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Prior to the 1970s, there was little to no regulation of debt collection practices on a federal level. Individual states began to address the aggressive and sometimes threatening tactics of debt collectors and collection agencies, but few were strict enough in offering consumers a substantial degree of protection from sometimes brutal collection tactics. On March 20, 1978, the Federal Fair Debt Collection Practices Act (FDCPA) went into effect as 15 U.S.C. 1692-1692o. Later known as Title VIII of the Consumer Credit Protection Act, the FDCPA requires debt collectors to provide specific disclosures to the debtor, regulates how a debt collector can contact a debtor, and outlines different remedies a consumer can ask for when the law is violated by a debt collector.
In the years since the FDCPA went into effect, many individual states have adopted their own consumer protection laws that differ from or work in tandem with federal law. One example of a state law that supplements the FDCPA is Illinois law regulates a debt collector’s use of pseudonyms or aliases. Federal law states, “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” which includes “The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization” (FDCPA 807.14).
Despite this seemingly straight-forward federal requirement that debt collector’s use their true name, the Federal Trade Commission has also stated that “A distinctive collector may use an alias or pseudonym if it is used customarily,” and that using different names “does not violate Section 807(14), if he/she uses the same name persistently when dealing with a specific consumer.” One permissible example of this might be an employee of a debt collection agency who uses an alias when contacting debtors to protect his or her identity from hostile debtors. According to a recent New York Times article, many feel that such tactics are a necessary part of staying safe as a debt collector.
In Illinois, debt collectors are subject to both federal law and the Illinois Collection Agency Act of 2001, which differs from the federal requirements in some ways. Although Illinois law requires a business that exists for the sole purpose of collecting debt to obtain a special license as a collection agency, businesses which collect debts but have other business activities are not required to do so (225 ILCS 425/4). In fact, banks, real estate brokers, insurance companies, and others are exempt from licensure under Illinois law, unless they “act like a collection agency.” One way these institutions can find themselves subject to regulation as a debt collector is if the business “Uses a fictitious name in collecting its own accounts, bills, or debts” (225 ILCS 425/3).
For debt collection agencies with a sole purpose of collecting past due debts, there are no absolute prohibitions in Illinois law about using pseudonyms in an attempt to collect a debt. Instead, Illinois Administrative Code stipulates in Title 68, Chapter 7b, Section 1210.70 states only that such an agency must “maintain a listing of all pseudonyms used by an office, employee, or agent of the collection agency” that is “available upon request.” There is no requirement to inform consumers that the agency is using a pseudonym, nor is there any requirement to obtain separate licenses for each alias used.
That is not to say that there are no limitations on pseudonym use in Illinois, however. Under Section 9 of the Illinois Collection Agency Act, a collection agency “may not conduct business under any name…which suggests or implies that the collection agency is a branch of or is affiliated in any way with a governmental agency or court” if they are not (225 ILCS 425/9). So for example, a collection agency may not pretend to be the Internal Revenue Service in an attempt to collect a debt. Similarly, a collection agency may not pretend to be an attorney or an agent for an attorney if it is not. While not as comprehensive as the restrictions on pseudonym use at the federal level, Illinois state law works in tandem with federal regulations to prevent collection agencies from using a false threat of government agencies involvement or potential lawsuits to manipulate Illinois consumers.
The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.
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