The Laws Governing Fair Debt Collection Practices

What Protections Do Consumers Have in Debt Collection Proceedings?

Few experiences are less onerous than being on the receiving end of debt collection efforts. You may feel anxious every time you go to the mailbox or hear the phone ring. Debt collectors seem to call with threats at all hours. Are there any legal protections against unscrupulous, harassing, or deceptive behavior by debt collectors? Yes, a federal statute known as the Fair Debt Collection Practices Act (FDCPA) limits what debt collectors can do to get payment from you.

What Is the Fair Debt Collection Practices Act?

Enacted in 1977, the FDCPA is a federal statute that protects consumers by imposing sanctions on debt collectors who engage in certain types of behavior. The stated goals of the FDCPA are to encourage fair conduct in debt collection practices and eliminate abuse by individuals and agencies seeking to recover debts. The FDCPA sets forth rules identifying when and how debt collectors may conduct business. The statute also seeks to provide consumers with tools to ensure the validity and accuracy of an alleged debt, as well as a legal mechanism for disputing incorrect assertions of debt. For situations when a debt collector violates the law, the FDCPA provides remedies for the consumers and penalties for the debt collectors.

How Does the Fair Debt Collection Practices Act Work?

Generally, the FDCPA bans debt collectors and debt collection entities from using unfair, deceptive, or abusive practices in an attempt to collect a debt. Among the specific protections afforded by the statute are the following:

• Regulations on the time and place a debt collector may attempt to contact you—A debt collector may not call before 8 A.M. (your time) or after 9 P.M. Furthermore, a debt collector may not contact you at work if they know you are not allowed to take personal calls on the job. Debt collectors are also generally prohibited from attempting to contact you at any time or place the collector knows is inconvenient for you.
• Protection from harassment—A debt collector may not badger, pester, or harass you, either over the phone or through any other means. Debt collectors also may not use obscene or abusive language when trying to collect a debt. A bill collector cannot call you without identifying who they are and may not threaten to sell your property without legal authority. Bill collectors are also precluded from lying or making false representations, such as claiming that you’ve committed a crime, or from threatening to take action that can’t be taken (such as having you arrested).
• Restrictions on contact when you are represented by legal counsel—If a debt collector knows that you have retained an attorney, they may not contact you directly but must direct all communication through your lawyer.
• All further contact prohibited upon request—If you notify a debt collector in writing that you want no further contact, the debt collector must comply. The only exceptions are to acknowledge that there will be no further contact or to notify you of legal action to be taken.
• Limits on third-party contact—In general, debt collectors may not talk to anyone about your debt other than you, your spouse, or your attorney. There are limited exceptions to this rule. Collectors may discuss your debt with the original creditor, a credit reporting agency, or someone who cosigned for you. A debt collector may contact a third party to gather information about your whereabouts, but the conversation can go no further. There can be no reference to any debt you owe, or even to the name of the company the debt collector represents or works for.

When and How Debt Collectors May Contact Debtors Under the FDCPA

Under the FDCPA, a debt collector may call you after 8 A.M. or before 9 P.M. or contact you by text message, email, or regular mail. A debt collector may not talk to anyone but you or your spouse about an alleged debt. When the debt collector contacts you, they must provide the following information:

• The amount you allegedly owe
• The name of the creditor to whom the debt is owed
• How you can get the name of the original creditor
• How you can dispute the debt

Who Is Covered by the Fair Debt Collection Practices Act?

Under the FDCPA, a “debt collector” is defined to include “any person in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due anothers.” It’s important to understand that the federal law, as written, restricts only the conduct of “third party” debt collectors—it has never been held to apply to individuals who are employees or staff of the “original” creditor, the individual or entity that extended the debt. Nonetheless, a number of states have implemented their own laws that impose the same restrictions and sanctions on in-house debt collectors.

The FDCPA specifically excludes certain types of individuals, including attorneys, from the definition of “debt collector.” In addition, the Act is generally considered to apply only to consumer debt incurred for family, personal, or household purposes. The financial obligations of businesses are not covered by the FDCPA.

How Is the Fair Debt Collection Practices Act Enforced?

The provisions of the FDCPA are regulated and enforced by the Consumer Financial Protection Bureau (CFPB). A consumer who believes a debt collector has violated the law may ask the CFPB to intervene and impose sanctions. Alternatively, a consumer may file a civil lawsuit seeking damages. In such a situation, the debtor does not need to show actual damages, but may recover up to $1,000 plus all reasonable attorney fees, pursuant to the provisions of the FDCPA.

Common Violations of the FDCPA

According to statistics gathered by the CFPB, the most frequent citations for FDCPA violations involve:

• Efforts to collect a debt not owed, either because it was paid off or due to mistaken identity
• Debt collectors who use threatening, vulgar, obscene, or profane language
• Failure by the debt collector to provide the debtor with written validation of the amount of the debt, the name of the creditor, or other required information
• False statements made by the debt collector, either regarding their legal status (as an attorney, for example) or as to the amount of the debt
• The threat or carrying out of an illegal act, such as claiming that wages will be garnished or attempting to repossess without legal authority
• Discussing a debt with family or friends of the debtor other than a spouse
• Engaging in a pattern of phone harassment, such as making non-stop calls or calling every day at the same time for extended periods

What Are the Penalties for Violation of the Fair Debt Collection Practices Act?

According to the provisions of the FDCPA, a debtor who can show that a debt collector has violated the law may recover:

• Actual damages—Any monetary losses caused by the wrongful conduct, as well as damages for emotional distress, including anger, frustration, fear, or hopelessness
• Statutory damages—Up to $1,000, plus any attorney fees
• Legal costs—Any costs associated with filing a lawsuit or claim with the CFPB

Summary

Under the FDCPA, consumers are protected from unfair or abusive practices by debt collectors. The provisions of the FDCPA do not, however, apply to business debts. The law prohibits a wide range of conduct, including the use of threats, false statements and harassing behavior, and it regulates when and where a debt collector may attempt to contact a debtor. The statute also allows a debtor to recover actual or statutory damages, as well as attorney’s fees and costs, for any proven violation of the Act.