In 1978, after a spike in the number of bankruptcy filings and a review of “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices,” Congress passed the Fair Debt Collection Practices Act (FDCPA) in an effort to protect consumers from harassment over unpaid debt. The FDCPA sets limitations on behaviors debt collectors may and may not engage in while attempting to collect debt from consumers. Additionally, it provides consumers who have been illegally harassed by debt collectors the right to sue for monetary and injunctive relief.
Who is Impacted by the FDCPA?
Consumer Debtors: The regulations are applicable to personal, family, and household debts including those associated with medical care, mortgages, credit card accounts, car payments, and retail financing. Debts related to business matters are not covered under the FDCPA.
Third Party Debt Collectors: Entities or individuals attempting to collect debt on behalf of another are bound by the regulations.
Creditors Collecting Their Own Debt: Creditors attempting to collect debt owed to them, on their own behalf, are not subject to the FDCPA regulations. However, this may vary between states.
What Are the FDCPA Guidelines?
Acquisition of Location of Debtor: Collectors looking to gather information from a third party on the whereabouts of a debtor must identify themselves, their motive, and, if asked, their employer. They must be discreet and may only contact these parties once to determine the location of the debtor, unless information is later found to be missing or erroneous. If the collector becomes aware that the debtor has retained an attorney, communication must be solely with the attorney.
Communication with the Consumer: Without consent of the debtor, collectors may not contact these individuals concerning the debt at inconvenient times, as inferred or as specified by statute; if the collector is aware of that the debtor has retained an attorney; or at their place of employment if it is known that such communication will negatively affect the debtor. No third parties, other than the debtor’s attorney, may be contacted regarding the debt, except as outlined above.
If the debtor or their attorney notifies a collector in writing that they are refusing to pay the debt, and that they no longer want to have further communications with them, the collector is prohibited from further contact with the debtor. Communication is only permissible if the contact is intended to advise the debtor that collection efforts are being terminated, or to notify the debtor that special remedies will or may be invoked by the collector or creditor.
Consumer Disrespect: Collectors may not harass, oppress, or abuse any individual connected to the collection of a debt. These behaviors can include:
- The use of threat of violence or criminal behavior to harm the individual;
- The use of obscene or offensive language in communications;
- Publishing the individual’s name in a list of consumers who allegedly refuse to pay debts, unless that publication is made to a consumer reporting agency.
- Repeated contact with the debtor or third parties by phone with intent to annoy, abuse, or harass the individual.
Misrepresentation and Unfair Practices: A debt collector may not:
- Falsely represent the character, status, or amount of the debt;
- Claim to be or imply he is a government official;
- Claim to be an attorney;
- Imply or state that the failure to pay the debt will result in the debtor’s arrest and/or confiscation of their property;
- Threaten impermissible legal action;
- Threaten legal action that is not intended;
- Communicate false information about the debtor’s credit;
- Use deceptive means to collect or attempt to collect the debt;
- Fail to disclose interaction(s) with the debtor;
- Imply they are employed by a consumer reporting agency; or
- Imply that collection documents are not of a legal nature.
- Additionally, a debt collector may not use unfair or unconscionable means to:
- Collect any interest, fees, charges, or expenses incidental to the initial debt unless authorized by the original contract;
- Accept a check postdated by more than 5 days unless the debtor is notified, in writing, the collector will deposit the check within 3-10 days;
- Threaten to deposit postdated checks; or
- Cause unnecessary charges for communications by concealment of the true purpose of the communication, including collect telephone call and telegram fees.
Validation: Within five days after initial contact with the debtor, the collector must send a written statement highlighting the amount of debt owed, name of the lender, and payment due date.
Liability for FDCPA Violations
Debt collectors who fail to comply with FDCPA provisions may be liable to the debtor or third parties for actual damages sustained as a result, as well as additional damages, not exceeding $1,000, if a personal claim is filed by the debtor. The amount of damages awarded will hinge on the frequency and noncompliance of the collector; the nature of the noncompliance; resources of the debtor; the number of individuals negatively affected; and the degree of intent with which the violations were executed.