From Jan 2016 thru June 2018, the Consumer Financial Protection Bureau (CFPB) received over 300,000 complaints about the debt collection industry. The most common: companies attempting to collect debts not actually owed.

The Fair Debt Collection Practices Act.

Most people have heard of the Fair Debt Collection Practices Act (FDCPA), the most important federal consumer protection for those dealing with debt collectors. But, relatively few understand the full scope of their rights under it. A basic understanding of the FDCPA can provide consumers confidence and additional leverage when dealing with debt collectors.

It’s important to clarify that the FDCPA does bind all people who collect debts. “Debt collector” is specifically defined by the FDCPA as a person or entity who engages:

in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

That means the original creditor is almost never a “debt collector” and is not covered by the FDCPA, with a few key exceptions for government officials and original creditors representing themselves as a different entity. Note also that the FDCPA only applies when the collector is attempting to collect a “personal, consumer, or household” debt. Debts incurred for business purposes are not covered.

Mandatory Communications.

Debt collectors are required to preface communications to consumers with what’s sometimes referred to as a ‘mini-Miranda warning’:

a statement that the communication is from a debt collector and that information obtained from the debtor may be used to collect the debt. 

They must also provide as a “validation letter”, within five days of initially contacting the consumer, which must state:

• how much is owed;
• who’s seeking payment; &
• that the collector will assume the debt is valid in 30 days, absent dispute, and provide verification of the debt along with information on the original creditor if sought within 30 days.

Sending debt collectors a “verification letter”, increases the burden on them and reduces the chances of paying a debt you’re not legally obligated to. It’s also best practices to avoid admitting you owe the debt or offering to make any payments until you’ve collected as much information about the validity of it as possible. Affirming or making a payment on a debt that is past the statute of limitations can restart the period and can result in you being liable on a debt that formerly couldn’t have supported an enforcement action.   

Prohibited Communications.

Subsequent communications are also regulated. Unless you agree, debt collectors can’t contact you between 9 p.m. and 8 a.m. They’re bound to abide by requests as to the manner of communications with you. Some requests are only enforceable if delivered in writing, such as that they stop contacting you about the debt altogether or that they only contact you through your attorney (if collector is an attorney they’re likely required by rules of professional ethics to do this anyway). Of course, asking a debt collector not to contact you wouldn’t prevent them from going to court to collect on your debt, which could result in a judgement and wage garnishment.

Debt collectors can’t use “harassing or abusive practices.” Among common disallowed practices are, in connection with attempting to collect a debt:

• using profanity, slurs, or obscenity;
• threatening violence;
• not identifying themselves as debt collectors;
• attempting to disguise communications as coming from a credit bureau, court, or government agency;
• calling with excessive frequency;
• attempting to collect, fees or interest not permitted by the underlying contract;
• soliciting postdated checks; &
• depositing or threatening to deposit postdated checks before the intended date. 

Prohibited conduct also includes anything “false, deceptive, or misleading.” Collectors must answer questions truthfully, although they can avoid this obligation by not answering. But, knowing the rule, you can gage the answer from the elusion. It’s wise to ask whether the debt in question is beyond the statute of limitations and what the repercussions of nonpayment are. Invoking the threat of arrest is always untrue and a clear FDCPA violation.

Contact with third parties is also highly regulated. Debt collectors must stop calling you at your job at your request. They can’t disclose your debt to your relatives (save spouses), neighbors, or associates without your consent, including posting your debt for sale to the public. They’re permitted to contact third parties who know you, but they may do so only for the purposes of collecting information about you, they can’t disclose that they’re attempting to collect a debt, and they can only contact a third party once to make such an inquiry.

How to Exercise Your Rights Under the FDCPA.

It’s incumbent upon consumers to enforce the FDCPA by filing a complaint with the CFBP, your state attorney general, or by suing the debt collector. The FDCPA provides statutory damages for claimants of $1,000 per violation, and the possibility of court costs and attorneys’ fees, to incentivize enforcement actions. Any recourse requires documentation of each allegedly unlawful, abusive, or harassing act. Affirmative communications also affect your rights, so documenting all communications in both directions is important. 

CFBP has numerous sample forms, which can be easily adapted to your situation. If you need help suing a debt collector or have questions regarding credit card bills, lawsuits, or bankruptcy options, contact an experienced attorney for advice.