Is Volkswagen Violating The Fair Debt Collection Practices Act?

Tim’s neighbor received a call from VW Credit asking her to walk across the street and leave a note on her neighbors’ front door and VW Bug asking them to call back their creditor. Calls like these are known as block parties, and they are a direct violation of the Fair Debt Collection Practices Act.

Tim writes:

My neighbor “Pam” recently lost her husband and was surprised to have someone call her up and ask for him. She asked who was calling. The representative was from VW Credit agency. They get to chatting and the rep asks if she knows two people from across the street and gives their names and house number. Pam is very social and say yes of course. The representative then asks if Pam could leave a note on the front door and on their VW Bug asking if the neighbors could please contact VW Credit agency.

At this point Pam said “No thank you” and terminates the call.

I don’t know if any laws were broken but there are violations of privacy legal or not that are very disturbing. I now have suspicions that neighbor 1 and 2 are co-signers on a car loan and are not returning calls to the VW credit. I am dismayed that VW Credit is using some data mining tools to figure out who the neighbors are and asking them to help in collections!

I know if I was having trouble making payments, the last person I want at my door is a neighbor telling me to call the collectors.

Shocked in CA,

Tim

Tim should visit his neighbors, but instead of leaving harassing notes, he should bring them Section 805(b) of the FDCPA:

(b) COMMUNICATION WITH THIRD PARTIES. …without the prior consent of the consumer,… a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, [or] a consumer reporting agency…

Since Tim is in California, he also falls under the Rosenthal Fair Debt Collection Practices Act, which extends the federal FDCPA to original creditors, and separately provides: “…collectors may not tell another person, other than your attorney or spouse, about your debt.”

Tim’s neighbors can sue VW Credit in small claims court, and, thanks to Section 813 of the Act, walk away with a judgment for $1,000.

We’d expect shady collection tactics from fly-by-night creditors, but not large established subsidiaries of Volkswagen. Have any of you had similar experiences? Tell us in the comments.

Fair Debt Collection Practices Act [FTC]
RELATED: How To Take Your Case To Small Claims Court
(Photo: 416style)

Comments

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  1. nightshade74 says:

    Are they not the original creditor — not a debt collector.
    As an OC doesnt this provision not apply?

  2. SuperiorInky says:

    Why does that picture make me feel so sad?

    On topic: Yeah, you might want to sue on this. I’m curious to whether VW has done this before or if they still continue this violation. Perhaps this is one of those “rare” instances.

  3. forgottenpassword says:

    SHoulda asked for $50 bucks to do it.

  4. jpdanzig says:

    This is a very troubling invasion of privacy. If this is official VW policy, I would NEVER apply for their credit. Of course, given the plunging value of the dollar and the abysmal reliability of VWs these days, I am HIGHLY unlikely to want to buy one…

  5. nybiker says:

    If they called me, I’d have truly said I don’t know them. I barely know them by face, let alone by name. My neighborhood (or at least my block) in New York City doesn’t exactly roll out the welcome blanket when somebody new moves in. I bought my house in Sept 2000. At this point, I only know the first names of about 3 or 4 neighbors.

    Still, even if I did know them, I’m not putting any such note on anyone’s door or car. And now having been made aware of the law, I’d tell them their options.

  6. jamesmusik says:

    The FDCPA doesn’t apply to original creditors, but California law does.

  7. cmdrsass says:

    The only people would would voluntarily comply are those with existing beefs with their neighbors or the genuinely clueless.

    • johnnya2 says:

      @cmdrsass: This is a common practice and MOST will not portray it as a creditor. They will say, I have been trying to get in touch with so and so, could you ask them to call me, it is important. They say things like their phone may be out, or I need to make sure they got an email, etc. This creditor was obviously more blatant about it, but collections people are paid on what they collect, so they can be pretty sneaky to get people to do things.

      • ClickClickThud says:

        @johnnya2: debt collectors are allowed to call other people to get “location information” about a debtor, but they may not inform those others of the debt. Otherwise, debt collectors would call every friend and neighbor of a debt collector, and broadcast the information as widely as possible in an attempt to pressure and humiliate the debtor.

        @cmdrsass: Neighbors with beefs are plenty common enough that this is a high-percentage tactic.

  8. Kesov says:

    I’ve never heard of VW doing this, and I’ve known people with VW cars for a long time. Then again, none of them have ever defaulted on a loan before.

  9. Tank says:

    the FDCPA allows 3rd party contact once per 3rd party, as a message only contact. the creditor cannot divulge the nature of the call (although it’s not hard for the 3rd party to figure out what’s happening) but must disclose the name of the company if asked.

    • Pylon83 says:

      @Tank:
      But the FDCPA doesn’t apply because VW is the original creditor. The California law does, but the actual Federal law does not.

      • Tank says:

        @Pylon83: rtfa:

        “Since Tim is in California, he also falls under the Rosenthal Fair Debt Collection Practices Act, which extends the federal FDCPA to original creditors, and separately provides: ‘…collectors may not tell another person, other than your attorney or spouse, about your debt.'”

    • brainologist says:

      @Pylon83: Actually, it depends on what VW said and what the law says. If, as TFA says, VW only asked the neighbor to “leave a note asking them to call VW Collections”, then this is not inconsistent with a law prohibiting “tell[ing] another person, other than your attorney or spouse, about your debt”, as no mention of any “debt” was ever stated or implied. I mean, it may be the case that the neighbor OVERpaid and VW Collections wants to give them a refund. Unlikely, but based on the letter, how are we to know?

      • mythago says:

        @brainologist: Telling somebody to call “Collections” is a pretty strong implication that you are calling about a debt. And if they’re calling about a refund, that would be a refund OF PAYMENTS MADE ON A DEBT.

  10. thewriteguy says:

    Not only is it an invasion of privacy, it’s not the citizens’ responsibility to work for corporations for free.

  11. astrochimp says:

    Is Volkswagon the cheap, crooked knockoff of Volkswagen?

  12. UnStatusTheQuo says:

    I would have told them I would have left the note for:
    1). an upfront *cash* payment of $1000
    2). a hold harmless indemnification under FDCPA
    3). interest free leases on VW cars for the remainder of my life.

    And I’m pretty sure they would get the idea from there.

  13. tedyc03 says:

    Volkswagen Credit is probably a different company under the Volkswagen umbrella but unlikely to do direct business in California. So, if they break California law, how do they get held accountable?

  14. CyrusOpeth says:

    UnStatusTheQuo has the right idea.

    If you want me to perform a service for you, you should expect to pay me for it. So some debt collector is calling around asking other people to perform a service on behalf of the debt collector?

    I’ll watch your kid for $20/hour. I’ll help collect your debt for 75% of the action.

  15. rpm773 says:

    I would have lambasted VW Credit for telling me about my neighbor’s business, then I’d have told them to do their own dirty work.

    I’m not your errand boy, dirtbags.

  16. S-the-K says:

    If a collection agency wants to enlist my help in collecting on their debt, I am going to want them to pay me a service fee, a per diem, and gross points on any funds paid by the debtor.

  17. jefino says:

    @nybiker: @jpdanzig:

    We use this method all the time..FDCPA only applies to third party debt collectors and not the original creditors. There is no law, at least that im aware of and i have been in the business for 4 years, that prevents us from calling neighbors. For some of the higher balance accounts, we even hire a company to put whats called a door knocker on the customers front door advising them to call us. Im in the collections business, and ill leave it at that.

  18. DrJimmy says:

    VW Credit wants me to work for them? Great! My terms are: $250/hour, minimum 8 hours/day, 5 days/week, 4 weeks/month. Cash upfront, meet me at my bank on the 1st business day of the month with payment for the coming month.

    Waitin’ to hear from VW Credit Corporate, or its designee. Same terms apply, Designee.

  19. Amy Alkon says:

    I live in California and get my mail at a mailbox place and get calls on my home phone and cell phone for people who also get mail there. I think creditors figure it’s an apartment building and they’ll just call anyone else who “lives” there. So glad to know it’s illegal, and thanks for the correct law. (I’m hoping it does apply since the people are technically at the same address.)

    The last time a debt collector called, I actually knew the guy they were trying to reach – so now I also know that he apparently has some credit issues. Not cool.

  20. pwillow1 says:

    I got a telephone call years ago that was just like this. A collections person (not for VW, BTW, I think it was for a local department store) called and asked me to contact my neighbor for him.

    “No, I think you should contact so-and-so yourself.”

    He said, “I’ve left messages before and never gotten a callback. Now, what are we going to do to get him to call me back?”

    (This maneuver, BTW, is called “forced teaming.”)

    At this point I guess I was supposed to jump in and offer to leave my neighbor a note on his door, but instead — because I was annoyed by this collector’s blatant manipulation — responded this way:

    “Well, I don’t know what YOU’RE going to do about it, but I’M going to hang up this phone after telling you to never call me again.”

    Interesting what you wrote about this practice and how it’s blatantly illegal. I kinda suspected that it was.

    If I ever get another call, I’ll be sure to note the caller ID number and report them.

  21. t325 says:

    My car is financed through VW Credit and they’ve never contacted me. Then again, I pay my car payment each month on time.

  22. balthisar says:

    Where’s all the vitriol about any of us never wanting to buy a Volkswagen again?

    • jeffbone says:

      @balthisar: Based on the unreliability of my Jetta, I’ve already come to that conclusion. This slimeball behavior is just the icing on the cake.

    • mythago says:

      @balthisar: I deal with VW’s lawyers in an entirely different area of law and I will never buy a VW for any reason, either. Even by automaker standards their lawyers are obnoxious.

  23. RedwoodFlyer says:

    What’s a Volkswagon? Sounds like something that would give you cholera or dysentery in Oregon Trail…

  24. Benny Gesserit says:

    “Pam”s a smart girl – she knows if she’s seen leaving the note, the owner will think she’s in kahoots with the creditor and leaves herself open for at the very least a screaming match on the street, perhaps worse.

    Too bad she didn’t tell the guy: “Man-up, grow a pair and leave your OWN letter on the car, loser.”

  25. From FASTCASE – regarding the Rosenthal Fair Debt Collection Practices Act:

    CIVIL CODE SECTION 1788.10-1788.18

    (Continued)…1788.12. No debt collector shall collect or attempt to collect a
    consumer debt by means of the following practices:
    (a) Communicating with the debtor’s employer regarding the debtor’s consumer debt unless such a communication is necessary to the collection of the debt, or unless the debtor or his attorney has
    consented in writing to such communication.
    A communication is necessary to the collection of the debt only if it is made for the purposes of verifying the debtor’s employment, locating the debtor, or effecting garnishment, after judgment, of the debtor’s wages, or in the case of a medical debt for the purpose of discovering the existence of medical insurance. Any such communication, other than a communication in the case of a medical debt by a health care provider or its agent for the purpose of discovering the existence of
    medical insurance, shall be in writing unless such written communication receives no response within 15 days and shall be made only as many times as is necessary to the collection of the debt.
    Communications to a debtor’s employer regarding a debt shall not contain language that would be improper if the communication were made to the debtor. One communication solely for the purpose of verifying the debtor’s employment may be oral without prior written
    contact.
    (b) Communicating information regarding a consumer debt to any member of the debtor’s family, other than the debtor’s spouse or the parents or guardians of the debtor who is either a minor or who resides in the same household with such parent or guardian, prior to
    obtaining a judgment against the debtor, except where the purpose of the communication is to locate the debtor, or where the debtor or his attorney has consented in writing to such communication;
    (c) Communicating to any person any list of debtors which discloses the nature or existence of a consumer debt, commonly known as “deadbeat lists”, or advertising any consumer debt for sale, by naming the debtor; or
    (d) Communicating with the debtor by means of a written communication that displays or conveys any information about the consumer debt or the debtor other than the name, address and telephone number of the debtor and the debt collector and which is
    intended both to be seen by any other person and also to embarrass the debtor.

    =======================

    Seems to me, the part where a ‘collector’ says they’re trying to contact “the debtor”, and/or asks a neighbor to place a note on ‘the debtors’ car asking the ‘debtor’ to call (be it a ‘door knocker’ or not), would fall under these last two points – which is covered under the law…and therefore is unlawful.

    4 years in the biz or not, hooking is hooking, ambulance chasing is ambulance chasing, unlawful is unlawful.

    • brainologist says:

      @EyeintheLAsky: I don’t mean to be difficult, but you’re reading more intent into these laws than what the text says.

      Note that, according to TFA, VW *never* indicates there is a debt of any kind. Thus, point (c) was not voilated, because no debt was disclosed.

      Similarly, the letter of point (d) was not violated. Here, with a different emphasis:
      “…written communication that displays or conveys any information about the consumer debt or the debtor other than the name, address and telephone number of the debtor and the debt collector…”
      Seems to me that a note saying “Pam, plz call VW at 555-1234″ is allowed by that section, as no other information about any putative debt is conveyed.

      Like I said above, from the info in the article, VW might just as well have been contacting them to let them know they had OVERpaid and were trying to get ahold of them for a refund… or maybe they won a prize… or maybe they’re trying to get ahold of Pam’s recipe for fudge-drop cookies. The facts are no debt was mentioned, and, as far as I can tell, no law was violated.

      Full disclosure: Scientist, not lawyer, my 2c may not even be worth that much.

      • mythago says:

        @brainologist: Please stick to science. Your interpretation of the law is not correct. Telling somebody to call “VW Collections” is the disclosure of the “existence of a debt”.

  26. GTI2.0 says:

    Guys, it’s very, very possible that they listed her late husband as a reference on the loan. I just closed on a loan from VW credit and they asked me for two friends and a relative’s contact info.

    I declined to provide it and still got the loan – but I’m guessing they’d definitely use that info for collections.

    I don’t believe that would violate the FDCPA so long as they didn’t identify the reason for asking them to call VW Credit.

  27. dieman says:

    My wife had a creditor (original) call her asking her to discuss a debt with her brother. She was not the cosigner on the debt and read the /riot/ act back to this representative. They claim they’ll never call again, but this is the 2nd time they’ve called back in the past 3 months. Sigh.

    • lol_wut says:

      @dieman:

      Then have her actually do something about it. I’ve been behind on debts and I’ve fortunately only had my wife and a co-signor (if any) be contacted regarding the debt. No one else. (My wife was listed on the account as a contact, so that would justify the call)

      I would be mad as hell if a neighbor would have taken a call for me where they were asked / requested by the creditor to leave a note on my door, a message on my machine, or worse – mention it in passing while I’m on my way to work or to take the kids somewhere.

      “John, I hope you aren’t going to spend too much money at the ballgame tonight – Ford just called me and said you are two months past due on your account.

      Have a good time at the game! But dont’ forget to call Ford!”

  28. SusitaBeaver says:

    Why do people that cannot read or cannot be bothered to read insist on commenting on this blog?

    Better yet why doesn’t moderation just eliminate the posting privileges of the obviously willfully ignorant? It’s not like there are that many of them and the comments section would be better for their loss…

  29. UstinLorton says:

    More than likely, the neighbors had listed Tim as a reference on their loan application with VW. Thus, it is perfectly legal for VW to attempt to contact Tim trying to locate the neighbors who are more than likely not paying their loan.

    I work for a Credit Union, we use references if someone is a skip or is not making payments and we cannot find them. That is what the references are there for on a loan application and why they are required.

  30. lauy says:

    In my experience collectors get around violating this provision by simply mentioning they are calling about an “important business matter”, not actually disclosing the nature of the call. Even though it is pretty obvious that a call from a credit department is probably a collection call, I suppose it could be about fraud on an account or something else – thus the “important business matter” being a guise that does not violate the FDCPA.

    I live in a large apartment complex, and though I have a common last name, my spelling is a bit less common. I used to get calls looking for someone I had no connections to (family or neighbor that I knew of) from several collection agencies. All the agencies used the “important business matter” line on the messages. I did some research online and found the person lived in my complex (at some point). When I was home to answer the phone, I told them I had no idea who this person was, that I live in a nearly 1000 apartment complex, and that they kindly stop calling. All of them stopped but one – a law firm in NY. Luckily, my brother is an attorney; one call from him to the firm and no more calls.

  31. johnnya2 says:

    The funny part through all this is EVERY person here has jumped to the conclusion VW Credit was calling regarding a past due debt. Nowhere in anything that was posted is that said. Even if it was a collection of debt why would you care. If you are so concerned about what your neighbors think you might want to start worrying about if they were gonna repossess your car instead. I could make a case that maybe they were trying to refinance the car, but needed some important documentation to finalize the terms, or maybe they made an overpayment and there were late fees associated from the past and VW wanted to know the proper place to post the money. They would be bitched at if they assumed the wrong thing as well. How about the person who is avoiding the calls answer the phone and say, I choose not to talk to you. Thank you and goodbye. Send a certified letter to make sure they do not call you, your employer or anybody else, and life will be good.

  32. bubbledumpster says:

    I have had similar experiences.

    I was getting about 4 phone calls a day from a bill collector. I’m not sure what they were trying to collect for it was either a credit card or an apartment complex that had tried to rip me off. Either way, they also called my boyfriend and his mother and father. I’m not sure if my parents ever recieved phone calls, as they get over 10 bill collection calls each day and wouldn’t notice an extra one or two.

  33. rochec says:

    A. If it’s VW calling they aren’t governed by the FDCPA because they are the original creditor. As for the Rosenthal Act see my point below.

    B. This isn’t illegal. VW didn’t call to say your neighbor owes money or any specifics of why they were calling. Creditors are allowed to contact a 3rd party, certainly if they are listed as a contact at least once for information and there is no mention if they are listed as a contact. Obviously asking them to go put a note on the door isn’t the usual info asked for, but it still falls under section 804 of the FDCPA.

    This is how people end up getting information like you can tell collectors to only contact you in writing, so they do, and they end up receiving a summons.

    The attorney general is your friend in matters of question though.

  34. Yogambo says:

    Just curious, as I know of similar circumstances with another creditor, how does one go about pursuing that creditor – this is a third party too, not the OC. I know this must be in the archives somewhere but I’ve not parlayed the perfect search terms. Any direction would be appreciated.

  35. BernadetteAlcathous says:

    I am a Lawyer, the law is as always subjective to review and interpretation by a judicial body. However precedence would have it that this would most likely not be judged to be in violation of the law by most courts. As they did not outright say that they where calling about a collection or a debt. We of course assume that they where but the law doesn’t work that way.

  36. ManiacDan says:

    Isn’t Volkswagon the same people that were on the Consumerist a few years ago with their “certified pre-owned cars aren’t actually certified or inspected” policy? It seems like Volkswagon takes great pains to appear to be an honest company while distancing themselves from all their third party affiliates like the dealers and debt collectors.

    Found the article:
    [consumerist.com]

    It seems that Volkswagon isn’t as great as they would like to appear. Their certification service is (or was) smoke and mirrors, and their debt collection practices are shady and illegal.

  37. scredly says:

    I always find it interesting in collections threads that no one has any thing to say about the creditor trying to get the money the customer promised to pay. No one posts that the customer should “grow a pair” and face up to their responsibilities and obligations.

    Avoidance is human nature. Being up front and working with a creditor early in a delinquency can save customers a lot of grief. Extensions, forbearance agreements and even re-writes are possible before things get too far gone. The creditor doesn’t want a used car, they want the money. Work with them. If you have no reasonable way to continue paying, it’s time to face reality as unpleasant as that may be. What do you call it when you take something and don’t intend to pay for it? The only difference is this is a civil and not a criminal matter.

    Some folks seemed surprised that VW would stoop to the level of becoming aggressive to defend their assets. They have to pay their bills too. If they don’t get a return on the money they’ve lent, they can’t give you a new loan at an attractive rate.

    Just as there are bad apples in every profession, there are bad collectors -many of them unfortunately- mostly due to poor or no training. They are not taught debtor psychology or how to empathise with the customer. They’re plugged into an auto-dialer and told to “get the money”. They hear other bad collectors beating folks up and think that’s the way to do it. My collectors would be immediately re-trained if I heard that type of approach.

    The customer is offered legal protection from collectors. Just tell them not to communicate with you at all or just via the mail- or how ever you want to deal with them regarding the debt and follow it up with a certified letter stating the same as you told them on the phone. Done deal. They can contact you ONE more time to acknowledge receipt of your letter and to inform you a specific remedy will be invoked. At that point, they will either give up or sue you.

    It is only illegal to disclose the nature or existence of a debt – asking a neighbour to leave a note with the customer to contact Mr. Smith at VW Credit or VW is not a violation as it does not disclose the existence of a debt. Assumptions of a 3rd party are not a violation. Telling the neighbour “it’s about their loan” is a violation because it discloses the existence of a debt. Using “VW Collections Department” in the communication would most likely be considered a violation if not for a back-door disclosure of a debt, it would for the “embarrassing” the customer provision. Regardless if the communication was about a debt or not. There are limits in the law regarding how often and how many times a 3rd party may be contacted. This also pertains to calling an employer and co-workers.

    Written communications with the customer cannot have any reference to a debt or the existence of a debt or have any words, marks or symbols that may be “embarrassing” to the customer visible to a 3rd party -on the envelope, a post card or even a note on the door. That’s why collection agencies names don’t generally have the word “collections” in them, if they do, they use initials on their stationery.

    I am not an expert but I’ve worked in collections for over 15-years for very large collection agencies, banks and Fortune 100 companies in collections(repo and door knocker too), work-out, foreclosure, asset management and legal as a paralegal.

    • Blitzgal says:

      @scredly: We have regulations on debt collection activities for a reason. Two wrongs don’t make a right.

      Also, on the day that the House will vote on whether my tax dollars should be used to bail out the gross mismanagement of banking institutions in this country I really can’t muster up much outrage about a skipped car loan. That makes me a moral relativist, but whatever.