The Fair Debt Collection Practices Act protects consumers against unfair conduct by debt collectors. There are unfair and illegal actions debt collectors are prohibited from doing.
The Fair Debt Collection Practices Act (FDCPA) was instituted in 1978 by the federal government in order to provide guidelines for debt collectors on how they may collect debts from consumers.
The FDCPA gives consumers protections against abusive, unfair or deceptive practices debt collectors may use in collecting debts.
The Federal Trade Commission (FTC) enforces the Fair Debt Collection Practices Act. The FTC is the “nation’s consumer protection agency.”
Who is a debt collector
According to the FDCPA a debt collector means “any person who uses any instrumentality of interstate commerce or the mails 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 another.”
This includes collection agencies, debt collectors, attorneys collecting debts on a regular basis, debt collection law firms and debt buyers. The FDCPA applies to third party debt collectors, not original creditors who may have an internal collections department.
However, each state may have its own debt collection laws, such as California’s Rosenthal Act, which provides additional consumer protection laws along with the FDCPA.
Types of debt covered under the FDCPA
The FDCPA covers personal, family, and household debts, including credit card accounts, auto loans, medical bills, retail financing and, first and second mortgage loans. Business debts are not subject to the FDCPA.
When a debt collector can contact you
Generally a debt collector can contact you 7 days a week between the hours of 8am and 9pm.
Can a debt collector contact your job?
Yes. However, if you inform them orally or in writing not to contact your employment they are prohibited from doing so except only to verify employment.
Stop a debt collector from contacting you
To request a debt collector not contact you, send a “cease and desist” letter requesting the debt collector only correspond with you by way of U.S. Mail. To ensure the debt collector receives the letter you should send it certified, return receipt.
Sending the letter certified mail helps you maintain proof for your records in case you need it at a later date. It also keeps the debt collector from claiming they never received the letter.
Upon receipt of the letter, the debt collector may not contact you by telephone at your home, cell phone or job. The only exception to this is if the debt collector contacts you to inform you they will no longer be contacting you or to inform you they intend to take a specific action against you such as filing a lawsuit.
Getting the debt collector’s mailing address
This would seem like an easy process but lately, consumers are running into debt collectors who refuse to give their mailing address. Debt collectors are aware consumers are becoming well versed in their rights. Many do not want to give their mailing address because they prefer to speak with you on the telephone in an attempt to persuade you into agreeing to pay the debt.
Debt collectors especially want you to disclose your bank account information so they can automatically deduct payment from your account. DO NOT DISCLOSE YOUR BANK ACCOUNT INFORMATION…EVER!
With so many players entering the debt buying industry, it is hard to know who you are dealing with. Some debt collectors have been known to wipe out consumer bank accounts. Some debt collectors have no physical address, they will use a PO Box as their address, make as much money as they can by harassing consumers then close down before anyone realizes what happened.
Since the inception of the Consumer Financial Protection Bureau's complaint portal, there have been approximately 400,500 debt collection complaints.
What happens once you send the cease and desist letter
The debt collector may no longer contact you by telephone but can still pursue you for the debt. This is very important as many consumers send a cease and desist letter and believe the debt goes away. It does not go away. Collection efforts can continue and you must deal with debt collector to insure proper handling of the debt.
The best way to handle a cease and desist is to request “U.S. Mail Communication Only” as telephone calls to your home, work and cell are inconvenient. That way you keep communication open because a debt collector may decide to pursue a lawsuit against you and you want to know about any legal remedy they may plan to pursue.
Responsibilities of the debt collector
The debt collector must send a “validation notice” within five days of their first contact with you. That initial letter must include a warning known as a mini miranda stating:
“The communication is from a debt collector and that any information obtained may be used to collect the debt.”
The initial letter must also state you have 30 days to request debt validation otherwise they will assume the debt belongs to you. If you ever get a letter from a debt collector which does not include the “mini miranda” the FDCPA has been violated.
You may discover many debt collectors violate this requirement. They do not want to send you anything in writing because they prefer to get you on the telephone in attempt to force you to pay the debt.
Some debt collectors know they cannot validate the debt meaning they have no information other than your contact information, the original creditor’s name and the amount of debt you owe. They have nothing else in their possession to validate the debt such as an original credit agreement or even a credit card statement.
Always request verification of the debt. It's interesting that according to the FTC many debt buyers purchase large portfolios of debt from a company but they do not purchase back-up documentation. Portfolios are bought under the condition that the debt buyer has a limited amount of time to request back-up documents. There are also conditions on the number of documents that can be requested at no charge. Document requests after the time period expires (typically 6 mos to 3 years), or above the agreed-upon limit, will incur a fee ranging between $5 and $10 per document.
Generally debt collectors do not purchase the necessary documents to even prove the account belongs to you.
The debt collector must include the following in the first written notice
- Amount of debt owed
- Name of the original creditor
- The debt belongs to you and assumed to be valid unless within 30 days of your receipt of the notice you dispute the validity of the entire or part of the debt
- Should you dispute the debt or a portion thereof within 30 days, the debt collector will obtain verification of the debt and mail it to you
- Upon written request and within the 30 day period, the debt collector shall provide the name and address of the original creditor.
Who can a debt collector contact besides you
If you are represented by an attorney, the debt collector must contact your attorney. Other people may be contacted but only to find out your telephone number, address and workplace. Debt collectors are prohibited from discussing the debt with anyone except you or your attorney.
What if you think you don’t owe the debt
Send a validation request within 30 days of the debt collector’s initial letter to you. During the debt validation process the debt collector must cease all collection activities. But even if you are out of the 30-day range you can always request debt validation.
Once you receive proper debt validation which must be proof from the original creditor, the debt collector may resume collection activities. Some debt collectors may send you a letter stating some nonsense like “we have contacted the original creditor and verified you owe the debt.” This is not proper debt validation. Even if you receive an itemization of the debt, this does not constitute proper debt validation either.
Debt collectors cannot engage in the following practices:
Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:
- use threats of violence or harm;
- publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
- use obscene or profane language; or
- repeatedly use the phone to annoy someone.
False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:
- falsely claim that they are attorneys or government representatives;
- falsely claim that you have committed a crime;
- falsely represent that they operate or work for a credit reporting company;
- misrepresent the amount you owe;
- indicate that papers they send you are legal forms if they aren’t; or
- indicate that papers they send to you aren’t legal forms if they are.
Debt collectors also are prohibited from saying that:
- you will be arrested if you don’t pay your debt;
- they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
- legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.
Debt collectors may not:
- give false credit information about you to anyone, including a credit reporting company;
- send you anything that looks like an official document from a court or government agency if it isn’t; or
- use a false company name.
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:
- try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
- deposit a post-dated check early;
- take or threaten to take your property unless it can be done legally; or
- contact you by postcard.
Source: Federal Trade Commission
How to report an abusive debt collector?
All complaints should be filed with the Federal Trade Commission. But there are a few very important agencies to file complaints which may get you faster results:
- Consumer Financial Protection Bureau: (www.consumerfinance.gov).
- Your State Attorney General: (www.naag.org).
- The Better Business Bureau: (www.bbb.org)
- The Association of Credit and Collection Professionals: (www.acainternational.org)
Legal Remedies if a debt collector violates the FDCPA
You can sue a debt collector in state or federal court within one year from the date of the violation. If your lawsuit is successful you may recover damages in the amount of any losses you suffered as a result of the violation, plus an additional amount of up to $1,000.00. Your attorney fees and court costs are also recoverable.
In 2010 a jury awarded Allen Jones, a Texas man, more than $1.5 million in a lawsuit over abusive and profane voicemail messages left by a debt collector. The incident occurred in August 2007, where collectors for a Bank of America credit card, Advanced Call Center Technologies, left eight messages for Allen Jones to collect his credit card debts. Jones sued the debt collector and was awarded $50,000 in mental anguish and $1.5 million in punitive damages by a Dallas County jury.
In May 2015 a jury awarded Maria Guadalupe Mejia, a Kansas City, Missouri woman, nearly 83 million in a lawsuit over “malicious prosecution” of a debt she did not owe. Portfolio Recovery pursued Mejia for more than a year even though she repeatedly told them she did not owe the debt. The debt belonged to a man who lived in Kansas City, Kansas with a similar name to Mejia's. Like many debt collectors, Portfolio lacked the proper documentation for the debt it purchased but pursued it anyway. The jury ordered the debt collection agency to pay punitive damages of $82,990,000 for violating the Fair Debt and Collection Practices Act.