What is the Fair Debt Collection Practices Act & What is it for?

Did you know that there are laws that govern debt collection practices? One such law is the Fair Debt Collection Practices Act (FDCPA). This federal law limits the actions of debt collectors when attempting to collect certain types of debt.

It protects debtors from predatory debt collection practices by prohibiting third-party collection agencies from harassing, threatening, and inappropriately contacting someone who owes money. It also protects reputable debt collection agencies from unfair competition.

What is the Fair Debt Collection Practices Act (FDCPA)?

The FDCPA became effective in 1978 and is a federal law designed to eliminate abusive, deceptive, and unfair debt collection practices.

It governs the actions of third-party debt collectors who attempt to collect consumer debts on behalf of another person, entity, or institution. Under the FDCPA, debt collectors can include collection agencies, debt buyers, and lawyers.

The FDCPA only covers the collection of debts taken for personal, family, or household purposes, including credit cards, home/auto loans, retail refinancing, and medical bills. It doesn’t apply to collecting corporate or business debts or debt owed for agricultural purposes.

If a collector violates the FDCPA, the aggrieved party can sue the company and the individual debt collector for damages and attorney fees.

How does the FDCPA work?

The FDCPA provides a structure within which debt collectors can work to ensure fair and nonaggressive debt collection processes. Some of the areas covered by this law include:

• Communication in connection with debt collection: The FDCPA provides the guidelines for when, where, and with whom contact (third parties) about debt is permitted.

For example, it prohibits debt collectors from communicating with a consumer at any unusual time, typically before 8.00 am or after 9.00 pm within the consumer’s time zone. Or at an inconvenient place for the consumers, such as their place of work, unless the consumer or a court of competent jurisdiction permits such contact.

Also, suppose the debt collector knows that the consumer has retained the services of a lawyer. In that case, the law states that all contacts much be made through the lawyer unless they are unresponsive or agree to allow direct communication with the debtor.

Collectors are prohibited from contacting friends, family members, neighbors, or other third parties except to ask for help locating the debtor. They also can’t publish lists of consumers who haven’t paid debts, including on social media.

If a debtor communicates in writing, requesting the collector to cease all further communication, the collector must cease further communication. The collector then can seek payment through a lawsuit. Suppose the debt collector communicates using an email address, telephone text number, or other electronic media. In that case, they must offer consumers a reasonable and straightforward method to opt-out.

• Validation of debt: According to the Fair Debt Collection Practices Act, a debt collector must provide a debtor with certain basic information in the initial communication as proof that the debt is due. These include the amount of debt, the name of the creditor, and instructions on how to repay the debt.
• Prohibited practices: The FDCPA states that in collecting debt, a collector should not harass, oppress, or abuse any person. Specifically, it prohibits collectors from using or threatening violence to cause harm to the physical person, their reputation, or property. It also denies using obscene language or repeatedly calling debtors to annoy, abuse or harass.

 The FDCPA prohibits agencies from using false, deceptive, or misleading representations. For example, it prohibits collectors from falsely representing the debt’s character, amount, or legal status. Also, falsely identify themselves as credit reporting agency representatives, attorneys, or government representatives.

Unfair practices such as collecting interest or fees not authorized by the original debt agreement or permitted by law are also prohibited. Or collectors soliciting postdated checks or other postdated payment instruments, depositing or threatening to deposit postdated payment instruments, causing communications charges, or taking or threatening to repossess property when the creditor has no enforceable right to do so.

The bottom line

Debtors are responsible for paying off the money they owe. However, they also have rights, including being free from threats or harassment during the collection process.

The law is clear, but many collectors don’t follow the rules. Thus, before you choose to work with a debt collection agency, do your research to ensure that the one you choose understands and abides by the rules and regulations set out by the Fair Debt Collection Practices Act.