Fair Credit Debt Collections Act

Enacted in 1978, the Fair Debt Collection Practices Act is known as the FDCPA. The act is a part of the more encompassing Consumer Credit Protection Act. The purpose of the FDCPA is to protect consumers from aggressive, abusive or illegal debt collection practices by debt collection agencies. It also provides measures for consumers to have their debts validated with the original creditor before further contact from the collection agency can take place.

Third Party Collections

The act protects consumers from third-party debt collectors' abusive or illegal tactics to collect on past-due accounts. Third party agencies are either hired by the original creditor on their behalf, or the debt is purchased by third party agencies for pennies on the dollar. Debt collection agencies use the newly purchased debt and attempt to turn a significant profit by collecting the entire amount, plus interest, from the consumer.

Illegal Conduct

The FDCPA regulates the types and forms of communications permitted and those that are banned. Collectors are only allowed to contact the consumer who actually owes the debt, and only during normal business hours. They are not allowed to contact the workplace or call outside of normal hours if asked by the consumer not to do so, according to the Federal Trade Commission. Threatening or intimidating conduct of any kind is strictly forbidden. Any communication by a third-party collector that is perceived to scare, threaten, abuse or harass is against the law and should be reported to the Federal Trade Commission.

Required Conduct

Specific information is required of a debt collection agency. Each time the collector contacts a consumer, the name of the agency and representative must be given. Additionally, the agency must convey the consumer's rights and the name of the original creditor.

Disputed Debts

Debt collectors often contact the incorrect person. Debt validation is an option available to the consumer under FDCPA guidelines, and it forces the collector to provide proof the debt exists, that it belongs to the consumer and to justify the amount owed. Once a validation of debt is requested or submitted to a collector by a consumer, all communication must cease until the necessary proof is obtained and made readily available to the consumer.

Violation of the Act

The Federal Trade Commission administers and enforces the FDCPA. Violations by debt collectors of the act are reported to the FTC for each occurrence. Additionally, the consumer has the right under the act to file suit against the debt collector for each violation committed during the course of the collections. Statutory damages up to $1,000 per instance, plus reasonable attorney's fees, are allowed under the FDCPA provisions.

References

• ExpertLaw: The Fair Debt Collection Practices Act
• Federal Trade Commission: Fair Debt Collections Practices Act