The banking industry is urging the federal appeals court in New York to overturn a decision that makes it tougher for lenders to collect debts.

At issue is the Fair Debt Collection Practices Act, which is intended to prevent creditors from using strong-arm tactics to persuade people to pay their bills.

One provision in the act bars creditors from sending out letters that purport to be from a lawyer but are really from the debt collector.

The rationale for the provision is that letters from lawyers are considered particularly threatening and therefore should be regulated more closely.

Banks often hire lawyers to send out letters as a last-ditch effort to avoid suing debtors in default. The letters urge the debtors to pay their bills or work out repayment plans.

For this task, Citicorp Retail Services Inc. hired Maria I. Moir, a New York-based lawyer who has represented the bank since 1987.

Ms. Moir created a computer program to help her identify which Citicorp borrowers should receive dunning letters. The program reviews the amount of outstanding balances, time past due, and other measurable standards. Citicorp runs this program on its computers and prints out letters demanding repayment on Ms. Moir's letterhead.

One of those letters went to Robin Young, who was in default on her Citicorp-issued Bradlees department store credit card.

The letter informed Ms. Young that her debt had been referred to Ms. Moir's office for collection. It provided Ms. Moir's phone number and address, and said payment could be sent either to her or to Citicorp.

Ms. Young sued Citicorp, arguing that the debt collection act requires a lawyer to personally review a debtor's file before mailing a collection letter.

U.S. District Judge Alan H. Nevas sided with Ms. Young, ruling that the law does not let lawyers use computers to decide which consumers should receive collection letters.

Ms. Young's lawyer, Daniel Edelman of Chicago, did not return calls for comment.

Banking industry officials blasted the ruling, saying it will make it more expensive to collect debts.

"The lower court has now declared efficiency illegal," said Michael F. Crotty, deputy general counsel at the American Bankers Association. "Efficiency holds down costs for those who pay their bills in a timely fashion. This decision benefits only a single person who did not pay her just debts."

"To say a lawyer has to pick up the paper file and read through it is just ignoring practical reality," said Stefan Underhill, a partner in the Stamford, Conn., office of the Day, Berry & Howard law firm, who filed a friend-of-the-court brief on behalf of Fleet Financial Group, People's Bank, and several trade groups. "A computer can do this work faster and more accurately."

In briefs filed with the court, lenders devoted the bulk of their argument to public policy issues.

They said computers are increasingly used by lawyers in all aspects of their practices, and they noted that one company even markets an off-the- shelf product similar to the program that Ms. Moir created.

"There is nothing false, deceptive, or misleading about the use of computer systems to identify accounts for collection and to facilitate collection efforts," the groups wrote. "Where, as here, the attorney chose the factors by which the computer system operate and prepared the letter, the attorney was sufficiently 'meaningfully involved'" to satisfy the law.

Ms. Young's lawyers are to file their brief on Feb. 18. Arguments are expected in April, and an early-summer decision is possible.

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