In 1977, the Federal Trade Commission enacted the Fair Debt Collection Practices Act as an amendment to existing legislation under the Consumer Credit Protection Act, to prohibit abusive practices by debt collectors.
The statute’s stated purposes are to eliminate abusive practices in the collection of personal debts, to promote and enable fair debt collection, and to provide consumers with mechanisms to dispute a debt and to ensure that a claimed debt is valid and accurate.
The statute’s sweep includes only third party debt collectors although it recognizes state statutes, such as exist in California, which incorporate the conduct of the original debtor.
Broadly, the statute prohibits a debt collector from using ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt.’ (15. U.S.C sec. 1692e)
A debt collector is prohibited from harassing or annoying debtors. Debt collectors are prohibited from contacting debtors before 8 a.m. and after 9 pm. The collector cannot call repeatedly, cannot make anonymous telephone calls or employ any other behavior intended to annoy, harass or abuse the consumer or the consumer’s family or co-workers. The collector may not threaten legal action against the debtor unless litigation is actually being planned. If the debtor requests in writing that all communication from the collector cease, the collector must honor the request, but only if the request in made in writing. (See 15 U.S.C. sec 1692c)
The law allows the collector to accept a post-dated check from the debtor, but if the date on the check is more than 5 days away, the collector is required to notify the consumer in writing, at least three business days prior, of their intent to deposit the check prematurely. Neither can the collector add interest, fees, or other charges to the debt unless the original debt provided for them or they are otherwise provided for by law.
One of the most helpful provisions of the statute requires that the collector, in its first communication with the debtor, notify the debtor about their ability to challenge the validity of a debt and to provide other basic information. On first contact, the collector must inform the debtor of the amount of the debt, the name of the creditor, the thirty day limitation period of time to dispute the validity of the debt and that the debtor can ask for verification of the debt.
The debtor’s request for verification must be done in writing within 30 days of the first contact from the collector. Collection calls and letters must stop until the debt is verified. If the debt cannot be verified by the collector, all collection activities must cease on that account.
Finally, the statute provides enforcement tools against abusive debt collectors. It allows legal action to be brought against the abusive debtor within one year, and allows the recovery of actual damages, statutory damages and attorney’s fees for violation of the statute’s terms.
The Fair Debt Collection Practices Act is here to help protect clients like you from fraudulent practices by collectors. Contact us right away if you have any questions about how the Fair Debt Collection Practices Act can help you.