Texas Collection Practices Act (the
Tex. Rev. Civ. Stat. Ann. art. 5069-11.01 et seq.
The Texas State law that governs debt collection practices in Texas is called
the Texas Collection Practices Act (the "Act" TCPA.) It is a law passed by
a legislative body and set forth in a formal document that provides statutory
standards (formal regulations and established rules called statutes,) that
have to do with debt collection practices in the state of Texas. The TCPA
was passed in the 63rd Texas Legislative Session, and first became effective
August 27th, 1973, and was codified as Vernons Texas Revised Civil
Statutes Annotated, Article 5069-11.01, et esq. The TCPA was amended in the
68th Texas Legislative Session to add certain civil remedies in Article
5069-11.10 and other parts in Article 5069-11.11, which became effective
August 29th, 1983.
The next amendment to the TCPA took place in the 73rd Texas Legislative Session
and became effective September 1st, 1993. The amendments added a definition
of the tern "Credit Bureau," certain bond requirements for third party debt
collectors, certain dispute rule and procedures, certain civil remedies,
and added a requirement for credit bureaus to send copies of credit information
to consumers upon request. Now lets have a closer look at "the Act."
The following amendment to the TCPA (HB668[Junell]) was signed by Governor
George W. Bush June 8th, 1995 and became effective September 1, 1995. The
Texas Legislature approved amendment to (Article 11.05(e)) allowing collectors
to use a post office box and a telephone number in lieu of their street address
on written communications. It amended (Article 11.05 (a)) allowing collectors
collecting bank card debts to collect under the name appearing on the face
of the credit card as well as under their true business name or professional
name or the true personal or legal name of the debt collector. It amends
( Article 11.05(c)) by adding credit card debts to real estate first lien
mortgages as a type of debt excluded from the requirement that the collector
disclose to the alleged debtor the name of the person to whom the debt has
been assigned or is owed. It amends (Article 11.10 (the remedies) by restricting
the $100 per violation damages to violations of article 11.02 (c) (reporting
or threatening to report to a credit bureau that the debtor is refusing to
pay a non-disputed debt when the debt is disputed) or Article 11.07A (dispute
rules and bonds) only. Subsection (c).
This is an index of different topics within the Texas Collection Practices
5069-11.02, Threats or coercion.
5069-11.03. Harassment; abuse
5069-11.04. Unfair or unconscionable means.
5069-11.05. Fraudulent, deceptive, or misleading representations.
5069-11.06. Deceptive use of credit bureau name.
5069-11.07. Use of independent debt collectors.
5069-11.08. Bona fide error.
5069-11.10. Civil remedies.
5069-11.11. Other remedies.
Cross References & Case Examples
Another law you may want to look at later in this book is the Deceptive Trade
Practices-Consumer Protection Act, see V.T.C.A. Bus. & C 17.41 et esq.
Some violations of the TCPA also are violations of the Texas Deceptive Trade
Practices Act (TDTPA.) To learn about furnishing false credit information
to or by a credit reporting bureau, see art. 9016.
An example of a case where Coercive collection and exempt property in Texas
was used is: Roy Ryden Anderson, 13 Houston L.Rev. 84 (1975). Procedural
due process. 10 Houston L.Rev. 880 (1973). You may want to look at the Texas
Debt Collection Practices Act: Relief for harassed debtor in: William R Crow,
jr., 8 St. Marys L.J. 773 (1977). For an example of Usury implication
of front-end interest in advance. see: §29 Southwestern (Tex.) L..J.
748 (1975). Tex. Prac., Consumer Rights and Remedies, chs. 2, 15.
Art. 5069-11.01. Definitions
As used in this subchapter:
(a) "Debt" Means any obligation or alleged obligation arising out of a consumer
(b) "Debt collection" means any action, conduct, or practice in soliciting
debts for collection or in collecting debts owed or due, or alleged to be
owed or due to a creditor by a consumer.
(c) "Debt collector" means any person engaging directly or indirectly in
debt collection, as defined herein, and includes any person who sells, or
offers to sell, forms represented to be a collection system, devise, or scheme,
intended or calculated to be used to collect debts.
(d) "Consumer" means an individual who owes or allegedly owes a debt created
primarily for personal, family, or household purposes.
(e) "Consumer transaction" means a transaction in which one or more of the
parties is a consumer.
(f) "Creditor" means a party to a consumer transaction other than a consumer.
(g) "Person" means individual, corporation, trust, partnership, incorporated
or unincorporated association, or any other legal entity.
(h) "Credit bureau" means any person who, for compensation, gathers, records,
and disseminates information relative to the creditworthiness, financial
responsibility, paying habits, and other similar information relative to
the creditworthiness, financial responsibility, paying habits, and other
similar information regarding any person, for the purpose of furnishing consumer
reports to third parties.
Note: All areas of italics are personal comments and are in no way intended
to be a legal opinions. You should check with an attorney regarding any
interpretations or comments in this book to verify its accuracy prior
to taking any action.
In subsection (c) above, the term "Debt Collector" includes credit grantors,
collection agencies, credit bureaus, and attorneys that collect debts.
It is important that you note that Debt Collector is referred to as a "person"
in the subsection of the Act, and "Person" is further defined in subsection
(g) above, to include individuals, corporation, trusts, partnerships,
associations, or any other legal entity and if broad enough to include credit
granters. The Consumer must be an "individual" according to subsection (d)
to fall under the TCPA. The Act has been interpreted to mean collecting from
a cooperation, partnership, or trust could not be a "consumer debt," and
therefore the collection of such debt is not covered by the Act.,
Cross References and Definitions
This is an Act relating to the regulation of practices used in collection
of debts; providing penalties; providing certain civil remedies; and declaring
an emergency. Acts 1973, 63rd Leg,. p 1513, ch. 547. Beyond truth-in-lending
(another law governing consumer lending laws.) See example in: Federal regulation
of debt collection. R. Glen Ayers, Jr., 16 St. Marys L.J. 329 (1985)
Hear are some examples of cases, notes, and decisions that may be helpful
as examples you can refer to.
Notes and Decisions
1. In general
In the Debt Collection Act (this example) does not apply to controversy over
ownership and/or corollary right of alleged owner to retrieve their property.
See: Pergars of Longview, Inc. v. Jones (Civ. App. 1978) 573 S.W.2nd 571.
The following example requires that the wrong complained of must arise out
of a debt or creditor relationship but does not limit the cause of action
for violation of an Act to the debtor. Any person against whom prohibited
acts are committed may maintain an action for actual damages sustained as
a result of violations of the Act. See: Campbell v. Beneficial C. of Dallas
(Civ.App.1981) 616 S.W.2nd 373.
Am obligation of consumer to return credit card upon cancellation was considered
a "debt" within meaning of the following example governing debt collection,
and attempts of debt collection company to return such credit cards constituted
integral part of debt collection process within meaning of this Chapter.
See:Ledisco Financial Services, Inc. v Viracola (Civ. App. 1976) 533 S.W.2nd
The next example of a case is where an individual used his credit card for
personal purposes, owed money to issuer of such credit card, and also owed
obligation to return credit card when it was canceled, such individual was
a "consumer" within meaning of this example. See: Ledisco Financial Services,
Inc. v. Viracola (Civ.App.1976) 533 S.W.2nd 951.
This section will help you when you are trying to find out or prove certain
collection tactics are illegal
Art. 5069-11.02. Threats or coercion
No debt collector may collect or attempt to collect any debt alleged to be
due and owing by any threats, coercion, or attempts to coerce which employ
any of the following practices:
(a) using or threatening to use violence or other criminal means to cause
harm to the person or property of any person;
(b) accusing falsely or threatening to accuse falsely any person of fraud
or any other crime;
(c) representing or threatening to represent to a third party or any other
person, that a consumer is willfully refusing to pay a non-disputed debt
when the debt is in dispute for any reason and the consumer has notified
such debt collector in writing of the dispute.
(d) threatening to sell or assign to another the obligation of a consumer
with an attending false representation that the result of such sale or assignment
would be that the consumer would lose any defense to the alleged debt or
would be subject to illegal collection attempts;
(e) threatening that the debtor will be arrested for non-payment of an alleged
debt without proper court proceedings; however, nothing herein shall prevent
a debt collector from informing the debtor that the debtor may be arrested
after proper court proceedings in cases where the debtor has violated the
criminal laws of this state;
(f) threatening to file charges, complaints, or criminal action against a
debtor when in fact the debtor has not violated any criminal laws; provided,
however, nothing herein shall prevent a debt collector from threatening to
institute civil lawsuits or other judicial proceedings to collect a debt;
(g) threatening that nonpayment of an alleged debt will result in the seizure,
repossession, or sale of any property of that person without proper court
proceedings; however, nothing herein shall prevent a debt collector from
exercising or threatening to exercise a statutory or contractual right of
seizure, repossession, or sale which does not require court proceedings;
(h) threatening to take any action prohibited by law.
Consumer Protection , Extortion and Threats, see the example in: C.J.S. Threats
and Unlawful Communications §§ 2 to 9., C.J.S. Trade-Marks, Trade-Names
and Unfair competition § 237.
It is a violation of Texas State law to destroy, remove, conceal, encumber
or otherwise harm or reduce the value of secured property with intent to
hinder enforcement of a lien. Section 32.33 of the Texas Penal Code.
§ 32.31 Hindering Secured Creditors
(a) For Purpose of this section
"Remove" means transport, without the effective consent of the secured party,
from the state in which the property was located when the security interest
or lien attached.
"Security Interest" means an interest in personal property or fixtures that
secures payment or performance of an obligation.
(b) A person who has signed a security agreement creating a security interest
in property or a mortgage or deed of trust creating a lien on property commits
an offense if, with intent to hinder enforcement of that interest or lien,
he/she destroys, removes, conceals, encumbers, or otherwise harms or reduces
the value of the property.
(c) For purposes of this section, a person is presumed to have intended to
hinder enforcement of the security interest or lien if, when any part of
the debt secured by the security interest or lien was due, he/she failed:
· To pay the part then due and
· If the secured party had made demand, to deliver possession of the
secured property to the secured party.
(e) If the Actor removes the property, the offense is a Felony of the Third
The following are more examples of cases and court decisions that relate
to the above listed section
Notes of Decisions
1. In general
Plaintiff could not recover damages from a creditor for wrongful debt collection
under this article as a result of indictment charging plaintiff with felony
theft of services, in absence of evidence that creditor made any false statements
or factual misrepresentations to district attorney. Hatcher v. Budget Rent-A-Car
Systems, Inc. (C.A.1980) 617 F.2nd 91.
Where collection agency employee called debtor on many occasions including
during sleeping periods, contacted neighbors concerning debtor and induced
their child to provide agency with debtors telephone number, contacted
debtors employer and threaten his job, and debtor informed agency that he
had become ill as a result of collection efforts, agency was liable for
unreasonable collection methods. Foley Newsom Oil Co. v. Crawford (Civ.App.1974)
515 S.W.2nd 750. All collection efforts by defendant, which after its employee
had been advised that hospital bill had been paid did not even contact hospital
to determine whether bill was in fact paid and which made at least four
collection contacts after contacts after bill was in fact paid, after date
of payment by debtors attorney were unreasonable. Pullins v. Credit
Exchange of Dallas, Inc. (Civ.App.1976) 538 S.W.2nd 681, ref. n.r.e. Contributory
negligence was not defense in unreasonable collection efforts case, which
is not suit for negligence but is based on intentional act. Pulins v. Credit
Exchange of Dallas, Inc. (Civ.App.1976) 538 S.W2nd 681, ref. n.r.e.
2. Action prohibited by law
Vendors letters threatening to terminate contract for deed for delinquent
payments without necessary notice required by art. 1301b (repealed; see,
now, V.T.C.A. Property Code, § 5.062) was action "prohibited by law"
within Debt Collection Act (this chapter), which prohibits any debt collector
from threatening to take any action "prohibited by law." See example in:
Dixon v. Brooks (Civ.App.1980) 604 S.W.2nd 330, ref. n.r.e., appeal after
remand 678 S.W.2nd 728, ref. n.r.e.
3. Standing (Skip-tracing with neighbors and relatives)
Parent of debtors had standing to maintain an action against credit company
under this chapter for alleged harassment and abusive debt collection practices
where alleged abuses were committed directly against her when the credit
company attempted to discover the whereabouts of the debtors. Campbell v.
Beneficial Finance Co. of Dallas (Civ.App.1981) 616 S.W.2nd 373. Persons
other than the debtor may maintain an action for violations of this chapter.
Id. This chapter requires that the wrong complained of must arise out of
a debtor/creditor relationship but does not limit the cause of action for
violations of an
Act to the debtor; any person against whom prohibited acts are committed
may maintain an action for actual damages sustained as a result of violations
of the Act. Id.
Plea in debtors petition alleged unreasonable collection efforts and
seeking "reasonable attorneys fees" was sufficient to authorize award
of such fees in higher courts." See: Ledisco Financial Services, Inc. v.
Viracola (Civ.App.1976) 533 S.W.2nd 951 Debtors petition seeking recovery
for unreasonable collection efforts of debt collection companys employee,
which simply stated that debt collection company perpetrated improper act,
was sufficient. Id. An action for unreasonable debt collection efforts may
be maintained absent a plea of physical illness or injury. See: Campbell
v. Beneficial Finance Co. of Dallas (Civ.App. 1981) 616 S.W.2nd. 373.
In action for civil penalties against credit bureau for alleged violation
of injunction prohibiting distribution to debtors of forms which had the
appearance of being official documents, evidence that, following injunction
order, credit bureau employed attorney, knowledgeable in style of law relating
to creditors, to revise such forms and that attorney consulted with Assistant
Attorney General regarding the revisions was admissible to show credit
bureaus good faith. See example: Credit Bureau of Laredo, Inc. v. State
(Civ.App.1974) 515 S.W.2nd 706, affirmed 530 S.W.2nd 288 In absence of offer
by debt collection company to prove that debtor alleged felony conviction
involved moral turpitude and was not too remote, trial court did not err
in excluding such evidence in action by debtor against collection company
for unreasonable collection efforts. See: Ledisco Financial Services, Inc.
v. Viracola (Civ.App.1976) 533 S.W.2nd 951. In action against debt collection
company to recover damages for unreasonable collection efforts, debt collection
company should have been permitted to cross-examine debtor about assaults
he allegedly had made on some of his neighbors, since such evidence could
raise inference that neighbors, rather than debt collection companys
employee, had made threatening phone calls to debtor.
Id. Alleged admission against interest made by debtor during recess of
debtors action against debt collection company to recover damages for
unreasonable collection efforts should have been admitted into evidence,
and refusal of trial court to allow debt collection company to elicit testimony
for its bill of exceptions constituted reversible error. Id. Evidence in
suit by debtors widow alleging that unreasonable collection efforts
had been made before and after hospital bill was paid by debtors attorney
and after defendant had been advised that debtor was represented by counsel,
including wifes allegations that she became nervous, upset and vomited
and had headaches, dizziness and went to doctor as result of collection efforts
made upon her, was sufficient for jury as to whether unreasonable collection
efforts had been made upon wife. See: Pullins v. Credit Exchange of Dallas,
Inc. )Civ.App.1976) 538 S.W.2nd. 681, ref. n.r.e.
Jury award of actual and exemplary damages for unreasonable collection methods
was supported by evidence that lender accelerated loan even before date for
first payment and without explanation, and that its representative made repeated
visits to home of borrower, his fiancee and apartment managers, confronted
and embarrassed fiancee in front of her social guests, made 20 or more telephone
calls to borrower in a ten-day period, and threatened him with criminal charges.
See example: Bank of North America v. Bell (Civ.App.1973) 493 S.W.2nd 633.
Jury finding that unreasonable collection efforts were actuated by malice
was supported by evidence that lender accelerated entire loan even before
first loan payment was due and that representative, of lender made repeated
visits to borrowers home, his fiancee and apartment managers, confronted
and embarrassed fiancee in front of social guests, made 20 or more telephone
calls to borrower in ten-day period, and threatened borrower with criminal
charges. Id. Award of $50.000 in punitive or exemplary damages was excessive
to the amount of $35,000 under evidence that, in action for unreasonable
collection efforts, lender accelerated loan even before date when first loan
payment was due and representatives of lender made repeated visits to
borrowers home, his fiancee and apartment managers, confronted and
embarrassed fiancee in front of social guests, made 20 or more telephone
calls to borrower in ten-day period, and threatened borrower with criminal
charges. See: Bank of North America v. Bell (Civ.App.1973) 493 S.W.2nd 633.
Notes on the subject of "DURESS"
"Unlawful constraint exercised upon a person whereby a person is forced to
do some act that they otherwise would not have done. The common law theory
of duress arises when one party to a transaction employs extorted measures
or when, lacking good faith, makes improper demand. Use of duress in the
business context is often referred to as "economic coercion" or "business
compulsion". Mere "pressure" of necessity does not reach the level of economic
duress. See First Texas Savings Association v. Dicker Center, Inc., 631 S.W.
2nd 179, 185-86 (Tex. App. Tyler 1982, no writ). A tort may be claimed only
when the party making the demand has or appears to have the power to injure
the business or property interests of the party upon whom the demand is made,
without resort to the court system to enforce the demand. Dale v. Simon,
267 S.W. 467, 470 (Tex. Comm. App. 1924).
As a matter of law, there is no duress unless (1) there is a threat to do
something which the party threatening has no legal right to do; (2) there
is some illegal exaction or some fraud or deception; and (3) the restraint
is imminent such as to destroy free agency without present means of protection.
See Simpson v. Mbank Dallas, 725 S.W. 2d 102, 109 (Tex. App.- Dallas, writ
refd n.r.e.) ; Tower Contracting Co., Inc. of Texas v. Burden Brothers,
Inc., 482 S.W. 2d 330, 335 (Tex. Civ. App. - Dallas 1972, writ refd
Once again, the seminal case on lender duress is State National Bank v. Farah
Manufacturing Co. supra. The Farah court made the following statement as
to duress: There can be no duress unless  there is a threat to do some
act which the party threatening has no legal right to do.  Such threat
must be of such character as to destroy the free agency of the party to whom
it is directed. It must overcome his will and cause him to do that which
he would not otherwise do, and which he was not legally bound to do. 
The restraint caused by such threat must be imminent.
 It must be such that the person to whom it is directed has no present
means of protection. . . .
 Where a demand made is wrongful or unlawful, and it is necessary for
the party making such demand to resort to the courts to enforce same, there
is no duress, for the one upon whom demand is made has adequate means of
protection, and there is no imminent restraint. . .
 But where the party making such demand has, or is supposed to have, the
power to injure the business or property interests of the one upon whom such
demand is made, without resort to the courts to enforce the demand, and threatens
to do an act which would cause such injury, and which he has no right to
do, thereby induces a compliance with his demand ,  against the will of
such party through fear of injury to his business or property interests,
such threats amount to duress,  if it appears that the party making such
demand and threat ought not in good conscience to retain the benefit received
by reason thereof. Farh, supra, at 684 (citing Dale v Simon, supra at 470).
In short, there can be no duress under Texas law unless there is a threat
to do an act which the threatening party has no right to do, coupled with
fraud or deception, such that the free will of the threatened party is destroyed.
Additionally, a threat to institute a civil suit or even the actual institution
of a suit for the purpose of enforcing a legal right does not, as a matter
of law, constitute duress. Executive Condominiums, Inc. v State, 764 S.W.
2d 899 (Tex. App. -Corpus Christi 1989, writ denied). Other selected opinions
are (a) Sander v. Republic Natl Bank, 389 S.W. 2nd 551 (Tex. 1965),
assertion of a legal right does not constitute duress. (b) First Texas Sav,
Assn v Dicker Center Inc., 631 S.W. 2nd 179 (Tex. App. -Tyler 1982,
no writ). Acting party must be responsible for complainants financial
embarrassment. . . .
Art. 5069-11.03. Harassment; abuse
In connection with the collection of or attempt to collect any debt alleged
to be due owing by a consumer, no debt collector may oppress, harass, or
abuse any person by methods which employ the following practices:
(a) using profane or obscene language that is intended to unreasonably abuse
the hearer or reader;
(b) placing telephone calls without disclosure of the name of the individual
making the call, and with the willful intent to annoy or harass or threaten
any person at the called number;
(c) causing expense to any person in the form of long distance telephone
tolls, telegram fees, or other charges incurred by medium of communication,
without first disclosing the name of the person making the telephone call
or transmitting the communication; or
(d) causing telephone to ring repeatedly or continuously or making repeated
and continuous telephone calls, with the willful intent to harass any person
at the called number.
Notes of Decisions
1. In general
Alleged "wrongful acceleration of debt," which actually sought to present
cause of action for unreasonable collection of the debt, required, in order
for recovery to be authorized under Texas law, finding that debtor suffered
some physical injury and that such injury was proximately caused by
creditors collection efforts. See: McDonand v. Bennett (C.A.1982) 674
F.2nd 1080, on re-hearing 679 F.2nd 415.
State properly exercised its option in prosecuting defendants for conduct,
in which a defendant threatened to harass victim by making repeated and
continuous phone calls until he paid debt he said that he did not owe, under
V.T.C.A. Penal Code, § 42.07, which proscribes making threats by telephone
to take unlawful action against any person, thereby intentionally, knowingly,
or recklessly annoying or alarming or intending to annoy or alarm recipient,
rather than under this article prohibiting debt collector from harassing
person by causing telephone to ring repeatedly or continuously in connection
with collection of or attempt to collect debt. See: Collection Consultants,
Inc. v. State (Cr.App.1977) 556 S.W.2nd 787, appeal dismissed 98 S.Ct. 2228,
436 U.S. 901, 56 L.Ed.2nd 399, rehearing denied 98 S.Ct. 3127, 438 U.S. 908,
57 L.Ed.2d 1150.
Art. 5069-11.04. Unfair or unconscionable means
No debt collector may collect or attempt to collect debts or obtain information
concerning a consumer by any fraudulent, deceptive, or misleading representations
which employ the following practices:
(a) seeking or obtaining any written statement or acknowledgment in any form
that specifies that a consumers obligation is one incurred for necessaries
of life where the obligation was not in fact incurred for such necessaries;
(b) collecting or attempting to collect any interest or other charge, fee,
or expense incidental to the obligation unless such interest or incidental
fee, charge, or expenses is expressly authorized by the agreement creating
the obligation or legally chargeable to the consumer. However, creditors
may charge reasonable reinstatement fees as consideration for renewal or
a real estate loan or contract of sale, after default, if the additional
fees are included in a written contract executed at the time of renewal.
Art. 5069-11.05. Fraudulent, deceptive, or misleading representations
No debt collector may collect or attempt to collect debts or obtain information
concerning a consumer by fraudulent, deceptive, or misleading representations
which employ the following practices:
(a) using any name while engaged in the collection of debts other than the
true business or professional name or the true personal or legal name of
the debts collector; or, if engaged in the collection of a credit card debt,
the name appearing on the face of the credit card; or failing to maintain
a list of all business or professional names known to be used or formerly
used by individual persons collecting debts or attempting to collect debts
for the debt collector;
(b) falsely representing that the debt collector has information in his
possession or something of value for the consumer in order to solicit or
discover information about the consumer,
(c) failing to clearly disclose, in any communication with the debtor, the
name of the person to whom the debt has been assigned or is owed at the time
of making any demand for money (provided, however, this subsection shall
not apply to person servicing or collecting real estate first lien mortgage
loans or credit card debts);
(d) failing to clearly disclose, in any communication with the debtor, that
the debt collector is attempting to collect a debt, unless such communication
is for the purpose of discovering the whereabouts of the debtor.
(e) using any written communication which fails to clearly indicate the name
of the debt collector and the debt collectors street address, or post
office box and telephone number, when the written notice refers to an alleged
delinquent debt; (the foregoing shall not require disclosure of names and
addresses of employees of debt collectors);
(f) using any written communication which demands a response to a place other
than the debt collectors or creditors street address or post
office box; (the forgoing shall not require response to the address of an
employee of a debt collector);
(g) misrepresenting the character, extent, or amount of a debt against a
consumer, or misrepresenting its status in any judicial or governmental
(h) falsely representing that any debt collector is vouched for, bonded by,
affiliated with, or an instrumentality, agent, or official of this state
or any agency of federal, state, or local government;
(i) using, distributing, or selling any written communication which simulates
or falsely represents to be a document authorized, issued, or approved by
a court, an official, a governmental agency, or any other legally constituted
or authorized governmental authority, or which creates a false impression
about its source, authorization, or approval; or using any seal or insignia
or design which simulates that of any governmental agency;
(j) representing that a debt may be increased by addition of attorneys
fees, investigation fees, service fees, or other charges when there is no
written contract or statue authorizing such additional fees or charges.
(k) representing that a debt will definitely be increased by additional
attorneys fees, investigation fees, service fees, or other charges
when the award of such fee or charge is discretionary by a court of law.
(l) falsely representing the status or true nature of the services rendered
by the debt collector or his business.
(m) using any written communication which violates or fails to conform to
the United States postal laws and regulations;
(n) using any communication which purports to from any attorney or law firm,
when in fact it is not;
(o) representing that a debt is being collected by an attorney when it is
(p) representing that a debt is being collected by an independent, bona fide
organization engaged in the business of collecting past due accounts when
the debt is being collected by a subterfuge organization under the control
and direction of the person to whom the debt is owed; however, nothing herein
shall prohibit a creditor from owning or operating its own bona fide debt
See the Deceptive Trade Practices-Consumer Protection Act, below, see V.T.C.A.
Bus. & C. § 17.41 et seq. See Chapter 36 of the Business and Commerce
Code (Vernons Annotated Texas Statutes.) Subsection (e) was amended
as such: This subsection applies only to written notices which refer to a
All such written communication must clearly bear the name of the Debt Collector
and the Debt Collectors Street address, or if a Post Office Box Address
is used, then the Debt Collectors Telephone number must be included
in the return address. A debt collector, if collecting a credit card debt,
may use the name of the credit card issuer. As do all sections of this Act,
this subsection applies to both Debt Collection Agencies, Attorneys
collecting debts, and Credit Grantors. The law does not specify where such
name street address, or post office box and telephone number must be place
in a written communication. Therefore, such name, street address, or post
office box and telephone number does not have to be placed on the envelope
if such information is on a collection notice or letterhead. This section
does not apply to credit card debts as there are times when these debts are
transferred to other parties (TCPA 1995 Amendment effective September 1st,
Art. 5069-11.06. Deceptive use of credit bureau name
No person shall use the term "credit bureau," "retail merchants," or "retail
merchants association" in his business or trade name unless such person is
in fact engaged in gathering, recording, and disseminating favorable as well
as unfavorable information relative to credit worthiness, financial
responsibility, paying habits and other similar information regarding
individuals, firms, corporations and any other legal entity being considered
for credit extension so that a prospective
creditor may be able to make a sound decision in extension of credit. This
paragraph shall not apply to any nonprofit retail trade association consisting
of individual members and qualify as bona fide business league as defined
by the United States Internal Revenue Service, and which nonprofit retail
trade association does not engage in business of debt collection or credit
Art. 5069-11.07. Use of independent debt collectors
No creditor may use any independent debt collector who repeatedly and
continuously engages in acts or practices which are prohibited by this Act
after the creditor has actual knowledge that an independent debt collector
is in fact repeatedly and continuously engaging in such acts or practices.
Art. 5069-11.07A. Correction of third-party debt collectors files;
(a) If an individual disputes the accuracy of an item in a third-party debt
collectors file on the individual, the individual may give notice of
the inaccuracy in writing to the third-party debt collector. The third-party
debt collector shall provide forms for the notice and shall assist an individual
in preparing the notice when requested.
(b) Within 30 days after the date on which a notice of inaccuracy is received,
the third-party debt collector shall send a written statement to the individual
in which the third-party debt collector shall deny the inaccuracy, admit
the inaccuracy, or state that it has not had sufficient time to complete
(c) If the third-party debt collector admits that the item is inaccurate,
it shall within five business days correct the item in its file and shall
immediately send to each person who has previously received a report from
the third-party debt collector containing the inaccurate information notice
of the inaccuracy and a copy of the accurate report.
(d) If the third-party debt collector states that it has not had sufficient
time to complete its investigation, it shall immediately change the item
in its file as requested by the individual, shall immediately send to each
person who previously received the report containing the information a notice
that is equivalent to a notice under Subsection (c) of this section and a
copy of the changed report and shall immediately cease collection efforts
if the item involves a debt. When the third-party debt collector completes
its investigation and determines whether the item is accurate or inaccurate,
it shall inform the individual of its determination. If the third-party debt
collector determines that the information was accurate, it may again report
that information and may resume its collection efforts.
(e) A third-party debt collector may not engage in debt collection unless
the third-party debt collector entity, whether a sole proprietorship, firm,
partnership, or corporation, has obtained a surety bond issued by a surety
company authorized to do business in this state as required by this section.
A copy of the bond must be filed with the secretary of state.
(f) The surety bond must be in favor of: (1) any person who is damaged by
a violation of this Act; and (2) the state, for the benefit of any person
who is damaged by a violation of this Act.
(g) A person claiming against the bond for a violation of this Act may maintain
an action against the third-party debt collector and against the surety.
The aggregate liability of surety to all persons damaged by a violation of
this Act may not exceed the amount of the surety bond.
(h) The bond must be in the amount of $10,000.00
(i) For purposes of this section, "third-party debt collector" means a debt
collector, as defined by 15 U.S.C. section 1692a(6), other than an attorney
at law collecting a debt as an attorney on behalf of and in the name of a
client, unless the attorney has nonattorney employees who are regularly engaged
to solicit debts for collection or who regularly make contact with debtors
for the purpose of collection or adjustment of the debt.
(j) The provisions of this section apply to any person who for compensation
gathers, records, or disseminates information relative to the creditworthiness,
financial responsibility, and paying habits and similar information, regarding
any person, for the purpose of furnishing such information to any other person.
Summary of Dispute Process
Disputed consumer accounts fall under the Texas Debt Collection Practices
Act Art 5069-11.07a-.
If an individual disputes the accuracy of an item, the creditor, debt collector,
or attorney attempting to collect a debt should give written notice to the
consumer that acknowledging the dispute, and explain to the consumer that
collection efforts have ceased on any disputed portion of the alleged debt,
and furthermore advise the consumer that the claim is being investigated.
The debt collector should provide forms for the notice and assist the consumer
when requested to do so. Within thirty (30) days after the dispute is received,
the collector must send the consumer a written statement:
1. Denying the accuracy of the debt or,
2. Admitting the accuracy of the debt or,
3. Stating the collector has not had enough time to complete the investigation.
If the dispute is found to accurate, within five (5) days the collector must
correct the item in its file and correct the consumers credit bureau report
(if applicable) and notify the creditor of such (if applicable.)
If the dispute was being investigated and the claim was latter found to be
inaccurate, the collector should send a notice to the consumer "Denying the
accuracy of the debt," close the account, and within five (5) days the collector
must correct the item in its file and correct the consumers credit bureau
report (if applicable) and notify the creditor of such (if applicable.)
Art. 5069-11.08. Bona fide error
No person shall be guilty of a violation of this Act in the action complained
of resulted from a bona fide error notwithstanding the use of reasonable
procedures adopted to avoid such error.
Notes of Decisions
Under this article, reasonable procedures must be adopted to avoid error
before a bona fide error will be excused. See example: Central Adjustment
Bureau, Inc. v. Gonzales (Civ.App.1975) 528 S.W.2nd 314.
Art. 5069-11.09. Penalties
Any person who violates a provision of the Act is guilty of a misdemeanor,
and upon conviction is punishable by a fine of not less than $100.00 nor
more than $500.00 for each violation. Such misdemeanor charge must be filed
within one year of the date of the alleged violation.
Comments: The statute of limitations for criminal charges under this Section
is one year.
Art. 5069-11.10. Civil remedies
(a) Any person may seek injunctive relief to prevent or restrain a violation
of this Act and any person may maintain an action for actual damages sustained
as a result of a violation of this Act. A person who successfully maintains
such action shall be awarded attorneys fees reasonable in relation
to the amount of work expended and costs. On a finding by the court that
an action under this section was brought in bad faith or for purposes of
harassment, the court shall award to the defendant attorneys fees
reasonable in relation to the work expended and costs.
(b) When the attorney general has reason to believe that a person is violating
or is about to violate a provision of this Act, the attorney general may
bring an action in the name of the state against the person to restrain or
enjoin the person from violating this Act.
(c) A person who successfully maintains an action under this article for
violation of Article 11.02 (c) or 11.07A of this act shall be awarded at
least $100. for each violation of this Act. Subsec. (c) added by Acts 1993,
73rd leg., ch. 813, § 2, eff. Sept. 1 1993.
Presumptions and burden of Proof
A party seeking to recover damages under this chapter is not required to
show intent on part of wrongdoer, but merely that harm incurred was a reasonable
foreseeable result of wrongdoers conduct. Case example: Brown v. Oaklawn
Bank (Sup.1986) 718 S.W.2nd 678.
Important Comment for Alleged Debtors
Subsection (a), Any person who is damaged as a result . . . This last portion
allows a Debt Collectors to recover their attorneys fees and costs
when the debt collector is a victim of a lawsuit not filed in good faith
or for purposes of harassment also. This limits the application of a minimum
recovery of $100.00 per violation to violation of Article 11.02(c) and 11.07A
of this Act.
Notes of Decisions
1. Attorney fees
This article, authorizing award of attorney fees reasonable in relation
to amount of work expended and cost to person who successfully maintains
action for actual damages, would authorize recovery of reasonable
attorneys fees for all work expended, including that on appeal, if
such should be necessary in suit under debt collection act. See: Central
Adjustment Bureau, Inc. v. Gonzalez (Civ.App.1975) 528 S.W.2nd 314. In action
against debt collection company to recover damages for unreasonable collection
effort, in which debt collection company failed to submit definition or
explanatory instruction with respect to proper elements jury could consider
in awarding actual damages, omission of such instruction by court did not
constitute reversible error. See example: Ledisco Financial Services, Inc.
v. Viracola (Civ.App.1976) 533 S.W.2nd 951Id.
Art. 5069-11.11. Other remedies
(a) A violation of any provision of this Act by any person is a Deceptive
trade practice in addition to those practices delineated in Chapter 17,
Subchapter E, Business & Commerce Code (2), and is actionable pursuant
to said subchapter. As such, the venue provision and all remedies available
in said subchapter apply to and are cumulative of the remedies in this Act.
(b) None of the provisions of this Act shall effect or alter any remedies
at law or in equity otherwise available to debtors, creditors, governmental
entities, or any other legal entity.
Subsection (a) Because violations of the TCPA sound in misrepresentation
or deception, a violation of the Act is considered a deceptive trade practice
under the Deceptive Trade Practices Act. A person suing for a violation of
the Act may also sue under the Deceptive Trade Practices Act.
Section 17.50(b) allows a successful consumer "two times the actual damages
that does not exceed $1,000" and if the jury/judge finds that the Debt Collector
acted knowingly, "three times the amount of actual damages in excess of $1,000."
Award of $69,447.35 exemplary damages for unreasonable collection efforts
by credit company employees in attempt to collect debt of $158 was not excessive
where credit company acted through its employees with malice. See: Credit
Plan Corp. of Houston v. Gentry (Civ.App.1974) 516 S.W.2nd 471, reversed
on other grounds 528 S.W.2nd 471, Reversed on other grounds 528 S.W.2nd 571.
Award of $5,000 past and $5,000 future mental anguish for unreasonable collection
efforts to wife, whose husband suffered heart attack and subsequent illness
and possible permanent inability to work, was not excessive where there was
jury finding of misconduct constituting willful and wanton disregard of
wifes well-being on part of credit company and its employees. Id. See:
Ledisco Financial Services, Inc. v. Viracola (Civ.App.1976) 533 S.W.2nd 951.
Collection agency can be liable for usury penalties, even though it was not
party to original loan transaction. See: Lupo v. Equity Collection Service
(App. 1 Dist. 1991) 808 S.W.2nd 122. Collection agencys attempt to
collect twice the authorized interest made agency liable to borrower for
statutory penalties. See: Lupo v. Equity Collection Service (App. 1 Dist.1991)
808 S.W..2nd 122.
Art. 5069-11.12. Report to consumer
A credit bureau shall, upon request, provide to any person in its registry
a copy of all information contained in its files concerning such person.
This copy must be provided to the consumer within 45 days of request. Added
by Acts 1993 73rd Leg., ch.813, § 3, eff. Sept. 1, 1993.
1. The term "debt collector" means any person who uses any instrumentality
of interstate commerce or the mails in any business the principal purpose
of which is the collection of any debts, or who regularly collects or attempts
to collect, directly or indirectly, debts owed or due or asserted to be owed
or due another. Notwithstanding the exclusion provided by clause (F) of the
last sentence of this paragraph, the term includes any creditor who, in the
process of collecting his own debts, uses any name other than his own which
would indicate that a third person is collecting or attempting to collect
such debts. For the purpose of section 1692 (6) of this title, such term
also includes any person who uses any instrumentality of interstate commerce
of the mails in any business the principal purpose of which is the enforcement
of security interests. The term does not include:
(a) any officer or employee of a creditor while, in the name of the creditor,
collection debts for such creditor;
(b) any person while acting as a debt collector for another person, both
of whom are related by common ownership or affiliated by corporate control.
if the person acting as a debt collector does so only for persons to whom
it is so related or affiliated and if the principal business of such person
is not the collection of debts;
(c) any officer or employee of the United States or any State to the extent
that collection or attempting to collect any debt is in the performance of
his official duties;
(d) any person while serving or attempting to serve legal process on any
other person in connection with the judicial enforcement of any debt;
(e) any nonprofit organization which, at the request of consumers, performs
bona fide consumer credit counseling and assists consumers in the liquidation
of their debts by receiving payments from such consumers and distributing
such amounts to creditors, and
(f) any person collecting or attempting to collect any debt owed or due or
asserted to be owed or due another to the extent such activity (i) is incidental
to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii)
concerns a debt which was originated by such person; (iii) concerns a debt
which was not in default at the time it was obtained by such person or
(g) (iv) concerns a debt obtained by such person as a secured party in a
commercial credit transaction involving the creditor.
2. The 1983 amendment added subd. (a) and designated the former second paragraph
as subd. (b)
Burden Of Proof
Community Property, Joint Liability.
Joint Obligation Joint Management of Household,
Under Texas law it is presumed that all acquisitions made during a marriage
are community property. The burden of proof that such property is "separate
property" is on the debtor. In Texas community property is subject to the
husbands sole management. Sec. 5.02 of The Texas Family Code (Marital Liability)
and in The Texas Constitution and Judicial decisions the party trying to
prove "separate property" needs to essentially prove it is not joint property.
Evidence considered helpful is a pre-marital prenuptial agreement, a court
approved interlocutory agreement, segregated funds (demonstrate the separateness
of funds,) and showing proof of separate control of household management.
Another way to prove non-obligation is if the creditor agreed to look solely
to a separate estate of the contracting party for satisfaction of the debt.
Joint Banking, Joint Income Tax Filings, Joint and Several Liability Contracts,
and Joint Charge Accounts are thing that are considered. The Texas Family
Code Sec 4.031 states: unless a spouse is acting as the agent for the other,
the other (spouse) is not personally liable for such contact. A spouse does
not act as an agent for the other spouse, solely because of the marriage
relationship, [Sec 4.031 (c).]
"Non Obstante Veredicto" a judgment against a spouse of an alleged debtor
who made a note with another party against the other spouses will and
consent. Because to note was executed during a marriage judgment was sought
against both parties. It was overturned by the Court of Appeals because the
spouse did not impliedly assent to the establishment of the debt.