies the

consumer of the violation, and makes whatever adjustments or corrections are necessary to cure

the violation with respect to the consumer.

(5) An action to enforce any liability created by the provisions of this article may be

brought in any court of competent jurisdiction within one year from the date on which the

violation occurs.

(6) The policy of this state is not to award double damages under this article and the

federal "Fair Debt Collection Practices Act" (15 U.S.C. 1692 et seq). No damages under this

section shall be recovered if damages are recovered for a like provision of said federal act.

19-14.9-14. Severability. -- If any provision of this chapter or its application to any

person or circumstance is held invalid by a court of competent jurisdiction, the invalidity does not

affect other provisions or applications of the chapter that can be given effect without the invalid

provision or application, and to this end the provisions of the chapter are severable.

SECTION 2: This act shall take effect upon passage.

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LC00502/SUB A

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