What is a “Legal Department”?  Must it have lawyers? Can a finance company call its collection employees who perform quasi-legal functions its “Legal Department”?  The Federal Trade Commission (“FTC”) says maybe not. The FTC recently sued RTB Enterprises, Inc., and its principal, for improper debt collection practices, one of which included using legal-sounding terms that left consumers with the impression that the communication was from or on behalf of an attorney, such as “breach of contract,” “affidavit signed against you,” and “due to the legal nature” of the call. Moreover, the FTC alleged that RTB did not have a Litigation Department or a Pre-Litigation Department that included attorneys, nor did it employ collectors who worked with or referred matters to attorneys.

In its Official Staff Commentary to the Fair Debt Collection Practices Act (“FDCPA”), the FTC stated that “[a] debt collector may not send a collection letter from a ‘Pre-Legal Department,’ where no legal department exists.”  Statements of General Policy or Interpretation: Staff Commentary on the FDCPA, 53 Fed. Reg. 50097-02, 50105 (Dec. 13, 1988).  At least two circuit court cases provide support for interpreting a debt collector’s use of the term “Legal Department” to suggest to a least sophisticated consumer that a department exists with licensed attorneys.  Rosenau v. Unifund Corp., 539 F.3d 218, 223 (3d Cir. 2008) (“a debtor receiving a [] letter [from a debt collector using the heading ‘Unifund Legal Department’] could reasonably infer that the Legal Department contains attorneys who played a role in writing or sending the letter”); LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir. 2010); see also In re Belile, 209 B.R. 658 (Bankr. E.D. Pa. 1997) (The evidence of record established that the defendant’s legal department did not employ anyone licensed to practice law and was therefore incapable of seeking a civil judgment.  Because the defendant had no legal department capable of filing suit, the defendant had made a false representation); but see Ostrander v. Accelerated Receivables, 2009 WL 909646, at *6 (W.D.N.Y Mar. 31, 2009) (“Even applying the ‘least sophisticated consumer’ standard, it cannot be said that by simply stating that she worked in the ‘legal department,’ defendant . . . gave a ‘false representation or implication’ that she was an attorney at law or that the communication was from an attorney, in violation of 15 U.S.C. § 1692e(3).”).

Caution should be exercised when using the term “Legal Department,” or any permutation of the term, when referring to a group of non-attorney collection employees performing quasi-legal functions.

For more information about the FDCPA, please contact Scott J. Hyman at