The Fair Debt Collection Practices Act – What Is It?
The Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”) is a federal consumer protection statute which was signed into law in 1977 and became effective in 1978. It specifically governs the conduct of third-party debt collectors. The purpose of the FDCPA is to eliminate unfair, deceptive, and abusive practices during debt collection processes. In order to achieve this goal, the FDCPA contains many provisions that prohibit debt collectors from engaging in unlawful collections acts, and it also provides remedies for injured consumers.
What is prohibited?
The FDCPA contains a number of rules that a debt collector must follow when attempting to collect a debt. When contacting a debtor, a debt collector must abide by specific time restrictions; they cannot communicate with debtors at inconvenient times. This means that debt collectors are prohibited from calling a consumer before 8 a.m. or after 9 p.m. of the consumer’s local time unless the consumer has given them prior consent to do so. Additionally, while a debt collector can call a consumer’s place of employment to verify if a consumer works there, if the consumer objects to these workplace calls and asks for them to be stopped, the debt collector must cease these calls. A consumer can also stop a debt collector from calling their telephone by sending them a written request to cease communication by mail.
A debt collector can contact third-party individuals (for example, a debtor’s relatives, neighbors, and so forth) in order to obtain a debtor’s location information but they cannot contact these individuals more than once or if they already have the debtor’s location information. Additionally, a debt collector cannot discuss a consumer’s debt with any third parties and can only reveal information about a debt to the debtor and their spouse.
Within five days of a debt collector’s first contact with a debtor, they must provide the debtor with a written “validation notice”. This notice must include information about the amount of debt that is owed, the name of the creditor that the debt is owed to, and what the consumer can do if they do not believe that the debt is theirs. The FDCPA outlines all of the things that need to be in this letter.
If a consumer believes that they are being wrongfully pursued for a debt, they have the right to dispute the debt and to ask for validation of the debt. If a letter asking for validation is sent by a consumer to the debt collector within 30 days of receiving the “validation notice”, the collector must provide the consumer with written verification of the debt before it can continue with its collection practices. A debt collector is prohibited from continuing collection efforts with a consumer until it provides said notice to the consumer.
During the actual debt collection process, there are many practices that are prohibited under the FDCPA and for the most part, these practices are split into three general groups: 1) harassing or abusive practices; 2) false or misleading representations; and 3) unfair practices.
When attempting to collect a debt, a debt collector does not have the right to harass or abuse a consumer. Harassing or abusive practices by debt collectors include, but are not limited to:
- Using profane or obscene language that would abuse a hearer or reader; and
- Causing a consumer’s phone to ring repeatedly with the intention of annoying or harassing them; and
- Using or threatening to use violence in order to harm a consumer, their property, or their reputation; and
- Calling a consumer without properly identifying themselves.
Debt collectors are also prohibited from using false, deceptive, or misleading representations in connection with debt collection. Such representations include, but are not limited to:
- Using a badge, uniform, or other identification to falsely imply that they are affiliated with the United States or any State; and
- Falsely representing the legal status, amount, or character of a debt; and
- Falsely representing that the debt collector is an attorney or that communications made with the consumer are from an attorney; and
- Threatening to take action against a consumer that is illegal, that the debt collector does not have the right to take, or that the debt collector does not intend to take; and
- Falsely representing that a consumer could be arrested or imprisoned, or that their property or wages could be seized, if they do not make a payment on their debt; and
- Using a name that is not the debt collector’s actual business name.
Additionally, a debt collector cannot use unfair or unconscionable means during the debt collection process, including, but not limited to:
- Collecting an unauthorized fee, charge, or expense from a consumer that is in addition to their principal obligation; and
- Soliciting a postdated check or other payment method in order to use it as a threat or to begin criminal prosecution; and
- Repossessing or threatening to repossess a consumer’s property when the creditor does not have the right or does not actually intend to do so; and
- Contacting a consumer via postcard.
Who does the law apply to and how can consumers sue?
The FDCPA applies to all third-party debt collectors — any person who regularly collects consumer debts for another entity or uses a name that is different from its own when collecting its own debts. Third-party debt collectors include employees from collection agencies but do not include internal collectors from original creditors. Additionally, the law only applies to household consumer debts like medical bills, credit card debt, student loan debt, and so forth. The FDCPA does not govern the collection of a personal or a business debt.
The FDCPA provides consumers with private rights of action against debt collectors that violate the law. An injured consumer can file either an individual action or a class action lawsuit.
What damages are consumers entitled to?
A debt collector that violates the FDCPA would have to provide an injured consumer with actual damages; additional statutory damages of up to $1,000.00; as well as costs and reasonable attorney’s fees.
When determining the amount of additional damages, the court would have to take into account the frequency, persistency, and nature of the debt collector’s violations, as well as the extent to which their actions were intentional.
In the case of a class action, each named plaintiff would receive additional damages of up to $1,000.00, and class members would be provided with an amount of up to $500,000 or 1% of the debt collector’s net worth, whichever is less, to be split amongst them.
What is the statute of limitations period?
The statute of limitations period is a legal provision that sets forth the maximum amount of time that a party has to initiate legal proceedings in regard to a particular claim for relief; generally starting from the date that an alleged unlawful action accrued. The statute of limitations for claims under the FDCPA is one year from the date that the unlawful practice occurred.
Some of the places that a consumer can look to for help or answers to questions:
The laws and statutes discussed above can change. So, in the state that a consumer resides in, a consumer protection agency, the Office of the Attorney General, and/or a consumer protection attorney who is licensed in a consumer’s respective state can help a consumer in getting help, up to date information and interpretations, and/or with determining the answers to their questions in regard to the aforementioned laws. The Consumer Financial Protection Bureau can assist as well.