Apparently Creditor Friendly North Carolina Debt Collection Law Revision Surprises Some

On August 5 the General Assembly of North Carolina passed Senate Bill 678 which amended the State’s debt collector statutes to more nearly conform to the federal Fair Debt Collection Practices Act (FDCPA). The following changes were made.

§ 75-50. Definitions. A new definition was added:

“Location information” means information about a consumer’s place of abode, any telephone numbers used by the consumer, and information about the consumer’s place of employment.”

§ 75-53. Unreasonable publication. The following changes (stricken portions)/additions (underlined portions) were made:

No debt collector shall unreasonably publicize information regarding a consumer’s debt. Such unreasonable publication includes, but is not limited to, the following:

(1) Any communication with any person other than the debtor or his attorney, except:

1. With the written permission of the debtor or his attorney given after default; To designated third parties with the written permission of the debtor or his attorney.
2. To persons employed by the debt collector, to a credit reporting agency, to a person or business employed to collect the debt on behalf of the creditor, or to a person who makes a legitimate request for the information.
3. To the spouse (or one who stands in place of the spouse) of the debtor, or to the parent or guardian of the debtor if the debtor is a minor and lives in the same household with such parent. If the debt collector has a good faith belief that the exception set forth in this sub-subdivision applies to a particular communication, that communication shall not be a violation of this sub-subdivision.
4. For the sole purpose of locating obtaining location information about the debtor, if no indication of indebtedness is made. A debt collector making a communication under this sub-subdivision shall:
   1. Identify himself or herself, state that he or she is attempting to confirm or correct location information about the debtor, and, only if expressly requested to do so, identify his or her employer.
   2. Not state that the debtor owes a debt.
   3. Not communicate with any particular person more than once per week or a total of three times during any 30-day period unless requested to do so by the person.

1. Through legal process.

§ 75-54. Deceptive representation. Section 2 was rewritten as follows (underlined portion added):

No debt collector shall collect or attempt to collect a debt or obtain information concerning a consumer by any fraudulent, deceptive or misleading representation. Such representations include, but are not limited to, the following:

(2) Failing to disclose in all communications attempting to collect a debt that the purpose of such communication is to collect a debt, unless the communication is made to a third-party pursuant to G.S. 75-53 for the purpose of obtaining location information about the debtor.

§ 75-55. Unconscionable means. Section 2 was amended as follows (underlined portion added):

No debt collector shall collect or attempt to collect any debt by use of any unconscionable means. Such means include, but are not limited to, the following:

(2) Collecting or attempting to collect from the consumer all or any part of the debt collector’s fee or charge for services rendered, collecting or attempting to collect any interest or other charge, fee or expense incidental to the principal debt unless legally entitled to such fee or charge. Nothing in this section shall be construed to prohibit the collection of filing fees, service of process fees, or other court costs actually incurred. The collection of such fees is not a violation of this Article or of Article 15 of Chapter 53 of the General Statutes.

According to a July 2015 article in The News & Observer, some North Carolina legislators expressed concerns that these changes roll back protections that their constituents had under the previous law.

An article posted last week in The Globe (serving Camp Lejeune and the surrounding area) says that these changes will make it easier for creditors to communicate with commanding officers, employers, and others about debtors. The concern raised is with the change in § 75-53 (1) a. which essentially removes the phrase “after default,” suggesting that permission can be given at any time, such as buried within the original contract.