UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

November 6, 1992

Mr. Paul A. Borowski
Compliance and Standards Manager
National Recovery Systems, Inc.
301 Missouri Avenue
Clearwater, Florida 34616-5833

Dear Mr. Borowski:

This is in response to your request for a staff opinion concerning checks returned for insufficient funds on a joint account held by two parties who are not spouses and who have two different last names. A check drawn on a joint account requires the signature of only one of the joint owners. Such a check (signed by one of the owners) is returned for insufficient funds. You ask whether a debt collector, when collecting on the check, may properly contact the other joint account holder and discuss the debt without violating the Fair Debt Collection Practices Act ("FDCPA"). I assume that the collector is attempting to collect the amount of the bad check only from the joint account holder who actually executed the check.

Section 805(b) of the FDCPA provides:

Except [for attempts to locate the consumer], 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 attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

Under the FDCPA, the term "communication" means "the conveying of information regarding a debt directly or indirectly to any person through any medium." For purposes of Section 805 the term "consumer" includes the consumer's spouse, parent (if the consumer is a minor), guardian, executor, or administrator. The Act defines a consumer "as any person obligated . . . to pay any debt."

In my opinion, contact by the debt collector with the joint account holder who did not execute the bad check would not violate the FDCPA. The restriction imposed by Section 805(b) on communicating with third parties is intended to prevent unscrupulous debt collectors from embarrassing consumers and invading their privacy by revealing the existence of their debt to friends, neighbors or other third parties who do not already know of the debt. In the situation described by you, both parties are owners of the joint account, and presumably both agreed that each could sign checks independently. Further, in the event of a check returned for insufficient funds, both parties would probably be notified of the returned check, and both would clearly be aware (or entitled to be aware) of the returned check when receiving the bank statement at the end of the month. Finally, the joint nature of a joint checking account implies that what happens in the account is the business of the joint owners and that each is obligated for whatever commitments the other makes with respect to the account. At some point both parties to the account will be aware of the debt and contact by the collector will reveal nothing that is not already known or soon will be known to each party to the joint account. Therefore the potential mischief which Section 805(b) was designed to curb does not exist.

The views expressed represent informal staff opinion. As such, they are not binding on the Commission. They do, however, reflect the staff's current enforcement policy.

Sincerely,

Roger J. Fitzpatrick
Attorney
Division of Credit Practices