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UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
20580
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Division of Credit Practices
Bureau of Consumer Protection
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August 17, 1992
Lawrence A. Dunn
Knight, Dudley, Dezern & Clarke
6160 Kempsville Circle
Norfolk, Virginia 23506-3109
Dear Mr. Dunn:
This is in response to your request for an informal staff opinion
concerning whether certain practices by your law firm comply with
the Fair Debt Collection Practices Act ("FDCPA" or "Act"),
which this agency enforces. I apologize for the delay in responding.
The practices at issue may be summarized in the following manner.
An individual insured by one of your client insurance companies
is injured in an automobile accident. The insurance company is
subrogated to the rights of the injured individual, and your firm
files a subrogation action against the defendant. If a judgment
is obtained and the judgment debtor fails to satisfy the judgment,
your firm takes certain actions, including docketing the judgment
in the city in which the judgment debtor resides and garnishing
the judgment debtor's wages. Your firm files all of these cases
in the Norfolk General District Court, regardless of where in
the Tidewater area the auto accident occurred or where the defendant
resides. You ask whether these practices violate the FDCPA. For
purposes of the FDCPA, a "debt" is defined as
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 such obligation has been reduced to judgment.
The Commission Staff Commentary on the FDCPA, published in the
Federal Register in December 1988 (copy enclosed), states that
the definition of "debt" does not include tort claims
"because they are not debts incurred from a [transaction]
(involving purchase of) property ... or services ... for personal,
family or household purposes." (The Federal Register notice
contains a typographical error, using the word "transportation"
where the word "transaction" was intended.) It is my
understanding that all of the judgments that your firm is attempting
to enforce involve tort claims. If this is the case, the FDCPA
does not apply to the firm's actions because the firm is not attempting
to collect "debts" as the term is defined in the Act.
The views expressed herein represent an informal staff opinion.
As such, they are not binding on the Commission. They do, however,
reflect the staff's current enforcement position.
Sincerely,
Thomas E. Kane
Attorney
Division of Credit Practices
Enclosure
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