What To Know About The Fair Debt Collection Practices Act (FDCPA)
As a consumer, it's important to know your rights to protect yourself from any unethical practices in the debt collection industry.
Debt collectors are hired by banks and credit card issuers on commission to collect consumer debts from past-due accounts. They may also practice debt buying by purchasing loan and credit card debt from lenders in order to own the debt and collect on it in full later.
In order to protect your consumer rights, the FTC has guidelines in place to keep debt collectors from using deceptive practices.
What Is The Fair Debt Collection Practices Act (FDCPA)?
The Fair Debt Collections Act (FDCPA) was enacted in 1978 to regulate the practices used by debt collectors. This act is enforced by the FTC and prohibits debt collectors from using abusive, deceptive, or unfair methods to collect the debt from you.
If you are being harassed over your debts by collection agencies, knowing the regulations put in place by the FDCPA can protect your consumer rights. The FDCPA does several things to protect you from debt collectors that include:
- When debt collectors first contact consumers, they must inform them about the following:
- Their rights to dispute debts
- The amount of debt
- The name of the creditor
- That unless a consumer disputes the validity of their debt in the first 30 days, the debt is considered valid
- That they can ask for the debt verification This information must be given over the phone or sent to the consumers in writing within five days of the initial phone call.
- This act gives you the right to know how frequently and when a debt collection agency can contact you and what they are allowed to say.
- Collection agencies can't call multiple times all day. By law, creditors can't call early in the morning (before 8 am) or late at night (after 9 pm) unless you ask them to call during those times.
- Agencies may not use abusive language, insults, intimidating, profane, or obscene language, or threats of violence or arrest.
- Threatening to take action that is not going to be legally taken is not allowed under this act. For example, collection agencies can't threaten to seize your property or garnish your wages if you don't pay your debts -- unless they actually do plan to take action.
- They cannot attempt to collect more debt than you owe. Collection agencies are not allowed to add extra fees that are not outlined in your original agreement.
- Debt collectors cannot threaten to file a lawsuit if the statute of limitations has expired.
- Collection agencies cannot inform other individuals about your debt. They can only share your financial details with legal advisers, administrators, guardians (if you are under 18), or your spouse, unless you give permission. These agencies can only contact one individual at a time if they need to locate you. Additionally, collectors can only send information to credit bureaus or individuals such as the creditor's attorney.
- Collection agencies cannot ignore your debt validation request. Once you have sent a debt validation letter, creditors must respond to your letter first before continuing with their collection attempts.
- If collection agencies won't stop the harassing calls, consumers can ask to stop all communication or only allow it in writing. If a consumer asks to cease all communication, the debt collector can only communicate with them to inform them the debts have been terminated or that a lawsuit or other action is about to be made by the creditor. If harassment is a problem, consumers can send a cease communication letter informing debt collectors that they are violating the FDCPA.
- If an attorney represents a consumer in a debt collection case, collectors must communicate with the attorney and not the debtor. However, if the attorney does not respond to the collector within a certain time, they can contact the consumer.
- Debt collectors cannot misrepresent themselves by claiming to be an attorney, credit reporting agency, or law officer.
- The FDCPA does not allow debt collectors to obtain post-dated checks if they intend to threaten consumers for bouncing checks. If the date on the check is over five days away, debt collectors must notify consumers in writing at least three business days if they plan to deposit the checks early.
- Collect calls and telegram fees are banned if they conceal the intent for debt collection reasons.
- You can sue collection agencies in a small claims court for violating your rights.
- It gives you the right to send a debt validation letter to a collection agency if you have been contacted about a debt you are not sure you owe. This means that creditors must show you the details of your debt.
There are exceptions to the FDCPA in regards to in-house collection departments, which are the collection division of banks and credit issuers. If you miss your monthly payments you might receive calls or letters from in-house collection agencies.
The laws outlined by FDCPA for third-party debt collectors do not apply to in-house collection agencies since lawmakers felt that credit issuers who wanted to keep a good rapport with customers would not engage in harassing behavior. However, this is not entirely true since complaints against in-house debt collections have increased in recent years.
What Can I Do To Combat Unfair Or Unethical Practices Conducted By Debt Collectors?
In their annual report on the FDCPA, the FTC stated that there were over 100,000 complaints filed against debt collection agencies.
You can take a few preventative measures when working with debt collectors, such as keeping copies of all correspondence. If you send any letters, ensure that they are certified via certified mail and get a return receipt.
Additionally, you can record the time and date of all the calls you receive from each collection agency in order to keep track of multiple calls.
Do not give a debt collector your debit card number and avoid paying them with post-dated checks since they may deposit your check earlier than the date written on it, which can result in a bounced check and extra fees.
If you have been harassed by a collection agency, you can file a complaint against the debt collector or the creditor's in-house collection agency by contacting the Consumer Financial Protection Bureau, which has a debt collection complaint form online. You can also contact your state Attorney General's office.
The FDCPA allows you to sue a collection agency, creditor, or credit bureau through a small claims court. If you feel you have been at the receiving end of unjust practices, you can file a civil suit within one year of the violation and be awarded damages for actual losses, court costs, attorney fees, and up to $1,000 in other damages. Consumers can receive up to $500,000 or 1% of the net worth of the debt collector, whichever amount is lower. Suing these companies makes it less likely for them to violate consumer rights in the long run.
Here are some reasons that allow you to take action against a creditor:
- They don't report a debt as disputed once you have disputed it.
- They pull your credit report without a purpose.
- They report incorrect information on your credit report.
- They refuse to fix your information after being given the correct information.
- They report an item a second time after it has already been removed and without notifying you within five business days in writing.
- They do not respond to your written dispute in 30 days. However, they may be given a 15-day extension if they receive information from the creditors in the first 30 days.
- They try to be both the purchaser and assignee of an account.
- They misrepresent themselves or misrepresent the debt they are aiming to collect.
- They attempt to age your account by updating the activity and keeping it on your collections account for a longer period of time.
- They do not validate a debt but continue with collections and file for a judgment.
- They violate your rights by contacting you while your debt is in the validation process.
- They call you even after you have sent a cease and desist letter.
- They call you at work, before 8 am, or past 9 pm (unless you have specified otherwise).
- They call unauthorized individuals such as your friends or family about your debt.
- They use threatening or abusive language.
- They threaten to garnish your wages.
- Letters sent to you must not identify the sender as being in the debt collection industry, meaning they cannot contain the words "debt" or "collection" on the envelopes even if it is part of the name. Postcards cannot be used at all since they can easily be read by anyone.
How Do I Deal With Overwhelming Debt?
If you have old collections accounts that need to be removed, you can contact a credit repair agency to dispute an item on your credit report that is incorrect or unverifiable.
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