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The Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. section 1692 et seq., requires, among other things, that in the initial written communication with a consumer, a debt collector provide notice that he or she is attempting to collect a debt and that any information obtained will be used for that purpose. In addition, the FDCPA requires that within five days after the initial communication with a consumer, the debt collector must, unless the information is contained in the initial communication, send the consumer a written notice containing: (1) the amount of debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that if the consumer notifies the debt collector in writing within thirty days that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt; and (4) a statement that upon the consumer's written request within the thirty day period, the debt collector will provide the consumer with the name and address of the original creditor if different from the current creditor. Failure to provide the required statutory notice may result in civil liability of up to $1,000.00.

Mr. Snow, purchased $23.12 worth of consumer goods from a Circle K store and paid for the merchandise with his personal check, which bounced. Circle K forwarded the returned check to its attorney, Jesse L. Riddle, to pursue collection. Riddle wrote a collection letter to Snow demanding the payment of the $23.12 plus a $15.00 bad check fee, authorized under Utah law. Riddle, however, did not give Snow the notice required by the FDCPA. Snow paid the face amount of the check, refused to pay the bad check fee and filed a civil action in federal court against Riddle for violation of the FDCPA.

The question before the court was whether a bad check constitutes a debt which is covered by the FDCPA. The FDCPA defines a debt as "any obligation . . . of a consumer to pay money arising out of a transaction . . . for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." Riddle contended that the FDCPA does not cover dishonored checks but is limited to the collection of debts resulting from transactions in which there is an offer or extension of credit. The District Court agreed and dismissed Snow's complaint; however, on appeal, the Tenth Circuit reversed. It held that an offer or extension of credit is not required for a payment obligation to constitute a debt under the FDCPA; rather, "a 'debt' is created when one obtains goods and gives a dishonored check in return therefore."

The Tenth Circuit now follows the Seventh, Eighth, and Ninth Circuits which have all held that dishonored checks are covered by the FDCPA.

As a result consumers who receive a "bad check" collection letter from a debt collector may recover damages if it does not contain all of the FDCPA notices.

I have felt for several years that bad checks were covered by the FDCPA and have advised my clients accordingly.

Snow v. Riddle, 97-4045, May 11, 1998 Tenth Circuit Court of Appeals.