Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (aka FDCPA), usc|15|1692 et seq., is a United States statute added in 1978 as Title VIII of the Consumer Credit Protection Act. Its purposes are to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy. The Act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act. It is sometimes used in conjunction with the Fair Credit Reporting Act.

People and entities covered by the FDCPA

The FDCPA broadly defines a debt collector as "any person who uses any instrumentality of interstate commerce or the mails 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." [usc|15|1692a] While the FDCPA generally only applies to third party debt collectors--not internal collectors for an "original creditor" -- some states, such as California, have similar state consumer protection laws which mirror the FDCPA, and regulate original creditors. In addition, courts have generally found debt buyers to be covered by the FDCPA even though they are collecting their own debts. The definitions and coverage have changed over time. The FDCPA itself contains numerous exceptions to the definition of a "debt collector," particularly after the October 13, 2006, passage of the Financial Services Regulatory Relief Act of 2006. Attorneys, originally explicitly excepted from the definition of a debt collector, have been included (to the extent that they otherwise meet the definition) since 1986.

The FDCPA's definitions of "consumers" and "debt" specifically restricts the coverage of the act to personal, family or household transactions.Clarifyme|date=August 2007 Thus, debts owed by businesses (or by individuals for business purposes) are not subject to the FDCPA.

Prohibited conduct

The Act prohibits certain types of "abusive and deceptive" conduct when attempting to collect debts, including the following:

* Hours for phone contact: contacting consumers by telephone outside of the hours of 8:00 a.m. to 9:00 p.m. local time [usc|15|1692c(a)(1)]
* Contact after being asked to stop: contacting consumers in any way (other than litigation) after receiving "written" notice that said consumer wishes no further contact or refuses to pay the alleged debt, with certain exceptions, including advising that collection efforts are being terminated or that the collector intends to file a lawsuit or pursue other remedies where permitted [usc|15|1692c(c)]
* Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously: with intent to annoy, abuse, or harass any person at the called number. [usc|15|1692d]
* Contacting consumers at their place of employment after having been advised in writing that this is not acceptable [usc|15|1692c(a)(3)]
* Contacting consumer known to be represented by an attorney [usc|15|1692c(a)(2)]
* Contacting consumer after request for validation: contacting the consumer or the pursuing collection efforts by the debt collector "after" receipt of a consumer's written request for verification of a debt (or for the name and address of the original creditor on a debt) and "before" the debt collector mails the consumer the requested verification or original creditor's name and address [usc|15|1692g(b)]
* Misrepresentation or deceit: misrepresenting the debt or using deception to collect the debt, including a debt collector's misrepresentation that he or she is an attorney or law enforcement officer [usc|15|1692e]
* Publishing the consumer's name or address on a "bad debt" list [usc|15|1692(d)]
* Seeking unjustified amounts, which would include demanding any amounts not permitted under an applicable contract or as provided under applicable law [usc|15|1692f(1); "Hodges v. Sasil Corp., 915 A.2d 1 (N.J. 2007)]
* Threatening arrest or legal action that is either not permitted or not actually contemplated [usc|15|1692e]
* Abusive or profane language used in the course of communication related to the debt [usc|15|1692d]
* Contact with third parties: revealing or discussing the nature of debts with third parties "(other than the consumer's spouse or attorney)" or threatening such action [usc|15|1692d and usc|15|1692e]
* Contact by embarrassing media, such as communicating with a consumer regarding a debt by post card, or using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business [usc|15|1692f(8)] [usc|15|1692f(7)]
* Reporting false information on a consumer's credit report or threatening to do so in the process of collection [usc|15|1692e(8)]

Required conduct

Further, the FDCPA requires debt collectors to:

* Identify themselves and notify the consumer, in every communication, that the communication is from a debt collector, and that information received will be used to effect collection of the debt [usc|15|1692e(11)]
* Give the name and address of the original creditor "(company to which the debt was originally payable)" upon the consumer's written request made within 30 days of receipt of the §1692g validation notice; [usc|15|1692g(b)]
* Notify the consumer of their right to dispute the debt, in part or in full, with the debt collector. This so-called 30-day "§1692g" validation notice is required to be sent by debt collectors within five days of the initial communication with the consumer, though in 2006 the definition of "initial communication" was amended to exclude "a formal pleading in a civil action" for purposes of triggering the §1692g validation notice, [usc|15|1692g(d)] complicating the matter where the debt collector is an attorney or law firm. The consumer's receipt of this notice starts the clock running on the 30-day right to demand validation of the debt from the debt collector. [usc|15|1692g(b)]
* Provide verification [usc|15|1692g(a)(4)] of the debt If a consumer sends a written dispute or request for verification within 30 days of receiving the §1692g validation notice, then the debt collector must either mail the consumer the requested validation information or cease collection efforts altogether. Such asserted disputes must also be reported by the creditor to any credit bureau that reports the debt. Consumers may still dispute a debt verbally or after the thirty-day period has elapsed, but doing so waives the right to compel the debt collector to produce verification of the debt. Verification should include at a minimum the amount owed and the name and address of the original creditor. [usc|15|1692g(b)]
* File a lawsuit in a proper venue - a debt collector may file a lawsuit, if at all, only in a place where the consumer lives or signed the contract [usc|15|1692i]

This should not be understood to be an exhaustive list either of prohibited or required conduct.

Enforcement of the FDCPA

The Federal Trade Commission has the authority to administratively enforce the FDCPA using its powers under the Federal Trade Commission Act. [usc|15|1692l]

Aggrieved consumers may also file a private lawsuit in a state or federal court to collect damages (actual, statutory, attorney's fee and court-costs) from third-party debt collectors. The FDCPA is a strict liability law, which means that a consumer need not prove actual damages in order to claim statutory damages of up to $1,000 plus reasonable attorney fees if a debt collector is proven to have violated the FDCPA. [usc|15|1692k(a)(2)] The collector may, however, escape penalty if it shows that the violation (or violations) was the result of a "bona fide error." [usc|15|1692k(c)]

Alternately, if the consumer loses the lawsuit and the court determines that the consumer filed the case in bad faith and for the purposes of harassment, the court may then award attorney's fees to the debt collector.

Criticisms of the FDCPA

By consumer groups

Some consumer groups argue that the FDCPA does not go far enough, and does not provide sufficient deterrence against unscrupulous collection agencies. Consumer groups have complained that the maximum statutory damages contained in the original 1977 version of the law has not kept up with inflation. According to the inflation calculator at the [http://stats.bls.gov/ Bureau of Labor Statistics'] website, that same penalty would be the equivalent of $3,105.83 by 2006 standards.

Many debt collectors, and the consumer rights attorneys who sue them for violations of the FDCPA rely heavily on the definitive legal treatise on the FDCPA produced by the [http://www.nclc.org/publications/manuals/fair_debt_collection.shtml National Consumer Law Center] .

By the credit industry

Conversely, many in the credit industry and some courts have taken the stance that the FDCPA has often been used to file frivolous lawsuits and seek damages for minor technical violations and has, at times, seriously impeded their ability to collect valid debts. [cite journal |last=Rubinstein |first=Kenneth |last2=Rheaume |first2=Alexander |title=Courts, Congress send mixed messages to debt collectors |journal=New Hampshire Business Review |date=July 20, 2007 |url=http://www.nh.com/apps/pbcs.dll/article?AID=/20070720/BUSINESSREVIEW05/70718029 |accessdate=2007-08-23; "O'Connor v. Check Rite, Ltd.," 973 F. Supp. 1010 (D.Colo. 1997) (awarding plaintiff statutory damages of only $0.01, and then finding plaintiff liable for a defendant’s attorneys’ fees and costs because of the plaintiff’s lack of discretion in filing the action). ] Given the strict liability nature of the FDCPA, the collections industry and the insurance companies who provide liability coverage for them have repeatedly lobbied Congress to relax provisions of the law to reduce their civil exposure for these "hyper-technical" violations. ["Bailey v. Security Nat. Servicing Corp.," 154 F.3d 384 (C.A.7 (Ill.), 1998); "Carroll v. Wolpoff & Abramson", 53 F.3d 626 (C.A.4 (Md.), 1995)]

The FTC Report

For its part, the Federal Trade Commission (FTC) produces an annual report to Congress of its findings with respect to its FDCPA enforcement activities. This report details consumer complaints to the FTC about alleged debt collector violations of the FDCPA. There were more than 69,000 consumer complaints made to the FTC about debt collectors in 2006, which is more complaints than the FTC receives about any other specific industry. This was an overall increase of 3.8% over 2005. [cite web |url=http://www.ftc.gov/os/2006/04/P0648042006FDCPAReport.pdf|title=Federal Trade Commission Annual Report 2007; Fair Debt Collection Practices Act|accessdate=2007-08-24|publisher=Federal Trade Commission]

References

External links

Note: Check to be sure you are looking at the current version of the Act. It was most recently amended in 2006. "See" [http://pubcit.typepad.com/clpblog/2006/10/fdcpa_amendment.html Public Citizen] .
* [http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf Fair Debt Collection Practices Act] - United States Federal Trade Commission
* [http://www.acainternational.org/?cid=209 ACA International's Consumer Complaint Resolution Web Page]
* [http://www.ftc.gov/os/statutes/fdcpajump.htm FTC's FDCPA Web Page]