The Fair Debt Collection Practices Act governs conduct by third-party debt collectors; in other words, creditors are not covered by the FDCPA and cannot be held liable under this particular set of federal laws for harassing debtors.
At least one court, however, has turned this on its head and held a creditor liable for misleading a consumer in connection with the collection of a debt for a time share.
The U.S. Court of Appeals for the Seventh Circuit in the case of Catencamp v. Cendant Timeshare Resort Group - Consumer Finance, Inc. found the creditor liable under the FDCPA.
The court used a part of the FDCPA that actually reclassifies creditors as “debt collector” when that creditor, “in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.”
In this case, Mr. Catencamp bought a time share but fell behind in his payments to Cendant Timeshare Resort Group. Cendant, in attempting to collect from Mr. Catencamp, sent some threatening letters. The problem was that Cendant didn’t identify itself clearly as the sender of the letters, but rather sent the letters under the name of a third party
debt collector, Resort Financial Services. In small print, the letter stated that Resort Financial Services was a division of CTRG - Consumer Finance.
The Seventh Circuit, realizing that this half-hearted attempt at honesty was not enough, held that Cendant, in deceiving its customers about the source of a debt collection letter may be liable under the FDCPA just like third party debt collectors.
You can read the entire opinion in PDF format by clicking on this link.
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