PRIOR PRINTER'S NO. 1264                      PRINTER'S NO. 1452

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 1038 Session of 1999


        INTRODUCED BY PICCOLA, DENT, HART, SALVATORE, BOSCOLA, MUSTO,
           WAGNER, WENGER, MOWERY, MADIGAN, PUNT, LEMMOND, MELLOW,
           TARTAGLIONE AND SLOCUM, JUNE 18, 1999

        SENATOR PICCOLA, INTERGOVERNMENTAL AFFAIRS, RE-REPORTED AS
           AMENDED, OCTOBER  26, 1999

                                     AN ACT

     1  Establishing the Fair Credit Extension Uniformity Act; and
     2     providing for debt collection trade practices and penalties.

     3     The General Assembly of the Commonwealth of Pennsylvania
     4  hereby enacts as follows:
     5  Section 1.  Short title.
     6     This act shall be known and may be cited as the Fair Credit
     7  Extension Uniformity Act.
     8  Section 2.  Scope of act.
     9     This act establishes what shall be considered unfair methods
    10  of competition and unfair or deceptive acts or practices with
    11  regard to the collection of debts.
    12  Section 3.  Definitions.
    13     The following words and phrases when used in this act shall
    14  have the meanings given to them in this section unless the
    15  context clearly indicates otherwise:
    16     "Communication."  The conveying of information regarding a
    17  debt directly or indirectly to any person through any medium.

     1     "Consumer."  A natural person residing in this Commonwealth
     2  who owes or is alleged to owe a debt or one who has incurred or
     3  is alleged to have incurred liability for the debt within this
     4  Commonwealth, including, but not limited to, a comaker,
     5  guarantor, surety or parent if the consumer is under 18 years of
     6  age. The term includes the consumer's guardian, executor or
     7  administrator.
     8     "Creditor."  A person, including agents, servants or
     9  employees conducting business under the name of a creditor and
    10  within this Commonwealth, to whom a debt is owed or alleged to
    11  be owed.
    12     "Debt."  An actual or alleged past due obligation, claim,
    13  demand, note or other similar liability of a consumer to pay
    14  money, arising out of a single account as a result of a
    15  purchase, lease or loan of goods, services or real or personal
    16  property for personal, family or household purposes or as a
    17  result of a loan of money or extension of credit which is
    18  obtained primarily for personal, family or household purposes,
    19  provided, however, that money which is owing OWED or alleged to   <--
    20  be owing OWED as a result of a loan secured by a purchase money   <--
    21  mortgage on real estate may SHALL not be included within the      <--
    22  definition of debt. The term also includes any amount owed as a
    23  tax to any political subdivision of this Commonwealth.  Tax
    24  includes an assessment, any interest, penalty, fee or other
    25  amount permitted by law to be collected. Debt does not include
    26  any such amount owed to the United States or the Commonwealth.
    27     "Debt collector."
    28         (1)  A person not a creditor conducting business within
    29     this Commonwealth, acting on behalf of a creditor, engaging
    30     or aiding directly or indirectly in collecting a debt owed or
    19990S1038B1452                  - 2 -

     1     alleged to be owed a creditor or assignee of a creditor.
     2         (2)  The term does not include:
     3             (i)  Any officer or employee of a creditor while, in
     4         the name of the creditor, collecting debts for such
     5         creditor.
     6             (ii)  A person while attempting to collect a debt on
     7         behalf of a creditor, both of whom are related by common
     8         ownership or affiliated by corporate control, if the
     9         person acting as a debt collector does so only for
    10         creditors to whom it is so related or affiliated and if
    11         the principal business of the person is not the
    12         collection of debts.
    13             (iii)  A person while collecting or attempting to
    14         collect any debt owed or due or asserted to be owed or
    15         due TO another to the extent such activity:                <--
    16                 (A)  is incidental to a bona fide fiduciary
    17             obligation or a bona fide escrow arrangement;
    18                 (B)  concerns a debt which was originated by such
    19             person;
    20                 (C)  concerns a debt which was not in default at
    21             the time it was obtained by such person; or
    22                 (D)  concerns a debt obtained by such person as a
    23             secured party in a commercial credit transaction
    24             involving the creditor.
    25         Persons included within this subparagraph shall be
    26         considered creditors and not debt collectors for purposes
    27         of this subchapter.
    28             (iv)  A person while serving or attempting to serve
    29         legal process on another person in connection with the
    30         judicial enforcement of a debt.
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     1             (v)  A person who is an elected or appointed official
     2         of any political subdivision of this Commonwealth, who
     3         collects or attempts to collect a tax or assessment owed
     4         to the political subdivision which employs the person,
     5         while that person is acting within the scope of his
     6         elected or appointed position or employment.
     7         (3)  The term does include:
     8             (i)  A creditor who, in the process of collecting his
     9         or her own debt, uses a name other than his or her own
    10         which would indicate that a third person is collecting or
    11         attempting to collect the debt.
    12             (ii)  An attorney, whenever such attorney attempts to
    13         collect a debt, as herein defined, except in connection
    14         with the filing or service of pleadings or discovery or
    15         the prosecution of a lawsuit to reduce a debt to
    16         judgment.
    17             (iii)  A person who sells or offers to sell forms
    18         represented to be a collection system, device or scheme
    19         which is intended or designed to collect debts.
    20             (iv)  A person, other than an elected or appointed
    21         official of any political subdivision of this
    22         Commonwealth, who collects or attempts to collect a tax
    23         or assessment owed to any political subdivision of this
    24         Commonwealth.
    25     "Location information."  A consumer's place of abode and his
    26  telephone number at such place or his place of employment.
    27     "State."  Any state, territory or possession of the United
    28  States, the District of Columbia, the Commonwealth of Puerto
    29  Rico or any political subdivision of any of the above.
    30  Section 4.  Unfair or deceptive acts or practices.
    19990S1038B1452                  - 4 -

     1     (a)  By debt collectors.--It shall constitute an unfair or
     2  deceptive debt collection act or practice under this act if a
     3  debt collector violates any of the provisions of the Fair Debt
     4  Collection Practices Act (Public Law 95-109, 15 U.S.C. § 1692 et
     5  seq.).
     6     (b)  By creditors.--With respect to debt collection
     7  activities of creditors in this Commonwealth, it shall
     8  constitute an unfair or deceptive debt collection act or
     9  practice under this act if a creditor violates any of the
    10  following provisions:
    11         (1)  Any creditor communicating with any person other
    12     than the consumer for the purpose of acquiring location
    13     information about the consumer shall:
    14             (i)  identify himself, state that he is confirming or
    15         correcting location information concerning the consumer,
    16         and, only if expressly requested, identify his employer;
    17             (ii)  not state that such consumer owes any debt;
    18             (iii)  not communicate with any such person more than
    19         once unless requested to do so by such person or unless
    20         the creditor reasonably believes that the earlier
    21         response of such person is erroneous or incomplete and
    22         that such person now has correct or complete location
    23         information;
    24             (iv)  not communicate by post card;
    25             (v)  not use any language or symbol on any envelope
    26         or in the contents of any communication effected by the
    27         mails or telegram that indicates that the communication
    28         relates to the collection of a debt; and
    29             (vi)  after the creditor knows the consumer is
    30         represented by an attorney with regard to the subject
    19990S1038B1452                  - 5 -

     1         debt and has knowledge of or can readily ascertain such
     2         attorney's name and address, not communicate with any
     3         person other than that attorney unless the attorney fails
     4         to respond within a reasonable period of time to
     5         communication from the creditor.
     6         (2)  Without the prior consent of the consumer given
     7     directly to the creditor or the express permission of a court
     8     of competent jurisdiction, a creditor may not communicate
     9     with a consumer in connection with the collection of any
    10     debt:
    11             (i)  at any unusual time or place or a time or place
    12         known or which should be known to be inconvenient to the
    13         consumer. In the absence of knowledge of circumstances to
    14         the contrary, a creditor shall assume that the convenient
    15         time for communicating with a consumer is after 8 a.m.
    16         and before 9 p.m., local time at the consumer's location;
    17             (ii)  if the creditor knows the consumer is
    18         represented by an attorney with respect to such debt and
    19         has knowledge of or can readily ascertain such attorney's
    20         name and address unless the attorney fails to respond
    21         within a reasonable period of time to a communication
    22         from the creditor or unless the attorney consents to
    23         direct communication with the consumer; or
    24             (iii)  at the consumer's place of employment if the
    25         creditor knows or has reason to know that the consumer's
    26         employer prohibits the consumer from receiving such
    27         communication.
    28         (3)  Except as provided in paragraph (1), without the
    29     prior consent of the consumer given directly to the creditor
    30     or the express permission of a court of competent
    19990S1038B1452                  - 6 -

     1     jurisdiction or as reasonably necessary to effectuate a
     2     postjudgment judicial remedy, a creditor may not communicate,
     3     in connection with the collection of any debt, with any
     4     person other than the consumer, his attorney, a consumer
     5     reporting agency if otherwise permitted by law, a debt
     6     collector, the attorney of the debt collector or the attorney
     7     of the creditor.
     8         (4)  A creditor may not engage in any conduct the natural
     9     consequence of which is to harass, oppress or abuse any
    10     person in connection with the collection of a debt. Without
    11     limiting the general application of the foregoing, the
    12     following conduct is a violation of this paragraph:
    13             (i)  The use or threat of use of violence or other
    14         criminal means to harm the physical person, reputation or
    15         property of any person.
    16             (ii)  The use of obscene or profane language or
    17         language the natural consequence of which is to abuse the
    18         hearer or reader.
    19             (iii)  The publication of a list of consumers who
    20         allegedly refuse to pay debts, except to a consumer
    21         reporting agency or to persons meeting the requirements
    22         of section 1681a(f) or 1681b(a)(3) of the Fair Credit
    23         Reporting Act (Public Law 91-508, 15 U.S.C. § 1681 et
    24         seq.).
    25             (iv)  The advertisement for sale of any debt to
    26         coerce payment of the debt.
    27             (v)  Causing a telephone to ring or engaging any
    28         person in telephone conversation repeatedly or
    29         continuously with intent to annoy, abuse or harass any
    30         person at the called number.
    19990S1038B1452                  - 7 -

     1             (vi)  Except as provided in paragraph (1), the
     2         placement of telephone calls without meaningful
     3         disclosure of the caller's identity.
     4         (5)  A creditor may not use any false, deceptive or
     5     misleading representation or means in connection with the
     6     collection of any debt. Without limiting the general
     7     application of the foregoing, the following conduct is a
     8     violation of this paragraph:
     9             (i)  The false representation or implication that the
    10         creditor is vouched for, bonded by or affiliated with the
    11         United States or any state, including the use of any
    12         badge, uniform or facsimile thereof.
    13             (ii)  The false representation of the character,
    14         amount or legal status of any debt.
    15             (iii)  The false representation or implication that
    16         any individual is an attorney or that any communication
    17         is from an attorney.
    18             (iv)  The representation or implication that
    19         nonpayment of any debt will result in the arrest or
    20         imprisonment of any person or the seizure, garnishment,    <--
    21         attachment or sale of any property or wages of any person  <--
    22         unless such action is lawful and the creditor intends to
    23         take such action.
    24             (v)  The threat to take any action that cannot
    25         legally be taken or that is not intended to be taken.
    26             (vi)  The false representation or implication that a
    27         sale, referral or other transfer of any interest in a
    28         debt shall cause the consumer to lose any claim or
    29         defense to payment of the debt or become subject to any
    30         practice prohibited by this subchapter.
    19990S1038B1452                  - 8 -

     1             (vii)  The false representation or implication that
     2         the consumer committed any crime or other conduct in
     3         order to disgrace the consumer.
     4             (viii)  Communicating or threatening to communicate
     5         to any person credit information which is known or which
     6         should be known to be false, including the failure to
     7         communicate that a disputed debt is disputed.              <--
     8             (ix)  The use or distribution of any written
     9         communication which simulates or is falsely represented
    10         to be a document authorized, issued or approved by any
    11         court, official or agency of the United States or any
    12         state, or which creates a false impression as to its
    13         source, authorization or approval.
    14             (x)  The use of any false representation or deceptive
    15         means to collect or attempt to collect any debt or to
    16         obtain information concerning a consumer.
    17             (xi)  The false representation or implication that
    18         accounts have been turned over to innocent purchasers for
    19         value.
    20             (xii)  The false representation or implication that
    21         documents are legal process.
    22             (xiii)  The false representation or implication that
    23         documents are not legal process forms or do not require
    24         action by the consumer.
    25         (6)  A creditor may not use unfair or unconscionable
    26     means to collect or attempt to collect any debt. Without
    27     limiting the general application of the foregoing, the
    28     following conduct is a violation of this paragraph:
    29             (i)  The collection of any amount, including any
    30         interest, fee, charge or expense incidental to the
    19990S1038B1452                  - 9 -

     1         principal obligation, unless such amount is expressly
     2         authorized by the agreement creating the debt or
     3         permitted by law.
     4             (ii)  The acceptance by a creditor from any person of
     5         a check or other payment instrument postdated by more
     6         than five days unless such person is WILL BE notified in   <--
     7         writing of the creditor's intent to deposit such check or
     8         instrument not more than ten nor less than three business
     9         days prior to such deposit.
    10             (iii)  The solicitation by a creditor of any
    11         postdated check or other postdated payment instrument for
    12         the purpose of threatening or instituting criminal
    13         prosecution.
    14             (iv)  Depositing or threatening to deposit any
    15         postdated check or other postdated payment instrument
    16         prior to the date on such check or instrument.
    17             (v)  Causing charges to be made to any person for
    18         communications by concealment of the true purpose of the
    19         communication. Such charges include, but are not limited
    20         to, collect telephone calls and telegram fees.
    21             (vi)  Taking or threatening to take any nonjudicial
    22         action to effect dispossession or disablement of property
    23         if:
    24                 (A)  there is no present right to possession of
    25             the property claimed as collateral through an
    26             enforceable security interest;
    27                 (B)  there is no present intention to take
    28             possession of the property; or
    29                 (C)  the property is exempt by law from such
    30             dispossession or disablement.
    19990S1038B1452                 - 10 -

     1             (vii)  Communicating with a consumer regarding a debt
     2         by post card.
     3             (viii)  Using any language or symbol, other than the
     4         creditor's address, on any envelope when communicating
     5         with a consumer by use of the mails or by telegram,
     6         provided that a creditor may use its business name.
     7     (c)  Definition.--For the purpose of subsection (b)(2) and
     8  (3), the term "consumer" includes the consumer's spouse, parent
     9  (if the consumer is a minor), guardian, executor or
    10  administrator.
    11  Section 5.  Enforcement and penalties.
    12     (a)  Unfair trade practices.--If a debt collector or creditor
    13  engages in an unfair or deceptive debt collection act or
    14  practice under this subchapter, it shall constitute a violation
    15  of the act of December 17, 1968 (P.L.1224, No.387), known as the
    16  Unfair Trade Practices and Consumer Protection Law.
    17     (b)  Jurisdiction.--An action to enforce any liability
    18  created by this subchapter may be brought in any court of
    19  competent jurisdiction in this Commonwealth within two years
    20  from the date on which the violation occurs.
    21     (c)  Remedies.--Remedies available for violation of this
    22  subchapter and the Fair Debt Collection Practices Act (Public
    23  Law 95-109, 15 U.S.C. § 1692 et seq.) shall not be cumulative,
    24  and debt collectors who violate this subchapter and the Federal
    25  Fair Debt Collection Practices Act shall not incur cumulative
    26  penalties.
    27     (d)  Defenses.--A debt collector or creditor may not be held
    28  liable in any action for a violation of this subchapter if the
    29  debt collector or creditor shows by a preponderance of the
    30  evidence that the violation was both not intentional and:
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     1         (1)  resulted from a bona fide error, notwithstanding the
     2     maintenance of procedures reasonably adapted to avoid any
     3     such error; or
     4         (2)  resulted from good faith reliance upon incorrect
     5     information offered by any person other than an agent,
     6     servant or employee of the debt collector or creditor.
     7  Section 6.  Repeal.
     8     The provisions of 37 Pa. Code Ch. 303 (relating to debt
     9  collection trade practices) are repealed.
    10  Section 7.  Effective date.
    11     This act shall take effect in 90 days.













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