FTC Clarifies Some Issues Surrounding Deceased Debt Collection

The Federal Trade Commission last week published a Consumer Alert on the rights and responsibilities survivors have for the debts of a deceased relative. The alert clarifies some recently debated points on deceased collections.

Using a Q&A format, the document provides answers to several consumer?focused deceased debt collection issues identified by the FTC, including legal responsibility for a deceased relative’s debts and the protections provided by the Fair Debt Collection Practies Act (FDCPA).

Steven Farsht, CEO of Minneapolis-based deceased debt collection agency DCM Services, said the FTC’s document is a good way to educate consumers and reinforce what he says should be standard industry practices.  

“We are pleased that the FTC sought to clarify these issues, which can be confusing to survivors, and we are proud of the fact that DCM Services’ collections practices are consistent with the FTC’s alert,” said Farsht.  “Our use of specialized technologies to locate probated estates has enabled us to significantly reduce the need to contact surviors in the wake of a loved one’s death,” he added.

A large portion of the two-page alert is focused on determining the person or entity responsible for paying the debts of a relative who has died.  According to the alert, “Generally, someone’s estate is responsible for paying [decedents’] debts.” The alert also addresses how to handle a call from a debt collector about the debt of a relative who has died, recommending providing the debt collector with the contact information of the decedent’s personal representative, typically an executor of a will or administrator of an estate.

Barbara Sinsley, a partner with the law firm of Barron, Newburger & Sinsley, PLLC, specializes in debt collection practices and represents several agencies and associations in the industry. “Given the attention paid to deceased debt recently, it was a good idea for the FTC to provide clarity to survivors who may have been confused about their responsibilities in the wake of a loved one’s death,” Sinsley said.  “The FTC has also made it clear what it expects of collection agencies in this industry.  This is good news for consumers and for the firms that specialize in the collection of deceased debt.”

The issue of deceased collections gained national attention earlier this year when U.S. Senator Chuck Schumer (D-N.Y.) called for an investigation into “debt collectors that shake down relatives of deceased debtors.” The call came after the New York Times ran a piece detailing the practices of deceased debt collection agencies like DCM.

The complete Consumer Alert is available at the FTC’s website at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt159.shtm.