Collector - December 2017 - 44

COMPLIANCE

How Much Power Does a Power of Attorney Have?
It doesn't provide the agent with the same authority over the consumer's affairs as a lawyer, guardian or administrator.
By Angela Czerlanis

here are many reasons consumers
might give a spouse, partner,
relative or associate power of
attorney to conduct their business.
Consumers in collections may also grant
power of attorney to credit counseling
or debt settlement companies to ease
collection communications. If someone
tells you, "I have power of attorney; you
need to deal with me," on the phone or in a
letter, there are some things debt collectors
should consider before responding.
Sections 805(b) and 805(d) of the Fair
Debt Collection Practices Act allow debt
collectors to communicate with select parties
other than the consumer. However, parties
with power of attorney are not mentioned in
the statute. This leaves room for third-party
disclosure violations.
"Attorney" is a game-changing word
for collectors, so understanding context is
important. For the purposes of defining
attorney representation in the FDCPA, the
Federal Trade Commission interprets an
attorney to be "someone who graduated
from law school and passed the bar
examination of at least one state." A power of
attorney is a contractual agreement in which
the "principal" designates an "agent" or
"attorney-in-fact" to handle certain affairs if
or when they are unable.
Requirements for a binding power of
attorney vary by state but generally involve
a written document with witnessed and/or
notarized signatures of the parties involved.
Power of attorney alone does not provide
the agent with the same authority over the
consumer's affairs as a lawyer, guardian or
administrator. That means for the purposes
of FDCPA Section 805(b), someone claiming
to hold power of attorney for a consumer
should be treated as a third party unless the
consumer provides prior consent directly to
the debt collector allowing communications

with that agent about a debt or the collector
receives a signed POA.
In limited case law, the courts have looked
first to the statute, then to the language in
the power of attorney document. In one case,
a collector argued he was permitted to speak
with a third party, as the third party stated he
had power of attorney for the consumer. The
court found that the third party's power of
attorney did not equate to consent provided
directly to the debt collector as required
in Section 805(b), and thus, the collector
violated the FDCPA.
In another case, a signed power of
attorney that contained language regarding
communications and was specific to
mediating debts with the collection
agency allowed the debt collector to safely
communicate with the settlement company
holding the power of attorney.

You have the power. Prior to
communicating about a debt with
someone claiming to have power of
attorney, get additional direct consent
of the consumer, preferably in writing.
If direct consent is not possible, obtain a
copy of the power of attorney document.
Make sure it is legally enforceable under
state law and contains language specific to
debt collection. As part of your agency's
compliance management system (CMS)
and continuing education, include policies
and training related to communicating
with power of attorneys in order to
minimize the risk of third-party disclosure
violations.
Angela Czerlanis is ACA International's
compliance education specialist

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Table of Contents for the Digital Edition of Collector - December 2017