Texas Collection Law Applies To FCUs, Even Out of State

ALEXANDRIA, Va.-Federal credit unions located outside Texas, but having members residing in that state, must comply with the Texas Debt Collection Act. NCUA does not want to preempt state laws regarding portions of credit transactions primarily governed by federal laws other than the Federal Credit Union Act, according to Associate General Counsel Sheila Albin in a recent legal opinion letter (03-0905). Kirtland Federal Credit Union in Albuquerque, N.M. made the inquiry of NCUA’s Office of General Counsel. The Federal Debt Collection Practices Act permits state regulation in the area, Albin pointed out. The FDCPA “provides that state efforts to regulate debt collection practices will not be considered inconsistent, for preemption purposes, if the differences in the state law provide relatively greater protection to the consumer. Id. We believe the TDCA meets this standard,” she wrote. She added that the agency had consulted with the Federal Trade Commission, which agreed with NCUA’s assessment. However, NCUA does retain the exclusive right to examination and enforcement jurisdiction over federal credit unions and a state official asserting a claim against a federal credit union must refer the matter to the appropriate NCUA regional office. The TDCA explains how creditors may collect past due debts. It was recently amended to require that creditors notify the borrower in the initial collection communication that there is an attempt being made to collect the debt. The borrower must also be informed that information obtained from the borrower is being used for that purpose and the creditor must assure in future communications that the borrower understands the communication is coming from a debt collector.