Understanding the Fair Debt Collection Practices Act (FDCPA)

Fair Debt Collection Practices

The Fair Debt Collection Practices Act (FDCPA) is a law that gives consumers protection against unprofessionals and harasing behavior when attempting to collect on a debt. The FDCPA was enacted to protect consumers from abusive, unfair, and deceptive debt collection practices, and provide guidance to debt collectors on avoiding practices that are abusive, unfair, or deceptive. Debts covered under the FDCPA include personal, family, and household debts as well as automobile loans, credit card debts, and money owed for medical bills.

Consumer Defined under FDCPA

Under the FDCPA, “consumer” means more than just the person who owes the debt; it also means the debtor’s spouse, parents ( if the debtor is a minor), legal guardian, and/or confirmed succesor in interest. If the debtor is deceased, the estate’s executer or administrator is also considered a consumer ofr FDCPA purposes

Debt Collectors Defined under FDCPA

A debt collector is usually a third party whose business is to collect debts owed to a creditor. That is, their primary business is collecting on debts that are owed directly to them, but to another entity. The two most common debt collectors are debt collection agencies and collection attorneys.

! * A debt collector may not tell anyone, other than the consumer, that the debtor owes money.*

How and When a Debt Collector May Contact a Consumer

The FDCPA establishes guidelines for how debt collectors must conduct themselves in their attempts to collect debts.

  • A debt collector may contact a consumer in person, by mail, by telephone, by telegram, by fax, or electronically, such as by email or social media.
  • A debt collector may contact a consumer between 8 a.m. and 9 p.m. at the consumer’s local time, unless the consumer asks to be contacted at another more convenient time. (Calling outside of convenient hours is a common violation of the FDCPA, the most common being a high volume of calls.)
  • If an attorney represents a consumer, the debt collector must only communicate with the attorney, unless the consumer request otherwise or the attorney does not respond to a communication from the debt collector in a reasonable amount of time.

Collecting Location Information

A debt collector may contact a consumer’s friends, relatives and neighbors to confirm or correct location information. Location information includes the debtor’s address, telephone number, and place of employment.

When confirming or correcting location information, the debt collector must follow these FDCPA rules:

  • Self-Identity: The collector must identify themselves and state the purpose of the call. The collector should not identify their employer, unless asked to do so by the individual called.
  • Privacy: The collector may not tell any third party, other than the debtor’s attorney, that the consumer owes money.
  • Acquaintances: The collector may not contact a consumer’s friends, relatives, or neighbors to collect money- only to confirm or correct location information.
  • Additional Information: The collector may not contact any third party more than once, unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.
  • Harassment: The debt collector may not repeatedly call a consumer’s friends, relatives, and neighbors. This is considered harassment.

The Validation Notice

Within five days of first contacting the consumer, the debt collector must send the consumer a written notice that validates that all the pertinent information regarding the debt is correct.

Called the validation notice, it must include:

  • The debt collector’s name and mailing address for disputes and requests
  • The consumer’s name and mailing address
  • The name of creditor a of the date the debt was itemized
  • The account number associated with the debt
  • The amount of money currently owed
  • The last statement date associated with the debt
  • The debt’s charge-off date
  • The last payment date associated with the debt
  • The transaction date for the debt
  • The debt’s judgment date
  • An itemization of the debt
  • The last date the consumer can verify or dispute the debt with the collector, called the validation date
  • A statement that unless the consumer disputes the validity of the debt, or any portition thereof, by the validation date, the debt will be assumed to be valid by the debt collector
  • A statement that if the consumer notifies the debt collector in writing by the validation data that the debt, or any portition thereof, is disputed the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector.
  • A statement that, upon the consumer’s written request by the validation date, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor

Categories of Prohibited Practice

The FDCPA prohibits debt collection practices that fall into three categories:

Harassment

The FDCPA states that debt collectors may not engage in any conduct to harass, oppress, or abuse any person in connection with debt.

Debt collectors may not:

  • Contact consumers during inconvient hours ( before 8 a.m. or after 9 p.m. at the consumer’s local time).
  • Repeatedly telephone consumers and/or their friends, relatives, and neighbors with the intent to annoy those individuals.
  • Call a consumer about a particular debt more than seven times in seven days.
  • Using a medium of communication after the consumer asked the debt collector to stop. ( E.g sending emails after the consumer says “stop emailing me”
  • Contact consumers without identifying themselves
  • Use or threated to use violance to collect a debt
  • Use obscene or profane language
  • Publish a list of consumers who refuse to pay their debts ( except to a credit bureau )

False or misleading information

There are many ways to mislead a debtor, intentionally or not.

  • Misleading information: The FDCPA prohibits debt collectors from using any false or misleading statements when collecting a debt. Debt collectors should be especially careful in how they present information to consumers. Even implying something that is false, and allowing consumers to believe it is a violation of the FDCPA.
  • False Identification: Debt collectors may not falsely imply they are attorneys or government representatives, operate or work ofr a credit bureau, or use false name. They also may not claim or imply that they are vouched for or bonded by the government.
  • Misleading documents: The FDCPA prohibits debt collectors from indicating that papers are legal forms when they are not, nor papers as not legal forms when they are. They may also not send the consumer anything that looks like an official document from a court or government aganecy when it’s not.
  • False information: Debt collectors may not mispresent the amount of the consumer’s debt, nor give false information about a consumer to a credit bureau.
  • False Threats: Debt collectors may not imply that a debtor has committed a crime or will be arrested if they don’t pay off the debt. Owing money is not a crime. They also cannot state that they will seize, garnish, attach, or sell the consumer’s property or wages, unless the collection agancy intends to do so and it is legal to do so. Finally they may not falsely threaten to take any action, such as a lawsuit that cannot legally be filed, or that the collector does not intend to take.

Unfair Practices

The FDCPA prohibits debt collectors from engaging in unfair practices when trying to collect a debt. Debt collectors may not:

  • Collect any amount greater than the consumer’s principal debt, unless state law permits such a charge. “Any amount” includes any interest, fees, etc.
  • Deposit a post-dated check before the date written on the check. They also may not accept a check that is post-dated by more than five days.
  • Apply a payment to a debt other than the one specified by the consumer.
  • Take, or threated to take, the consumer’s property, unless it can be done legally and the debt collector actually intends to follow through.
  • Contact the debtor by postcard ( too much information about a debt would be made public )
  • Use deception to get the debtor to pay for the debt collector’s communication, that indicates the existence of a debt or reveals the collector’s profession
  • Send emails to an email address that the debt collector knows was provided to the consumer by the consumer’s employer
  • Send messages to the consumer on social media that the public or the consumer’s contacts can see

Collecting Decedent Debts

For the purpose of collecting a decedent’s debt a debt collector may communicate with:

  • Spouse
  • Parent
  • Guardian
  • Executor
  • Administrator
  • Another person who has authority to pay the deceden’ts debts from the assets of the decedent’s estate

In instances in which collectors do not know the identity of those with the authority to pay the decedent’s debts from the estate’s assets they may communicate with others to try to identify these individuals.

In collecting this information, a debt collector must:

  • Identift themselves
  • State that they are confirming or correcting location information concerning the consumer
  • Identify their employer, if expressly requested
  • Not state that the consumer owes any debt .

In order to avoid creating the impression that the individual contacted is personally liable for the decedent’s debts, or that the collector could seek certain assets to satisfy the debt, the collector must disclose “clearly and prominently” that:

  • They are seeking payment from the assets in the decedent’s estate
  • The individual cannot be required to use their own assets, or assets the individual owned jointly with the decedent, to pay the decedent’s debt.

When debt collection efforts must cease

If a consumer tells a collector to cease communication, the collector must stop all attempts to contact the consumer. This can happend in two different situations.

The first situation occurs when the consumer asks the collector to stop. A consumer may at any time write a letter or email to the debt collector telling him to stop or telling the collector that the consumer refuses to pay the debt. Once the consumer’s letter or email is received, the collector may contact the consumer only in the following circumstances:

  • To notify the consumer that the collector will no longer attempt to collect any debt
  • To notify the consumer that the collector may invoke specific remedies
  • To notify the consumer that the collector intends to invoke a specific remedy

Sometimes financial institutions are required to contact consumers under provisions of RESPA and Regulation Z, such as to notify a consuemr about force-placed insurance. If a consumer has requested that your financial institution stop contacting her under the FDCPA, that request does not apply to contact that is required by RESPA or Regulation Z.

The second situation comes about when the consumer disputes the debt within 30 days of the collector’s initial communication. If the consumer sends a letter that disputes the debt, whether in whole or in part, the collector must cease contact with the consumer until the collector obtains verification of the debt. Once the collector mails the verification to the consumer, the collector can resume contact.

The Dodd-Frank Act granted rulemaking authority under the FDCPA to the Consumer Financial Protection Bureau (CFPB) and granted the CFPB the authority to enforce complience with the Act. Debt collectors who violate the FDCPA may be sued in a state of federal court.

  • An individual may sue the collector within one year from the date the violatin occured. If the consumer wins the lawsuit, they may collect damages plus up to $1,000 from the debt collector.
  • A group of people may also file a class also file a class action against a debt collector and recover damages up to $500,000, or one percent of the collector’s net worth, whichever is less. This in addition to the amount each named plaintiff could recover.