Collection Agencies – Your Consumer Rights

Ever since the beginning of time, people who are owed money have had a special place in the hearts of people who owe the money. These “creditors” wanted to make sure they received the money they were owed so they employed some pretty drastic practices to insure they would be paid. In the 20th Century, in America, the collection methods got to be  so bad Congress had to pass laws to govern the actions of debt collectors to protect the public from their abuses and excesses.

The Fair Debt Collection Practices Act (FDCPA)

Enacted in 1978, the Fair Debt Collection Practices Act (FDCPA) was designed to provide a degree of protection for consumers against the abusive acts of bill collectors. In great part, it was created to regulate the actions of third party collectors employed by the original creditor to collect its receivables. The result of the legislation was that credit card companies, banks, and finance companies had to monitor the activities of those companies they hired to collect on their receivables. The US government was insuring the behavior of those third party collectors would be brought under control. protecting consumers from unscrupulous and abusive bill collectors. As a part of the Consumer Protection Act,  consumers were provided a way to report complaints as well as penalties and court venues where complaints could be heard and acted upon. Most states have also enacted laws which further define the debtor/creditor relationship.

Definitions

The FDCPA clearly defines who is a debt collector and what is considered acceptable behavior. It also defines how debt collectors can communicate with a debtor and when they must stop communicating. Since some debts are sold between two parties, assigned to third party collection agencies or transferred from one organization to a successor entity with different policies, the FDCPA provides the standard under which all collections actions and communications must be conducted.

When the Collectors Can Call

One of the primary focuses of the Act was discouraging bill collectors from calling or personally contacting debtors at inconvenient times and/or causing a nuisance for the debtor. Generally, all contact should be conducted between 8am and 9pm local time for the debtor. The Act clearly prohibits a collector from making a telephone ring repeatedly or engaging in telephone conversation continuously with the intent of being an annoyance or becoming abusive and harassing the debtor.

Stop the Calls

When a debtor clearly tells the collector they should speak with an attorney or other legal representative, the collector must stop calling the debtor and begin communicating with the debtor’s representative. Collectors are not allowed to call a debtor’s relatives or employers seeking information on the debtor and the collectors are not allowed to leave messages with these contacts regarding the debt.

Truth, Lies, and Videotape

Because many collectors use deceptive techniques or misrepresent the true amount or nature of the debt, the Act prohibits this behavior and provides legal remedies for consumers who think they’ve been mistreated. Consumers can always record their telephone conversations with collectors to be used as evidence against the collector. In most cases, once an abusive collector is told the conversation is going to be recorded, they hang up.

Say What?

Collectors are prohibited from using abusive or profane language. Also, revealing or discussing the nature of a consumer’s debts with anyone other than a third party collection agency contracted to take over the collection action is specifically prohibited. And collectors are not allowed to send mail or postcards which clearly shows the mailing piece is a collection or debt notice.

More Protection

The FDCPA dictates all collectors clearly identify themselves, provide the name and address of the original creditor and notify the consumer of their right to dispute the debt. In most cases, the period for disputing a debt is 30 days from the date of notification. Consumers can also request information and data which will verify the debt and the collector is prohibited from communicating with the consumer until such information is provided. Click here for Sample Validation Letters

Here Come the Feds

The overall authority for violations of the Act rests with the Federal Trade Commission. In addition to filing complaints with the federal government, consumers can file private lawsuits against a collector and collect damages – actual and statutory, as well as attorney’s fees and court costs – from collectors who have violated the Federal law. Consumers have filed and won lawsuits against abusive collection agencies, in some cases winning sizable awards which forced the collection agency to take out bankruptcy and cease operations. The FDCPA is a strict liability law, so a consumer doesn’t have to prove actual damages in order to claim statutory damages of up to $1,000 plus reasonable attorney fees, when a collector has been found to be in violation.

Consumers Versus Credit Industry

Many consumer groups feel the federal laws don’t go far enough to protect debtors and the $1,000 limit on liability is out of step with current economics. They argue the penalty should be adjusted up to $3,500 or more for each violation of the Act. Credit industry experts feel the federal law allows for frivolous and unnecessary lawsuits for what they consider are minor technical violations of the Act.

Behave!

The Fair Debt Collection Practices Act serves as a guideline for behavior on both sides of a collection action. It defines acceptable practices and attempts to normalize the sometimes rancorous communications between the two parties.