The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act, commonly referred to as the FDCPA was enacted in 1978 as a United States statute (15 U.S.C. § 1692) and is enforced by the Federal Trade Commission. This law applies to primarily to third party debt collectors, although some first party collection departments implement aspects of the law by choice. Anyone who is interested in debt collection as a career would benefit by studying this law. Listing knowledge of the FDCPA is an essential component to any resume when applying for a debt collection job.

Abusive practices used by collectors created the need for a federal law to regulate them. Most agencies will provide training that will include studying the FDCPA and then testing that knowledge in order to protect the agency and the collector from lawsuits that arise from violating the law. Individual collectors are responsible for knowing the law, and abiding by it. If they do not, they can face fines for violating the law. This is why understanding and following the law is important to the success of a collector.

The FDCPA exists to eliminate abuse and harassment, deception, and unjust fees. It also seeks to provide fair competition for agencies that follow the law. This federal law uses the “least sophisticated consumer” standard, which is to say that if the least sophisticated consumer is misled, then the collection practices used are in violation of the FDCPA. Practices that the FDCPA governs include the time that it is acceptable to contact a borrower on the phone, which is 8:00am to 9:00pm in the borrower’s time zone. While many agencies will have policies in place to prevent this type of violation, it is possible that some will not. The collector is ultimately responsible for their actions. So knowing what time zone that an area code for a telephone number resides is essential information.

Another practice the FDCPA regulates is communication itself. If a borrower does not want to receive any collection calls, they have the right to request that the agency cease and desist all telephone communication. While the FDCPA rules that this should be a written request, many agencies will accept a verbal request. Furthermore, in regards to communication, a collector cannot repeatedly call the borrower with the intent to harass or annoy. For example, if the borrower hangs up during the conversation, you cannot call him back. The conversation is over. If a collector repeatedly causes a telephone to ring, that is harassment and a violation of the FDCPA. If the borrower, or anyone at the borrower’s place of employment, verbally informs the collector not to contact them at work, the collector must honor that request. A collector may not call a borrower represented by an attorney. Instead, they must contact only the attorney. A collector cannot contact a borrower until they have received validation of the debt, which is a letter that is mailed to the borrower upon receipt of the past due account by the agency. However, if the agency receives a request from the borrower for verification, then until the verification is sent, the collector may not call the borrower. Verification of debt may include the contract, statements of account, copies of payments, and other documents associated with the debt. A collector cannot use threatening, abusive language or profanity. A collector cannot disclose details of the debt to a third party, which is anyone other than the borrower. In non-community property States, this includes the borrower’s spouse.

The FDCPA seeks to eliminate deceptive practices. Deceptive practices include dishonesty, false representation, and claims that are not true. For example, a debt collector cannot say they are an attorney, a law enforcement officer, a pizza delivery person (yes, this one has been used), and so forth. A collector cannot tell a borrower anything that is untrue, or will not happen, such as arrest, a lawsuit, or repossession. Deceptive practices are common sense. If it is not true, then do not say it.

An agency may not publish a public list of a borrower’s debt. That would be third party disclosure. They may not mail anything that would disclose the purpose of the communication to a third party. An agency cannot seek unjust amounts or add fees not allowed by state or federal regulation. They must also state the Mini Miranda, the syntax of which is “this is an attempt to collect a debt, and any information obtained will be used for that purpose,” on any communications. An agency must provide the original name of the creditor, notify the borrower of the right to dispute the debt, provide verification of the debt, and dictates that an agency may file a lawsuit for collection purposes only in the venue where the contract originated. Finally, an agency must abide by the Fair Credit Reporting Act.

As you can see, the FDCPA provides rules of conduct. However, they are not difficult to understand. Penalties for violating the FDCPA for an individual collector are currently one thousand dollars for each individual violation including reasonable attorney fees incurred by the borrower to sue the collector. Therefore, it is in a collector’s best interest financially to know and follow the law. Since penalties for an agency are considerably more, they usually take the time to make sure a collector understands and follows the FDCPA.