After graduating from law school and serving time in prison for attempting to collect debts by posing as an FBI agent Barry Sussman theorized that if a debt-collection business collected only debts that it owned as a result of buying checks written on accounts with insufficient funds (NSF checks), it would not be subject to the Federal Debt Collection Practices Act (FDCPA). Check Investors bought more than 2.2 million NSF checks with an estimated face value of $348 million for pennies on the dollar from Telecheck. Telecheck is in the business of guaranteeing checks tendered to pay for consumer transactions. When those checks bounce, Telecheck pays the merchant the full value of the check and them attempts to collect the check from the payor/customer. Check Investors added a fee of $125 or $130 (more than the legal limit in most states) to the face amount of each check and aggressively pursued its drawer to collect. The firms employees were told to accuse drawers of being criminals and to threaten them with arrest and prosecution. The threats were false. Check Investors never took steps to initiate a prosecution. The employees contacted the drawers family members and used saturation phoning phoning a drawer numerous times in a short period. They used abusive language, referring drawers as deadbeats, retards, thieves, and idiots. They left messages on answering machines saying the drawer of the NSF check had to explain to the judge why she stole from the merchant with the fraudulent check and may need to turn herself in to the county sheriffs office. They told another consumer that if she did not pay her children would watch their mother being taken away in handcuffs. They sent collection letters purporting to be from Charles T. Hutchins, a lawyer and a defendant in the case, in which he stated he represented a client who was considering criminal or civil action for the bounced check. Hutchins did not actually send or sign the letters and had no idea how many letters were sent out purporting to be from him. Employees of Check Investors told one consumer who allegedly wrote an NSF check for $14.70 that she would be sitting in jail unless she immediately paid $144.70 (the amount of the original check plus Check Investors' additional fee of $130). Faced with the threat, the consumer paid the full amount demanded. Between January 2000 and January 2003, Check Investors netted more than $10.2 million from its Efforts. The FDCPA defines a debt as any

obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject to the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

T/F with explanation 1. Individuals who write checks knowing there is insufficient funds in their checking accounts to pay the check are entitled to the protections of FDCPA. 2. Check Investors acquisition of the NSF checks after payment of the checks was denied qualifies as a consumer transaction and hence its collection of the NSF check is covered by FDCPA. 3. Consumers who acquire goods by writing NSF checks commit criminal misconduct (all 50 states criminalize the act of writing a check knowing that it will be dishonored) and tortious conduct (conversion); nonetheless, such conduct qualifies as a consumer transaction. 4. The inclusion of the Hutchins letter in which he stated he represented a client who was considering criminal or civil action for the bounced check is permissible under FDCPA. 5. Because Check Investors bought the NSF checks from Telecheck, Check Investors is the actual owner of those checks and is therefore qualifies as a creditor whose collection activities (threats of arrest and prosecution, saturation phoning, contacting family members, and abusive language) do not violate the FDCPA