What Is the Fair Debt Collection Practices Act (FDCPA)?
Having debt in collections can be overwhelming. However, you may not know that the FDCPA provides you with protection. This law regulates the actions of third-party debt collectors if they contact you and attempt to collect a debt.
Debt collectors are notorious for harassing consumers when they seek repayment. They have a reputation for calling excessively and threatening to take action that may not be legal. This guide will look at the ways the FDCPA protects you and give you some pointers for dealing with debt collectors if they violate the law.
Table of contents
- What is the FDCPA?
- What types of collections does the FDCPA apply to?
- How does the FDCPA protect you?
What is the FDCPA?
The FDCPA is the federal law that sets rules for how debt collectors can contact debtors. It protects consumers from unethical or inaccurate collection attempts. The Federal Trade Commission (FTC) enforces this law which was passed in 1977 and amended in 2010. The FTC is a federal agency that protects consumers and maintains fair competition in the marketplace, including debt collection attempts. The law specifically limits how and when collection agencies can contact you, and it allows you to dispute debts.
What types of collections does the FDCPA apply to?
It’s important to understand what types of collections the FDCPA does, and doesn’t, apply to. There are two key distinctions:
- Third-party debt collectors: The FDCPA pertains to collection attempts by third-party collectors/debt collection agencies. The agencies either purchase debts from lenders/service providers or the lenders employ them to help collect payments. The law doesn’t pertain to the initial creditor or provider.
- Consumer debts: The FDCPA applies to all consumer debts, such as credit cards, student loans and medical bills, but it doesn’t apply to commercial debts. Therefore, if your business defaults on a loan or payments, the FDCPA won’t provide protection without a personal guarantee.
How does the FDCPA protect you?
You can read the FDCPA in its entirety at ftc.gov but listed below are the most important ways it protects you.
It limits how debt collectors can contact you
First and foremost, the FDCPA sets the terms for all of a collection agency’s correspondence with you. It ensures that debt collectors do not overstep by contacting you at inappropriate times or sharing your information with others, and it limits their interference in your daily life.
Here are a few specific guidelines:
- Debt collectors may only contact you between 8 a.m. and 9 p.m.
- At your request, you can prohibit collection agencies from contacting you at work.
- You may choose to only communicate with debt collectors in writing.
- You have the right to stop debt collectors from contacting you — but it won’t remove the collections account from your credit report, and unpaid debts may lead to a lawsuit.
- Debt collectors may not contact third parties, such as your employer or relatives, about your debt.
- You request collection agencies to speak exclusively with your attorney.
According to the FDCPA, you must make any requests about how the collections agency may contact you in writing. The Consumer Financial Protection Bureau (CFPB), another federal agency at your disposal, provides sample letters for several of these requests.
It prohibits debt collectors from harassing or threatening you
Debt collectors should be open when they communicate with you. This includes the actions they propose and the language they use. Debt collectors are prohibited from:
- Using profane language
- Threatening to inform your friends, family or coworkers
- Publishing your debts to the public
- Threatening violence against you
- Threatening to garnish your wages without a court order
- Calling repetitively to harass you
- Threatening to take your personal property illegally
It requires debt collectors to be honest with you
Debt collectors are legally bound to be honest with you and completely transparent in their collection attempts. They can’t falsely represent themselves as police officers, government agents, lawyers or representatives of credit bureaus. Likewise, they can’t send you letters designed to look like legally binding government documents.
They can’t lie about the repercussions of failing to make a payment or threaten to take any illegal action, such as suing you beyond the statute of limitations or seizing your property. Last, debt collectors can’t misrepresent any of the details regarding your debt. However, they may choose not to disclose them. This includes the amount of money you owe and the statute of limitations on the debt. They also can’t deposit a post-dated check early or collect more than you owe.
It allows you to seek debt validation
One of the most important and often overlooked aspects of the FDCPA is debt validation. Whenever a third-party debt collector claims you owe them money, the law requires them to present you with proof of your debt. They must also send you further information if you submit a debt validation letter.
Under the FDCPA, a collections agency should send you a letter within five days of contacting you. It should include the following:
- The original lender/service provider’s name
- The amount of money you owe
- Instructions for repayment
- An understanding that the debt is valid unless you dispute it within 30 days
- An understanding that if you send a debt validation request within 30 days, the agency will provide it
If a debt collector can’t provide adequate documentation of a debt, they must:
- Report it to the credit bureaus
- Withdraw credit entries from your report
- Cease their communications
It allows you to take legal action when a debt collector violates the law
According to the FTC and the CFPB, debt collectors garner more complaints than any other financial industry under their jurisdiction. For instance, the FTC lists dozens of lawsuits waged against popular debt collectors for violating the FDCPA.
If a collection agency violates your rights, it’s easy to take action against it. You can start by filing a complaint with the CFPB. In addition, you can complain to the state attorney general’s office or the FTC.
You may also seek legal action against the debt collectors. Many law firms are well-versed in dealing with collections agencies and violations of the FDCPA. Finally, you may want to consider hiring a credit repair company to help confront the collections agency and make sure they follow the tenets of the FDCPA.
Tips for dealing with debt collectors
If a debt collection agency contacts you, take advantage of the protection the FDCPA provides. It's important that you know your rights, so you can hold debt collectors accountable for their actions and make dealing with the agency as stress-free as possible.
When you interact with debt collectors, keep the following points in mind:
- Track your score: Stay on top of your credit with a free credit monitoring service that identifies faulty reporting, identity theft, and any overall changes to your score.
- Act quickly: When a collections account entry appears on your credit report, you should contact the agency as soon as possible to dispute the claim.
- Stay informed: Before you pay a debt collector or share your information, make sure they’re using it legitimately so they don’t scam you.
- Send letters: Whether you’re disputing a debt, ceasing communications or negotiating a payment, handle all of your correspondence with debt collectors by letter for verification.
- Document everything: Make a note of any FDCPA violations. Having a log of your interactions can be critical if you need to file a complaint or lawsuit.
- Get help: If you feel like you need assistance dealing with a debt collector, don’t hesitate to consult an attorney or credit repair specialist.
- Report violations: If a debt collector infringes on your rights, report it. The FTC and CFPB are there to protect consumers and stop debt collectors from breaking the law.
Disclaimer: This story was originally published on August 31, 2020, on BetterCreditBlog.org. For more information on the Fair Debt Collection Practices Act, please visit: https://www.ftc.gov/legal-library/browse/rules/fair-debt-collection-practices-act-text.