TEXAS LAW.   Unfair debt collection practices are prohibited under both Texas and  federal law. In Texas prohibited unfair debt collection practices are  set forth in four main sections of the Texas Finance Code. Debt  collectors are prohibited from doing the following acts:


THREATS or COERCION.  (Tex. Fin. Code Ann. § 392.301 (a)). 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 non-disputed  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.


HARASSMENT or ABUSE. (Tex. Fin. Code Ann. § 392.302). 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 arer 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.


UNFAIR or UNCONSCIONABLE MEANS. (Tex.  Fin. Code Ann. § 392.303). 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.


FRAUDULENT, DECEPTIVE, OR MISLEADING REPRESENTATIONS.  (Tex. Fin. Code Ann. § 392.304). 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 (not applicable to a person servicing or  collecting real property first lien mortgage loans or credit card  debts);

  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 (but the debt collector is not required to  disclose the names and addresses of employees of the debt collector);

  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 (this does not require a response to the address of an employee of a  debt collector);

  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;

  13. Rpresenting falsely the status or nature of the services rendered by the debt collector or the debt collector's business;

  14. Using a written communication that violates the United States postal laws and regulations;

  15. Using a communication that purports to be from an attorney or law firm if it is not;

  16. Representing that a consumer debt is being collected by an attorney if it is not;

  17. 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 (this  does not a creditor from owning and operating a bona fide debt  collection agency); or

  18. Using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer.


The  Texas statute 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. Tex. Fin. Code Ann. § 392.301 (b).  A creditor  may also 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. Tex. Fin. Code Ann. § 392.303 (b).  A debt collector can also collect or attempt 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 this  law, is fraudulent and that the check, draft, or payment was  authorized. Tex. Fin. Code Ann. § 392.303 (c).



Criminal and Civil Penalties.  For a period of one year from the date of violation, violators of this  statute can be charged with a misdemeanor punishable by a fine of not  less than $100 or more than $500 for each violation. Tex. Fin. Code Ann.  § 392.402. On the civil side, if filed within a year of the violation,  any person may maintain a cause of action for violations of the Act,  including actions for injunctive relief and actual damages. Tex. Gov.  Code Ann. § 392.403(a).  A person is entitled to maintain a cause of  action under the Act regardless of whether it was his personal debt in  issue, because the Act provides for remedies for "any person" adversely  affected by prohibited conduct, not just parties to the consumer  transaction. See Monroe v. Frank, 936 S.W.2d 654, 660-661 (Tex. App.--Dallas 1996, writ dism'd w.o.j.).  Actual damages may include mental anguish. Brown v. Oaklawn Bank,  718 S.W.2d 678, 680 (Tex. 1986) (holding that damages for "serious  upset" and "strain of overall situation" were recoverable under the  Act). A successful plaintiff is entitled to recover attorney's fees  reasonably related to the amount of work performed and costs. Tex. Fin.  Code Ann. § 392.403(b). Violations of some specific provisions may also  allow the plaintiff to recover $100 for each violation. Tex. Fin. Code  Ann. § 392.403(e).  A violation of this Act is also actionable as a  deceptive trade practice prohibited under the Texas Deceptive Trade  Practices Act. Tex. Fin. Code Ann. § 392.404(a).


But  note that a person does not violate the Texas Unfair Debt Collections  Act if the action complained of resulted from a bona fide error that  occurred notwithstanding the use of reasonable procedures adopted to  avoid the error. Tex. Fin. Code Ann. § 392.401.


FEDERAL LAW.  There is a federal statute that prohibits the same kind of conduct, and  has similar remedies for violations of the act. More information regarding the federal Fair Debt Collection Practices Act can be found  at:  http://www.consumer.ftc.gov/articles/0149-debt-collection

Unfair Debt Collections Act

© 2014 Mark Courtois and Diane Davis

© 2020 Funderburk Funderburk Courtois, LLP.   All rights reserved.

Unless otherwise noted, attorneys in the firm are not certified by the Texas Board of Legal Specialization.

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