The Fair Debt Collection Practices Act: Shielding Consumers from Abuse

By on | General Debt & Loan Consolidation Information.

Along with the Fair Credit Reporting Act, the Fair Debt Collection Practices Act (FDCPA) forms the cornerstone for consumer credit protection in the United States. Its objectives are as follows: 1) to prohibit collection agencies from utilizing abusive debt collection methods, 2) to provide debtors with remedies as well as a mechanism for disputing the alleged debt in order to ensure the accuracy of debt information, and 3) to guarantee fair debt collection. While the Fair Debt Collection Practices Act does not relieve consumers of their duty to repay debts, it grants them rights vis-a-vis creditors and bill collectors. The federal law applies to consumer debt, which encompasses debts incurred through loans, first and second mortgages, or credit cards as well as household, family, and personal debts. Individuals who have defaulted on their payments or have errors on their credit report that cast them as delinquent are potential targets of debt collectors. The Act governs the conduct of debt collectors, or individuals who regularly conduct debt collection activities.

Pursuant to the FDCPA, debt collectors must act fairly and ethically as well as refrain from undue harassment and illegal collection tactics. They must make their identity known to the debtor and state the lender’s name and the amount of the debt. Debt collectors may not engage in the following practices:

1. Abuse or harassment

The Fair Debt Collection Practices Act allows collectors to contact consumers via mail, fax, or telephone. However, debt collection must be free of oppression, abuse, and harassment. For instance, debt collectors may not:

contact debtors at unreasonable times, that is before 8:00 a.m. or after 9 p.m. unless consented to by the latter make repeated phone calls threaten harm or violence; or mail correspondence which appears to have been sent from a court of law

2. False or misleading representations

It is unlawful for debt collectors to employ false or misleading statements in the course of collecting a debt. Some of the prohibited conduct in this category includes the following:

False representations by debt collectors that they work for credit reporting agencies or operate one False information about the debtor to third parties Misrepresentation concerning the amount of the debt False implication by the debt collector that he or she works for the government or is an attorney Threat to arrest the debtor if he or she fails to repay the sum owed Statement that the debtor’s wages or property will be seized or garnished unless the lender or debt collection agency plans to take such action and it is legally-justified Statement that the debtor will be sued when such an action would be illegal or when there is no intention to do so on the part of the collector; or Threat to bring criminal charges against the debtor

If a debt collection agency does in fact intend to report the consumer’s debt to a credit reporting agency or his or her case to a lawyer, a debt collector can make such a statement. What the law prohibits is a fabricated threat aimed at intimidating a debtor into making payments.

3. Unfair practices

The Fair Debt Collection Practices Act requires debt collectors to steer clear of unfair practices. Examples include:

Seizing or threatening to repossess debtor’s property unless the law permits it Collecting an amount exceeding the consumer’s debt, unless permitted under state law Menacing to publish or publishing debtor’s name in reference to non-payment of debt (except to a credit bureau); or Threatening to seize debtor’s property, unless the collection agency or lender can do so by legal means

If the debtor has legal counsel and asks the debt collector to address all inquiries to his or her attorney, the debt collector must cease all contact with the debtor. If the debtor is not represented by an attorney, thus barring an opportunity for the debt collector to enter into debt negotiation with the latter, the debt collector is allowed to contact third parties. However, he or she may only inquire about the debtor’s phone number, place of employment, or domicile. Under the Act, debt collectors may only communicate once with third parties (i.e. employers, relatives, neighbors). Within five days of their initial communication with the consumer, debt collectors must provide written notification of 1) the amount owed, 2) the creditor’s name, and 3) the debtor’s right to dispute the amount due partially or in its entirety if he or she claims the debt to be lacking in legitimacy. If within 30 days after being notified of the debt in writing, the debtor informs the collector in writing that he or she does not owe money; the latter must cease all contact with the debtor, except to inform him or her that it intends to take action. The debt collector may proceed with the collection if the consumer is furnished written evidence of the debt such as copies of bills for the sum owed.

Finally, the Fair Debt Collection Practices Act provides a legal remedy to wronged debtors, who can sue the collection agency in federal or state court within one year from the violation’s inception. Debt help is also available through the Federal Trade Commission and the state Attorney General’s Office, which may assist consumers with any issues involving debt collectors.