How the Fair Debt Collection Practices Act Protects Debtors

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The Fair Debt Collection Practices Act has been around in different forms for several decades, but is rarely well-known by the average consumer. While I won’t be covering each and every piece of information in the document, I do want to summarize some of the key sections.

If you are currently struggling with debt and have fallen behind, there is a large chance you are dealing with collectors on a regular basis. In this situation, it is vitally important that you have a firm grasp on your rights. Violations of these rights occur on a daily basis, fueled by the lack of knowledge from the average consumer.

I’m Current On My Debt. Why Should I Care?

Even if you aren’t struggling with debt, I’d be willing to bet there is someone in your life who is. Nothing gets my blood boiling more than stories about debt collectors taking advantage of people in desperate financial situations. If someone you care about finds themselves in this situation, you will be glad you have the information to help them!

Don’t get me wrong, I know for a fact that not all debt collectors are bad people. But like many groups, a few “bad apples” are causing the entire industry to spiral out of control. Ultimately, consumers should take responsibility in fulfilling obligations they knowingly enter into and receive benefit from. However, they should be able to do this without being subject to harassment or abuse.

Disclaimer: The information provided below is a general summary and should not be mistaken for a definitive list. If you feel like you have been the victim of harassment of any kind, please contact a local professional who can review the specifics of your situation. Any quoted text references this full-length PDF, which is publicly provided by the FTC.

To start, let’s take a look at Congress’ own reasons for addressing this issue.

They’ve outlined it remarkably well in the early parts of the act:

§ 802. Congressional findings and declaration of purpose

  1. There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
  2. Existing laws and procedures for redressing these injuries are inadequate to protect consumers.
  3. Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.

I couldn’t agree more!

Now, onto some of the specifics…

How a collector should act when talking to anyone other than the person that actually owes the debt.

A collector should:

  • Identify themselves, but not their employer unless specifically asked.
  • Reasonably attempt to speak only with an attorney, once they are informed that the consumer is represented by an attorney.

A collector should NOT:

  • Ever state that the consumer owes any debt.
  • Contact a person more than once after receiving complete and accurate information.
  • Communicate by post card.
  • Send mail which indicates, on the outside of the envelope, that it is about the collection of a debt.

How a collector should act when talking to anyone other than the person that actually owes the debt.

A collector should:

  • Cease contact upon being informed that the consumer refuses to pay the debt or wishes to not be contacted further. Afterwords, the collector should only contact the consumer to:
    • Acknowledge that further collection efforts will be terminated.
    • Inform the consumer of all potential remedies.
    • Notify the consumer that a specific remedy has been initiated (pending lawsuit, etc…).

A collector should NOT:

  • Contact a consumer at a time which is a known (or should be a known) inconvenience. By default they should not contact the consumer before 8 a.m. or after 9 p.m. local time (of consumer).
  • Contact consumers at their place of employment, after being informed that it is not permitted by the employer.

List of prohibited practices that are considered harassment and/or abuse.

A collector should NOT:

  • Use or threaten violence or any other criminal activity.
  • Use obscene language with the intent to abuse the consumer.
  • Publish a private list of consumers who refuse to pay debts.
  • Leverage the sale of a debt in order to coerce payment.
  • Repeatedly or continuously call, regardless of whether the consumer answers, with the intent to annoy.
  • Engage in a telephone call without disclosing their identity.

List of prohibited practices that are considered false, deceptive, or misleading.

A collector should:

  • Properly disclose that the collector is attempting to collect a debt.
  • Immediately classify and continue to report a disputed debt as actually “disputed.”

A collector should NOT:

  • Falsely claim to be “vouched for, bonded by, or affiliated with the United States or any State.”
  • Falsely represent the “character, amount, or legal status of any debt.”
  • Falsely represent any compensation for the collection of a debt.
  • Falsely claim to be an attorney or that any communication is from an attorney.
  • Claim that nonpayment will lead to arrest or that any property will be seized unless the collector:
    • Can lawfully claim seizure of said property.
    • Intends to actually take that action.
  • Threaten any action that is not legal or that they do not intend to actually do.
  • Falsely claim that an impending sale of the debt could cause future harassment from another entity.
  • Disgrace the consumer by claiming that the debt was a result of a crime.
  • Threaten to communicate false credit information to a third party.
  • Falsely representing a document as approved by any court or government entity.
  • Use any fake business or company name.
  • Falsely claim to be associated with a consumer reporting agency.

List of additional prohibited practices that are considered unfair.

A collector should NOT:

  • Increase the amount of the original debt by adding their own interest, fees, or expenses, unless the original debt agreement authorizes said fees.
  • Accept a postdated check with the intent of instituting criminal prosecution.
  • Threaten to or actually deposit a postdated check before the date on the payment.
  • Cause a consumer to incur additional charges from communication, such as collect calls or telegram fees, by concealing the purpose of the communication.

Outline of “30 day” notices and initial obligations of the collector.

Within five days after the initial communication, a debt collector should provide the following information:

  • Total amount of the debt.
  • Name of the original creditor.
  • A statement that informs the consumer they have 30 days to dispute the validity of any portion of the debt.
  • A statement that if the consumer disputes within 30 days, the collector will be responsible for providing written verification of the original debt.
  • A statement that that the consumer may request, also within 30 days, the original creditor’s name and address.

If a consumer (a) disputes the validity of any portion of the debt or (b) requests the original creditor’s name and address, the collector should cease collection of the debt until all the information requested is provided.

How collectors should handle single payments by consumers with multiple debts.

A collector should:

  • Attempt to “apply such payments in accordance with consumer’s directions.”

A collector should NOT:

  • Apply any amount to a debt which is being disputed.

In the event of a lawsuit, discusses where a collector should file suit.

A collector should:

  • In the event they wish to enforce interest in real property, bring action in the judicial district where the actual property is located.
  • If no interest in real property, only bring action in the judicial district where:
    • The consumer signed the original debt obligation.
    • The consumer currently resides.

Last, but not least…

No one plans to be in a situation where they are dealing daily with creditors. However, a large number of families find themselves in this situation. By familiarizing ourselves with our rights under the Fair Debt Collection Practices Act, we can minimize the financial hardship exacerbated by irresponsible and abusive collection techniques.

{ 12 comments, please add your thoughts now! }

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12 Responses to “How the Fair Debt Collection Practices Act Protects Debtors”

  1. Thanks for this wealth of information. Unfortunately collectors can get ugly when trying to get their money. I wish this legislation never had to come into being in the first place but it became necessary.

  2. Ryan P Smith says:

    That has a bunch of good information, do you have any suggestions for what consumers should do when a debt collector violates one of these laws?

  3. eric says:

    This is something I learned only when I started following PF blogs a few years ago. I don’t think I would’ve been told otherwise. I just hope I can keep this info in the “good to know” category and not ever have to use it.

  4. Lucy says:

    Thank you for the great summary. Will bookmark this page for personal reference just in case anything comes up in the future.

  5. thomas says:

    scum of the earth – that’s what these people are. Great tips on how to deal with these flesh eaters.

  6. Nice post! A solid review that should be required reading before anyone signs a credit card or loan agreement.

  7. Gary says:

    What should I do now that I have been harrassed by a colector (that poses as a law firm). I want to nail these guys. They are harrassing my wife at work about 10 times per day. They told her “we can do anything we want”. Thanks

  8. Ray says:

    I used to be one of those collector’s (not my proudest moments), when they call ask for the exact spelling of the agents name and the firm name than ask them not call her at her place of employment. It is illegal for them to continue calling ones they are told not to.

    If you want them to stop calling you altogether send in a letter cease communication make sure you keep a record of everything. They have to stop communication with you.

    Record all future calls they are NOT allowed to threaten you and say that they will sue you unless they really will. If it continues contact consumer protection agency in your area and file a complaint. before that I would suggest you call the lender and file an internal complain.

  9. Dawn/FFL says:

    A collector may contact you by phone, mail or in person. However, they can not contact you before 8am or after 9pm. Also, if you let the collector know that your employer does not approve of collection calls they may no longer contact you at work.

    The next step to narrowing down their contact with you is to send a ‘Cease and Desist’ letter. This is done via regular ’snail’ mail and best sent registered mail so you know they received it and have physical proof.

    I have written more about this, based on experience…. the link is with my name… best of luck Gary!

  10. Matt says:

    Like Ray said, you’ll need to tell them not to call and follow that up with a letter. Document every communication with them. Also, make sure to send any communication via certified mail with return receipt.

  11. Damon Day says:

    Hey Jim,

    Great post on this topic. I assist my clients in dealing with these guys pretty much every day.

    A couple of points that I didn’t see. Maybe I missed it. Generally the FDCPA does not apply to the original creditors. It was specifically written for debt collectors which are clearly differentiated from original creditors in the act. So if say a rep from B of A is calling, they are not going to be bound as tightly as a third party debt purchaser.

    Also I saw a comment made about sending a cease communication letter to a collector to get them to stop calling. Consumers should utilize that practice with extreme caution. These days, it can be a highly sensitive issue with the creditor or collector and could actually prompt a lawsuit.

    I think most people would rather ignore phone calls than prompt a lawsuit. So people shouldn’t just blindly fire those off if they are not sure what they are doing.

    Other than that it was a very informative post for people, and the more people can recognize illegal tactics, the more empowered they will become.

    Once you can recognize illegal tactics, you document them, save them until you have a sufficient amount and they you contact a local consumer advocate attorney to take the case. Each violation can be worth up to $1,000 dollars in fines, and remember, they may commit 4 or 5 violations on one phone call.

    One last note, if you have a device that can record phone calls, then that is the best. Check the laws in your state, in some states only one party has to be aware that the call is being recorded. Other states require that both parties know. However as a side benefit, telling a collector that you are going to record the call seems to be the fastest proven technique to make them slither up and go away faster then you can say boo!!!

  12. vee says:

    I wish I had this information before I was sue
    in court.

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