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    Sometimes banks find themselves dealing with delinquent borrowers^[1] who refuse to respond to efforts to contact them, or who cannot be located.  One method banks use to locate these borrowers is to contact third-parties, such as neighbors and local business owners who may know where the borrower is or how the borrower may be contacted.  The Fair Debt Collection Practices Act (“FDCPA”)^[2] permits banks to contact third-parties, but only in limited circumstances.  The West Virginia Consumer Credit Protection Act does not expressly address such contact; however, recent lower court decisions have discussed contact with third parties when seeking borrower location information.  The following guidelines are intended to provide banks with ways to structure these types of contact to avoid potential liability.

Procedural Safeguards Regarding Contacting Third Parties

        First, a bank should set the caller identification for any number the bank may use to contact a third party or a borrower to read “unavailable”.  The bank should not set an incorrect or misleading name to appear on the caller identification. Allowing the bank’s name to appear on caller identification could potentially be considered inappropriate publication of the borrower’s debt.^[3]   

Telephone Calls Made Directly to a Third-Party

        As noted above, West Virginia law does not expressly address this type of contact.  However, in an August, 2012 decision, the Circuit Court of Raleigh County expressly found that a “creditor has a right to engage in the procedure generically referred to in the collection industry as ‘skip tracing’ if an alleged debtor has in fact ‘skipped,’ disappeared, moved, relocated, or attempted to abscond with or conceal secured property.” ^[4] Notably, abuse of this practice can lead to violations of the WVCCPA.  This decision has not been reviewed by the West Virginia Supreme Court of Appeals and is, therefore, not binding on courts outside of Raleigh County.

        A bank should not contact a third-party, including relatives, neighbors, friends, or co-workers of a borrower, if it has valid information about the borrower’s location, such as a phone number or an address, and the reasonable belief that the borrower is receiving the telephone messages or mail.  This is a grey area of the law, so proceed cautiously.

        If you choose to contact a third party to obtain information about the borrower’s location, do not state that you are collecting a debt or provide the name of your bank.  If the third party requests information about the call, federal law and interpretive cases require disclosure of the following information:

-  Your name (i.e., John Doe)

-  A telephone number where you can be reached

-  You are confirming/correcting location information

-  The call is personal

The federal caselaw suggests that if the third party does not know the person or refuses to assist, the call should be ended and that third party should not be called again.

        This article cannot address every situation a bank may face when attempting to contact or locate a borrower, so banks should always err on the side of caution.  Moreover, this area of law is fluid and there are civil actions addressing these issues pending throughout West Virginia courts.  Banks should periodically consult legal counsel to determine if changes in the law necessitate changes to their debt collection practices.

_{[1] The term “borrower” as used throughout this article refers only to natural persons who incur a consumer loan.}

_{[2] Note that lenders seeking to collect their own debt are not subject to the FDCPA.}

_{[3] A bank should not ask a borrower to consent at the onset of the loan transaction to allow the bank to contact a third-party in the event of a loan default. West Virginia law explicitly prohibits a borrower from waiving rights against third party debt publication (as well as any other rights) provided under the WVCCPA.}

_{[4] See Figgatt v. Green Tree Servicing, LLC, No. 10-C-930 (B), at 4 (Circuit Court of Raleigh County, West Virginia August 23, 2012).  See also State of West Virginia v. CashCall, Inc., et al., No. 08-C-1964 (Circuit Court of Kanawha County, West Virginia September 10, 2012).}