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 T 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 44 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 Collect Large, Pay Light. Flexible. Scalable. Comprehensive. Modular. Now with Microsoft SQL Server based options. Software for first party, third party and specialized portfolio collections. Best value with the functionality that your agency needs. Call us for a free consultation 1-800-661-6722 | Collect.org ACAINTERNATIONAL.ORG
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