WASHINGTON, D.C. -

The Federal Trade Commission recently finalized a policy statement clarifying that the agency will not take enforcement action under the Fair Debt Collection Practices Act or the FTC Act against companies that are attempting to collect the debts of deceased consumers.

Officials said the decision is effective only if collection companies communicate with someone who is authorized to pay debts from the estate of the deceased.

FTC added its policy statement also emphasizes that debt collectors may not mislead relatives to believe that they are personally liable for a deceased consumer’s debts, or use other deceptive or abusive tactics.

The enforcement of FTC’s policy became effective Monday after commissioners previously voted unanimously for approval.

The clarification comes because officials explained family members typically are not obligated to pay the debts of a deceased relative from their own assets. They noted the FDCPA limits the individuals debt collectors may contact after a loved one has died to people such as the deceased person’s spouse and the executor or administrator of the deceased person’s estate.

“Since the FDCPA was enacted in 1977, state probate laws have changed, and now, less formal procedures often govern the appointment or selection of those who are responsible for the disposition of the estate,” officials acknowledged.

“In many instances, there may be no formal executor or administrator of an estate. In the enforcement policy statement issued, the commission seeks to reconcile the FDCPA’s requirements with current trends in state probate law,” they continued.

In keeping with the FTC’s policy statement, the agency also specified that it will not take law enforcement action under the FDCPA if a debt collector communicates about a deceased person’s debts with that person’s spouse, the executor or administrator of the deceased person’s estate, or anyone else who is authorized to pay the debts from assets in the estate.

Other elements of this final policy statement include:

—A description of how debt collectors may communicate with family members and others to locate someone who is authorized to pay the deceased person’s debts from the estate, and specifies that collectors may not mislead individuals into believing that they have the authority to pay the decedent’s debts when they do not.

—Specifics that, in seeking to locate someone who is authorized to pay the deceased person’s debts from the estate, collectors may not reveal or refer to the debts, but may say they wish to discuss payment of the deceased person’s bills.

—Statements that in keeping with the FDCPA’s prohibition on unfair, deceptive, or abusive collection practices, debt collectors may not contact family members and others at unusual or inconvenient times or places.

—Emphasis that, in communicating with someone who is authorized to pay the debts from assets of the deceased person’s estate, collectors must avoid creating the misleading impression that the individual is personally liable or could be required to pay using his or her own assets, or assets held jointly with the deceased person.

The FTC indicated the final policy statement will be published in the Federal Register. The agency reiterated an enforcement policy statement describes the commission’s future enforcement plans, goals and objectives with respect to a particular industry or practice.

FTC officials also pointed enforcement policy statements do not have the force or effect of law, but they may reflect the commission’s interpretation of a legal requirement. The FTC vote approving the final policy statement was 5-0.

Commissioner Julie Brill issued a concurring statement that urged close monitoring and aggressive enforcement to assure that the expanded contact with bereaved families authorized by the policy does not result in abuse by the debt collection industry.

“A consumer in this vulnerable condition may mistakenly identify himself as the person with whom the debt collector should be speaking,” Brill stated.

“The new Bureau of Consumer Financial Protection, created under the Dodd–Frank Wall Street Reform and Consumer Protection Act, will have an important role in this area as well,” Brill continued.

“Dodd-Frank grants the new Bureau of Consumer Financial Protection the authority to promulgate regulations under the FDCPA, an authority that the Federal Trade Commission has not possessed,” she went on to say.

“In the event that the Commission finds that the debt collection industry is not adequately adhering to the limited inquiries allowed under this policy statement, I hope my fellow commissioners and staff will work closely with the new bureau to further develop appropriate rules to be applied to the collection of the debts of decedents,” Brill added.

The FTC has information for consumers about what to do when a loved one dies and debt collectors are calling. To learn more, visit: Paying the Debts of a Deceased Relative: Who Is Responsible?