THE TEXAS STATE-LAW COUNTERPART TO THE FDCPA
A NOTE ON FAIR DEBT COLLECTION TERMINOLOGY AND ACRONYMS
The Texas Debt Collection Act (TDCA) is the state-side counterpart to the federal Fair Debt Collection Practices Act (FDCPA). It is found in the Texas Finance Code within Title 5 ("TITLE 5. PROTECTION OF CONSUMERS OF FINANCIAL SERVICES") and is denominated Chapter 392. The short title of Texas Finance Code Chapter 392 is DEBT COLLECTION. The legal citation is as follows: TEX. FIN. CODE § 392.001 et seq.
|Screenshot of Texas Constitution and Statutes online lookup (TDCA)|
The TDCA is sometimes referred to as TDCPA for Texas Debt Collection Practices Act, in analogy with the federal Fair Debt Collection Practices Act. The TDCA is often invoked together with the FDCPA, but it does not independently provide a basis for a civil action in federal court.
An FDCPA claim, by contrast, may be filed in state or federal court, but is subject to removal to federal court if asserted as an independent lawsuit in state court. U.S. District Court operate by different rules, which is a matter of much greater significance in Texas because the Texas state rules of procedure do not resemble the federal rules as much as those of other states. That difference includes the matter of what the pleadings have to look like, and how pleadings must be responded to. Since the consumer is the plaintiff in a fair debt collection action, the requirements are rather onerous to commence a viable action in federal court, or to pursue it after it is removed to federal court by the Defendant debt collector. More critically, pro se litigants cannot generally recover attorney's fees for their own legal work.
See Adams v. United States, N.A., No. 3:17-cv-723-B-BN, 2018 WL 2164520, at *11 (N.D. Tex. Apr. 18,2018) (holding that plaintiff's failure to show facts that defendant was not authorized to collect such compensation under the Note constituted a failure to state a claim under Section 392.303(a)(2)); Westinde v. JP Morgan Chase Bank, N.A., No. 3:13-cv-3576-O, 2014 WL 4631405, at *8 (N.D. Tex. Sept. 16. 2014) (declaring that conclusory allegations are insufficient to state a claim under Section 392.303(a)(2)); Bircher v. Bank of New York Mellon, No. 4:12-cv-171, 2012 WL 3245991, at * 3 (N.D. Tex. Aug. 9, 2012) (finding plaintiff failed to state a plausible allegation of violation of § 392.303(a)(2) where petition contained scant factual specificity regarding any misrepresented amounts).It is therefore advisable to seek attorney representation for such a lawsuit. Unlike the defense of debt collection suits, attorneys have an incentive to take such cases (have they appear to have merit) even if the Defendant has no money (or just enough for filing fees) because they provide an opportunity to recover attorney's fees if the complaint about unfair debt collection is a valid one under the law.
SCOPE OF TDCA VS. FDCPA
The TDCA is broader than the federal fair debt collection act in that it includes within the definition of "collection" activities not reached by the FDCPA, and it also covers original creditors, which is not true of the FDCPA. That's a good reason to add a TDCA to an FDCPA action if there is uncertainty as to whether the FDCPA covers the facts scenario at issue. Another good reason is that the FDCPA has a one-year statute of limitations whereas the TDCA has a longer one (at least 2 years, arguably 4). Therefore, a claim may be time-barred under the FDCPA but not not under the TDCA when both statutes prohibit the conduct on which the claim is based.
Legal cite for both jointly: Fair Debt Collection Practices Act and its state counterpart, the Texas Fair Debt Collection Practices Act. See 15 U.S.C. § 1692 (West, Westlaw through Pub.L. No. 114-49); Tex. Fin. Code Ann. § 392.001 et. seq. (West, Westlaw through 2015 R.S.).
DIFFERENCE IN DEFINITION OF DEBT COLLECTOR [Excerpt from court opinion]
Lamell asserts a claim against OneWest under the federal Fair Debt Collection Practices Act and its state counterpart, the Texas Fair Debt Collection Practices Act. See 15 U.S.C. § 1692 (West, Westlaw through Pub.L. No. 114-49); Tex. Fin. Code Ann. § 392.001 et. seq. (West, Westlaw through 2015 R.S.). Lamell challenges OneWest's attempts to collect property taxes that Lamell was actively protesting and that Lamell claims he did not owe. OneWest moved for summary judgment on the ground that OneWest is not a debt collector within the meaning of the federal and state Fair Debt Collection Practices Acts.
With respect to the both the federal and state Fair Debt Collection Practices Acts, OneWest asserts that is not a debt collector within the meaning of 15 U.S.C. § 1692a(6). OneWest does not provide any additional citation or explanation for why it is not a debt collector under the Texas Fair Debt Collection Practices Act. OneWest simply cites the federal statute and alleges that it is not a debt collector under the Texas Fair Debt
Collection Practices Act.
The federal Fair Debt Collection Practices Act provides:
The term "debt collector" means any person who uses any 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.
15 U.S.C. § 1692(a). Section 1692(a)(6) further narrows the meaning of "debt collector" by excluding "any person collecting or attempting to collect any debt owed or due another to the extent such activity ... concerns a debt which was not in default at the time it was obtained by such person." See id. § 1692(a)(6)(F)(iii). Under 15 63*63 U.S.C. § 1692(a)(6), a debt collector does not include a mortgage servicing company that began servicing the mortgage before it was in default. See CA Partners v. Spears, 274 S.W.3d 51, 79 (Tex.App.-Houston [14th Dist.] 2008, pet. denied); Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 723 (5th Cir.2013). The summary-judgment evidence shows OneWest was servicing Lamell's mortgage before the note went into default. As a matter of law, OneWest is not a debt collector under the Fair Debt Collection Practice Act. The trial court did not err in granting summary judgment with respect to Lamell's claims under the federal Fair Debt Collection Practices Act. See CA Partners, 274 S.W.3d at 79; Miller, 726 F.3d at 723.
Whether mortgage servicers constitute "debt collectors" under the Texas Fair Debt Collection Practices Act appears to be an issue of first impression in Texas. In construing a statute, our objective is to determine and give effect to the Legislature's intent. See Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex.2000). If possible, we must ascertain that intent from the language the Legislature used in the statute and not look to extraneous matters for an intent the statute does not state. Id. If the meaning of the statutory language is unambiguous, we adopt the interpretation supported by the plain meaning of the provision's words. St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex.1997). We must not engage in forced or strained construction; instead, we must yield to the plain sense of the words the Legislature chose. See id.
The Texas Fair Debt Collection Practices Act defines "debt collector" as "a person who directly or indirectly engages in debt collection and includes a person who sells or offers to sell forms represented to be a collection system, device, or scheme intended to be used to collect consumer debts." Tex. Fin. Code Ann. § 392.001(6) (West, Westlaw through 2015 R.S.). There are no statutory exceptions. See id. The summary-judgment evidence shows that OneWest directly engaged in collecting a debt and therefore qualifies as a debt collector under the plain language of the Texas Fair Debt Collection Practices Act. See Miller, 726 F.3d at 723 (holding mortgage servicers are debt collectors under Texas Fair Debt Collection Practices Act). See also Smith v. Heard, 980 S.W.2d 693, 697 (Tex.App.-San Antonio 1998, pet. denied) (noting actors are not excused from provision of Texas Fair Debt Collection Practices Act because debt is owed directly to actor); Monroe v. Frank, 936 S.W.2d 654, 659-60 (Tex. App.-Dallas 1996, writ dism'd w.o.j.) (same).
Because OneWest was not entitled to judgment as a matter of law on its only summary-judgment ground against Lamell's claim under the Texas Fair Debt Collection Practices Act, the trial court erred in granting summary judgment on this claim.
SOURCE: Lamell v. OneWest Bank, FSB, 485 S.W.3d 53, 64 (Tex. App.-Houston [14th Dist.] 2015, pet. denied).
BELOW: TEXT OF THE TEXAS STATUTE
[Click hotlink to official website for current version]
FINANCE CODETITLE 5. PROTECTION OF CONSUMERS OF FINANCIAL SERVICESCHAPTER 392. DEBT COLLECTIONSUBCHAPTER A. GENERAL PROVISIONSSec. 392.001. DEFINITIONS. In this chapter:(1) "Consumer" means an individual who has a consumer debt.(2) "Consumer debt" means an obligation, or an alleged obligation, primarily for personal, family, or household purposes and arising from a transaction or alleged transaction.(3) "Creditor" means a party, other than a consumer, to a transaction or alleged transaction involving one or more consumers.(4) "Credit bureau" means a person who, for compensation, gathers, records, and disseminates information relating to the creditworthiness, financial responsibility, and paying habits of, and similar information regarding, a person for the purpose of furnishing that information to another person.(5) "Debt collection" means an action, conduct, or practice in collecting, or in soliciting for collection, consumer debts that are due or alleged to be due a creditor.(6) "Debt collector" means a person who directly or indirectly engages in debt collection and includes a person who sells or offers to sell forms represented to be a collection system, device, or scheme intended to be used to collect consumer debts.(7) "Third-party debt collector" means a debt collector, as defined by 15 U.S.C. Section 1692a(6), but does not include an attorney collecting a debt as an attorney on behalf of and in the name of a client unless the attorney has nonattorney employees who:(A) are regularly engaged to solicit debts for collection; or(B) regularly make contact with debtors for the purpose of collection or adjustment of debts.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.42, eff. Sept. 1, 1999.SUBCHAPTER B. SURETY BONDSec. 392.101. BOND REQUIREMENT. (a) A third-party debt collector or credit bureau may not engage in debt collection unless the third-party debt collector or credit bureau has obtained a surety bond issued by a surety company authorized to do business in this state as prescribed by this section. A copy of the bond must be filed with the secretary of state.(b) The bond must be in favor of:(1) any person who is damaged by a violation of this chapter; and(2) this state for the benefit of any person who is damaged by a violation of this chapter.(c) The bond must be in the amount of $10,000.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.102. CLAIM AGAINST BOND. A person who claims against a bond for a violation of this chapter may maintain an action against the third-party debt collector or credit bureau and against the surety. The aggregate liability of the surety to all persons damaged by a violation of this chapter may not exceed the amount of the bond.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.SUBCHAPTER C. INFORMATION IN FILES OF CREDIT BUREAU OR DEBT COLLECTORSec. 392.201. REPORT TO CONSUMER. Not later than the 45th day after the date of the request, a credit bureau shall provide to a person in its registry a copy of all information contained in its files concerning that person.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.202. CORRECTION OF THIRD-PARTY DEBT COLLECTOR'S OR CREDIT BUREAU'S FILES. (a) An individual who disputes the accuracy of an item that is in a third-party debt collector's or credit bureau's file on the individual and that relates to a debt being collected by the third-party debt collector may notify in writing the third-party debt collector of the inaccuracy. The third-party debt collector shall make a written record of the dispute. If the third-party debt collector does not report information related to the dispute to a credit bureau, the third-party debt collector shall cease collection efforts until an investigation of the dispute described by Subsections (b)-(e) determines the accurate amount of the debt, if any. If the third-party debt collector reports information related to the dispute to a credit bureau, the reporting third-party debt collector shall initiate an investigation of the dispute described by Subsections (b)-(e) and shall cease collection efforts until the investigation determines the accurate amount of the debt, if any. This section does not affect the application of Chapter 20, Business & Commerce Code, to a third-party debt collector subject to that chapter.(b) Not later than the 30th day after the date a notice of inaccuracy is received, a third-party debt collector who initiates an investigation shall send a written statement to the individual:(1) denying the inaccuracy;(2) admitting the inaccuracy; or(3) stating that the third-party debt collector has not had sufficient time to complete an investigation of the inaccuracy.(c) If the third-party debt collector admits that the item is inaccurate under Subsection (b), the third-party debt collector shall:(1) not later than the fifth business day after the date of the admission, correct the item in the relevant file; and(2) immediately cease collection efforts related to the portion of the debt that was found to be inaccurate and on correction of the item send, to each person who has previously received a report from the third-party debt collector containing the inaccurate information, notice of the inaccuracy and a copy of an accurate report.(d) If the third-party debt collector states that there has not been sufficient time to complete an investigation, the third-party debt collector shall immediately:(1) change the item in the relevant file as requested by the individual;(2) send to each person who previously received the report containing the information a notice that is equivalent to a notice under Subsection (c) and a copy of the changed report; and(3) cease collection efforts.(e) On completion by the third-party debt collector of the investigation, the third-party debt collector shall inform the individual of the determination of whether the item is accurate or inaccurate. If the third-party debt collector determines that the information was accurate, the third-party debt collector may again report that information and resume collection efforts.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 2003, 78th Leg., ch. 851, Sec. 1, eff. Sept. 1, 2003.SUBCHAPTER D. PROHIBITED DEBT COLLECTION METHODSSec. 392.301. THREATS OR COERCION. (a) In debt collection, a debt collector may not use threats, coercion, or attempts to coerce that employ any of the following practices:(1) using or threatening to use violence or other criminal means to cause harm to a person or property of a person;(2) accusing falsely or threatening to accuse falsely a person of fraud or any other crime;(3) representing or threatening to represent to any person other than the consumer that a consumer is wilfully refusing to pay a nondisputed consumer debt when the debt is in dispute and the consumer has notified in writing the debt collector of the dispute;(4) threatening to sell or assign to another the obligation of the consumer and falsely representing that the result of the sale or assignment would be that the consumer would lose a defense to the consumer debt or would be subject to illegal collection attempts;(5) threatening that the debtor will be arrested for nonpayment of a consumer debt without proper court proceedings;(6) threatening to file a charge, complaint, or criminal action against a debtor when the debtor has not violated a criminal law;(7) threatening that nonpayment of a consumer debt will result in the seizure, repossession, or sale of the person's property without proper court proceedings; or(8) threatening to take an action prohibited by law.(b) Subsection (a) does not prevent a debt collector from:(1) informing a debtor that the debtor may be arrested after proper court proceedings if the debtor has violated a criminal law of this state;(2) threatening to institute civil lawsuits or other judicial proceedings to collect a consumer debt; or(3) exercising or threatening to exercise a statutory or contractual right of seizure, repossession, or sale that does not require court proceedings.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.302. HARASSMENT; ABUSE. In debt collection, a debt collector may not oppress, harass, or abuse a person by:(1) using profane or obscene language or language intended to abuse unreasonably the hearer or reader;(2) placing telephone calls without disclosing the name of the individual making the call and with the intent to annoy, harass, or threaten a person at the called number;(3) causing a person to incur a long distance telephone toll, telegram fee, or other charge by a medium of communication without first disclosing the name of the person making the communication; or(4) causing a telephone to ring repeatedly or continuously, or making repeated or continuous telephone calls, with the intent to harass a person at the called number.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.303. UNFAIR OR UNCONSCIONABLE MEANS. (a) In debt collection, a debt collector may not use unfair or unconscionable means that employ the following practices:(1) seeking or obtaining a written statement or acknowledgment in any form that specifies that a consumer's obligation is one incurred for necessaries of life if the obligation was not incurred for those necessaries;(2) collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer; or(3) collecting or attempting to collect an obligation under a check, draft, debit payment, or credit card payment, if:(A) the check or draft was dishonored or the debit payment or credit card payment was refused because the check or draft was not drawn or the payment was not made by a person authorized to use the applicable account;(B) the debt collector has received written notice from a person authorized to use the account that the check, draft, or payment was unauthorized; and(C) the person authorized to use the account has filed a report concerning the unauthorized check, draft, or payment with a law enforcement agency, as defined by Article 59.01, Code of Criminal Procedure, and has provided the debt collector with a copy of the report.(b) Notwithstanding Subsection (a)(2), a creditor may charge a reasonable reinstatement fee as consideration for renewal of a real property loan or contract of sale, after default, if the additional fee is included in a written contract executed at the time of renewal.(c) Subsection (a)(3) does not prohibit a debt collector from collecting or attempting to collect an obligation under a check, draft, debit payment, or credit card payment if the debt collector has credible evidence, including a document, video recording, or witness statement, that the report filed with a law enforcement agency, as required by Subsection (a)(3)(C), is fraudulent and that the check, draft, or payment was authorized.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Amended by:Acts 2005, 79th Leg., Ch. 505 (H.B. 628), Sec. 1, eff. September 1, 2005.Sec. 392.304. FRAUDULENT, DECEPTIVE, OR MISLEADING REPRESENTATIONS. (a) Except as otherwise provided by this section, in debt collection or obtaining information concerning a consumer, a debt collector may not use a fraudulent, deceptive, or misleading representation that employs the following practices:(1) using a name other than the:(A) true business or professional name or the true personal or legal name of the debt collector while engaged in debt collection; or(B) name appearing on the face of the credit card while engaged in the collection of a credit card debt;(2) failing to maintain a list of all business or professional names known to be used or formerly used by persons collecting consumer debts or attempting to collect consumer debts for the debt collector;(3) representing falsely that the debt collector has information or something of value for the consumer in order to solicit or discover information about the consumer;(4) failing to disclose clearly in any communication with the debtor the name of the person to whom the debt has been assigned or is owed when making a demand for money;(5) in the case of a third-party debt collector, failing to disclose, except in a formal pleading made in connection with a legal action:(A) that the communication is an attempt to collect a debt and that any information obtained will be used for that purpose, if the communication is the initial written or oral communication between the third-party debt collector and the debtor; or(B) that the communication is from a debt collector, if the communication is a subsequent written or oral communication between the third-party debt collector and the debtor;(6) using a written communication that fails to indicate clearly the name of the debt collector and the debt collector's street address or post office box and telephone number if the written notice refers to a delinquent consumer debt;(7) using a written communication that demands a response to a place other than the debt collector's or creditor's street address or post office box;(8) misrepresenting the character, extent, or amount of a consumer debt, or misrepresenting the consumer debt's status in a judicial or governmental proceeding;(9) representing falsely that a debt collector is vouched for, bonded by, or affiliated with, or is an instrumentality, agent, or official of, this state or an agency of federal, state, or local government;(10) using, distributing, or selling a written communication that simulates or is represented falsely to be a document authorized, issued, or approved by a court, an official, a governmental agency, or any other governmental authority or that creates a false impression about the communication's source, authorization, or approval;(11) using a seal, insignia, or design that simulates that of a governmental agency;(12) representing that a consumer debt may be increased by the addition of attorney's fees, investigation fees, service fees, or other charges if a written contract or statute does not authorize the additional fees or charges;(13) representing that a consumer debt will definitely be increased by the addition of attorney's fees, investigation fees, service fees, or other charges if the award of the fees or charges is subject to judicial discretion;(14) representing falsely the status or nature of the services rendered by the debt collector or the debt collector's business;(15) using a written communication that violates the United States postal laws and regulations;(16) using a communication that purports to be from an attorney or law firm if it is not;(17) representing that a consumer debt is being collected by an attorney if it is not;(18) representing that a consumer debt is being collected by an independent, bona fide organization engaged in the business of collecting past due accounts when the debt is being collected by a subterfuge organization under the control and direction of the person who is owed the debt; or(19) using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer.(b) Subsection (a)(4) does not apply to a person servicing or collecting real property first lien mortgage loans or credit card debts.(c) Subsection (a)(6) does not require a debt collector to disclose the names and addresses of employees of the debt collector.(d) Subsection (a)(7) does not require a response to the address of an employee of a debt collector.(e) Subsection (a)(18) does not prohibit a creditor from owning or operating a bona fide debt collection agency.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 2003, 78th Leg., ch. 851, Sec. 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 3, Sec. 28.01, eff. Jan. 11, 2004.Sec. 392.305. DECEPTIVE USE OF CREDIT BUREAU NAME. A person may not use "credit bureau," "retail merchants," or "retail merchants association" in the person's business or trade name unless:(1) the person is engaged in gathering, recording, and disseminating information, both favorable and unfavorable, relating to the creditworthiness, financial responsibility, and paying habits of, and similar information regarding, persons being considered for credit extension so that a prospective creditor can make a sound decision in the extension of credit; or(2) the person is a nonprofit retail trade association that:(A) consists of individual members;(B) qualifies as a bona fide business league as defined by the United States Internal Revenue Service; and(C) does not engage in the business of debt collection or credit reporting.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.306. USE OF INDEPENDENT DEBT COLLECTOR. A creditor may not use an independent debt collector if the creditor has actual knowledge that the independent debt collector repeatedly or continuously engages in acts or practices that are prohibited by this chapter.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.SUBCHAPTER E. DEFENSE, CRIMINAL PENALTY, AND CIVIL REMEDIESSec. 392.401. BONA FIDE ERROR. A person does not violate this chapter if the action complained of resulted from a bona fide error that occurred notwithstanding the use of reasonable procedures adopted to avoid the error.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.402. CRIMINAL PENALTY. (a) A person commits an offense if the person violates this chapter.(b) An offense under this section is a misdemeanor punishable by a fine of not less than $100 or more than $500 for each violation.(c) A misdemeanor charge under this section must be filed not later than the first anniversary of the date of the alleged violation.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.403. CIVIL REMEDIES. (a) A person may sue for:(1) injunctive relief to prevent or restrain a violation of this chapter; and(2) actual damages sustained as a result of a violation of this chapter.(b) A person who successfully maintains an action under Subsection (a) is entitled to attorney's fees reasonably related to the amount of work performed and costs.(c) On a finding by a court that an action under this section was brought in bad faith or for purposes of harassment, the court shall award the defendant attorney's fees reasonably related to the work performed and costs.(d) If the attorney general reasonably believes that a person is violating or is about to violate this chapter, the attorney general may bring an action in the name of this state against the person to restrain or enjoin the person from violating this chapter.(e) A person who successfully maintains an action under this section for violation of Section 392.101, 392.202, or 392.301(a)(3) is entitled to not less than $100 for each violation of this chapter.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.Sec. 392.404. REMEDIES UNDER OTHER LAW. (a) A violation of this chapter is a deceptive trade practice under Subchapter E, Chapter 17, Business & Commerce Code, and is actionable under that subchapter.(b) This chapter does not affect or alter a remedy at law or in equity otherwise available to a debtor, creditor, governmental entity, or other legal entity.Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.