Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act ("FDCPA"), is a Federal law governing the collection of certain kinds of debt. In order to understand what falls within the purview of this law, it is important to distinguish between "commercial" debt and "consumer" or "retail" debt. A commercial debt is typically viewed as an obligation for goods sold or services rendered in connection with the operation of a business. Debts incurred by individuals for personal, household or family purposes are consumer debts. Generally speaking, the FDCPA applies to consumer debt.
The FDCPA is a relatively straight-forward statute. It was enacted in response to legislative findings of evidence of abusive, deceptive and unfair debt collection practices. In enacting this law, Congress wanted to eliminate these practices but, at the same time, not place debt collectors who refrain from abuse at a competitive disadvantage in collecting debts.Conduct Prohibited by the FDCPA
The FDCPA prohibits certain types of "abusive and deceptive" conduct when attempting to collect debts by regulating the following conduct:
- The hours during which a debt collector may contact a debtor by phone;
- The debt collector's failure to cease communication with the debtor upon request;
- Causing a telephone to ring, or engaging any person in telephone conversation, repeatedly or continuously;
- Communicating with debtors at their place of employment;
- Contacting debtors known to be represented by counsel;
- Communicating with debtors after they have requested validation of the debt;
- Misrepresentation or deceit;
- Publishing the consumer's name or address on a "bad debt" list;
- Seeking unjustified amounts;
- Threatening arrest or legal action that is either not permitted or actually contemplated;
- Using abusive or profane language;
- Communication with almost all third parties concerning the debt;
- Contact by embarrassing media (e.g., a post card that is easily read); and
- Reporting false information on a debtor's credit report or threatening to do so in the process of collection.
The FDCPA requires debt collectors to do, among other things, the following:
- Identify themselves and notify the consumer, in every communication, that the communication is from a debt collector, and in the initial communication that any information obtained will be used to effect collection of the debt;
- Give the name and address of the original creditor (company to which the debt was originally payable) upon the consumer's written request made within 30 days of receipt of notice required by the statute;
- Notify the consumer of their right to dispute the debt, in part or in full, with the debt collector;
- Provide verification of the debt; and
- File suit in a proper venue.
The US Federal Trade Commission is formally charged with enforcement of the FDCPA. However, the primary enforcement mechanism is by private action. Put somewhat differently, debt collectors who fail to comply with the law's requirements can be sued by the debtors who owe them money. These lawsuits can force the debt collector to pay awards to the debtor that are out of all proportion to the amount the collector originally sought.
The message of the FDCPA is really very simple - debt collectors must comply with proper debt collection procedures when attempting to collect debts subject to the statute.
Against this backdrop, it is imperative to use a collection attorney who understands the laws and procedures governing collection practice, including the special requirements that the FDCPA imposes upon consumer debt collection. The failure to do so could create exposure to liability far exceeding the amount owed by the debtor.
Please read about the following topics of interest to our collection clients.
- Our Collection Practice
Need to know more about State and Federal collection laws? Call James S. Friedman, LLC, at 800-361-6554 (toll free) or contact us online.