In order to understand both the rights of a consumer and the rights of a business hoping to collect on delinquent accounts, you must begin with a definition and a clear understanding of the Fair Debt Collection Practices Act. The FDCPA, passed in 1977, establishes legal regulations and protection from abusive debt collection practices. While it appears that the legislation is meant to protect the consumer, its purpose was originally geared towards protecting debt collectors. Even still, both consumers and collectors have mixed feelings about the Act.
What lead to the FDCPA?
The original bill that lead to the creation of the Fair Debt Collection Practices Act was drafted by the Senate Committee on Banking, Housing and Urban Affairs (Senate Report 382). After several court cases involving consumers and debt collectors, Congress determined that there was "abundant evidence" of deceptive, abusive and unfair debt collections practices and that the existing laws did little to protect consumers.
The report also stated that the bill should protect those debt collectors who are not using unfair, abusive or deceptive debt collections practices, so that they would be able to collect fairly and not be misrepresented.
How does the FDCPA protect consumers?
The FDCPA protects consumers by prohibiting debt or bill collectors from using abusive behavior when attempting to collect. For instance, it specifies the following is prohibited:
- Phone contact at anytime other than 8 am to 9 pm local time.
- Phone harassment is not allowed, including excessive ringing or calling.
- Contacting consumers at work, especially when unaccepted by the employer.
- Failure to stop communication after the consumer has issued a written notice to stop communication or refusal to pay the debt - unless the collector is calling to inform the consumer of intent to sue, other ways to solve the debt or that they will stop collection efforts.
- Failure to stop communication after the consumer has issued a written request for debt verification or the original creditor information (within a 30 day validation period) and before the debtor has mailed the verification.
- Contacting a consumer who is represented by an attorney.
- Adding the consumer's information to a published bad debt list.
- Misrepresentation of the collector as law enforcement or an attorney.
- Seeking unjustified sums of money or threatening violence, arrest or legal action.
- Profane language during communication.
- Reporting, or threatening to report, false information on the consumer's credit report.
- Attempting to embarrass the consumer with collection efforts through the mail such that the consumer's information or debt isn't hidden (on a postcard, for instance).
- Speaking about the debt or collector with another party. Collections agencies can speak to neighbors and co-workers to locate the consumer. Otherwise, only the consumer's spouse or attorney may be contacted.
HOW DOES THE FDCPA PROTECT Collectors?
Because collectors or collections agencies are only used when an account goes delinquent beyond a certain point, third-party collectors are not likely to have future contact with the consumer. If they know their contact is temporary, they typically aren't concerned with a consumer's opinion of them or their debt collections practices. Unfortunately, this leads some collectors to very aggressive behavior that tends to tarnish the reputation of all collectors and collections practices.
By specifying what is allowed during the process of collections, the FDCPA protects those collectors who are using honorable and legitimate methods of collecting. Collectors must adhere to the following during communication with a consumer:
- Identification of who they are and that they are attempting to collected on a debt.
- Whom they are representing (the original creditor) upon written request within 30 days of receiving notice.
- Notify the consumer of their right to dispute the debt.
- Provide debt verification - especially if the consumer writes a request for validation or wishes to dispute the debt.
- If suing, the debt collector must only file suit in the consumer's place of residence or where the contract was signed.
Keeping Up with the FDCPA
Enforcement of the Act is typically achieved through consumer lawsuits on collectors and the Consumer Financial Protection Bureau. The Federal Trade Commission does keep track of consumer complaints with regards to debt collection and receives more every year.
Because the Act was passed in 1977, many consumer groups feel that the penalties for abusive debt collections are not strong enough. If a consumer wins a lawsuit against a collector, they may receive damages up to $1,000 plus attorney fees. Debt collectors may also claim the violations were unintentional and not be penalized at all.
Alternatively, those attempting to collect legitimate debts also believe that the FDCPA is too strict and that some language in the Act needs to be updated to include new technology that wasn't around in 1977.
To read the actual language of the Fair Debt Collection Practices Act: FDCPA
With consumer credit card debt reaching unsustainable levels, many in the industry expect to see more disagreement and litigation with regards to the FDCPA. Amendments are proposed regularly and many states have passed their own fair debt collection practices regulations. Consumer watch groups are also staying on top of unfair collections practices with the hopes of stopping agressive collectors.
At BYL, we are commited to treating people the way we wish to be treated. Learn more about us and let us know how we can help.