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The Fair Debt Collections Practices Act is a federal law designed to protect consumers
from unfair, dishonest and excessive debt collection procedures. While the FDCPA is quite
detailed and lengthy, it is absolutely imperative that creditors and debt collectors know
the ins and outs of this Act. A failure to know what is and is not permissible in your
debt collection processes may subject you to lengthy and costly litigation. The following
are some of the most common violations, though there are many other possible violations:
Late Calling. Under the FDCPA, a debt collector may not,
without the prior written consent of the consumer or the express consent of a court,
communicate with a consumer at an unusual time or place. It is generally assumed that a
proper time for communication is between 8:00 a.m. and 9:00 p.m., consumer's local time.
Calling at Work. If the debt collector knows or has reason to
know that a consumer's employer prohibits the consumer from receiving telephone calls
regarding debt, a debt collector may not telephone the consumer at work.
Calling Too Often. The debt collector may not call the
consumer repeatedly or continuously with the intent to annoy, abuse or harass the debtor.
Threats or Obscene Language. A debt collector may not harass,
oppress or abuse any person in connection with the debt collection. This includes the use
of threats of violence or other criminal means to harm the debtor's reputation, property
or person, and the use of obscene language.
Publishing Debt. It is illegal for a debt collector
(excluding consumer reporting agencies) to publish a list of consumers who allegedly
refuse to pay debts or to advertise for sale any debt in an attempt to coerce payment.
Lack of Debt Collector Announcement. The FDCPA requires the
debt collector to immediately inform the consumer that the communication is from a debt
collector, whether the initial communication is by telephone, in writing or in person. The
debt collector must disclose to the debtor in the initial communication that the debt
collector is attempting to collect a debt, and that any information obtained will be used
for that purpose. Additionally, the FDCPA requires that each communication thereafter be
announced as a communication from a debt collector.
No Written "Validation" Notice. When attempting to
collect a debt, a debt collector must, within five days of the initial communication with
the consumer, send the consumer a written "validation" notice containing the
amount of the debt, the name of the creditor to whom the debt is owed, notice that the
consumer has thirty days to dispute the validity of the debt or any portion thereof, and a
statement that upon the consumer's written request the consumer will be provided
verification of the debt. This notice to the consumer must be in a legible form and
print-type large enough for the average consumer to read. If, according to the notice, the
consumer disputes all or a portion of the debt within the 30-day period, the debt
collector must cease collection of the debt until such time as the debt collector obtains
for the consumer the requested information in writing.
Early Payment Demands. Communications from a debt collector
may not contradict or obscure the 30-day validation notice. For example, you may not
demand payment within the 30-day period which the consumer has to request the debt
validation. Therefore, statements such as "payment due immediately" or
"payment due within ten days" on an initial communication are violations of the
FDCPA.
Reporting Disputed Debt. Once the consumer has informed the
debt collector that the debt is disputed, the debt collector must not further report the
disputed debt, or indicate that the debt is disputed on all reports it makes. For example,
if the creditor or debt collector wishes to report the debt to a credit reporting agency,
that "report" must indicate that the debt is currently disputed.
Time-Barred Debt. Sometimes an "old" debt is bought
by a financial entity that was not originally connected to the debt. Buyers of old debt
pay a few pennies for each dollar of debt and then try to collect the debt for themselves.
For example, a credit card may be offered if the consumer will transfer part or all of the
time-barred debt to the credit card. The consumer probably would not be aware that this
transaction actually renews the old debt which could not otherwise have been sued upon.
This practice is a violation of the FDCPA.
False Attorney Letters. Sometimes, when collection efforts
have failed, collection agencies send out collection letters under the name of an
attorney. When thousands of these letters are sent, the courts have held that it would
have been impossible for the attorney to review the creditor's files regarding each of the
debts for which a letter was sent. If the letters are not actually from the attorney, or
the attorney has not properly reviewed the file, the letters are a violation of the FDCPA.
Any lawsuit on an FDCPA violation must be filed within one year of
the violation or be forfeited under the Statute of Limitations. These lawsuits may be
filed in either state or federal court.
Should the court find that any one or more of the provisions of the
FDCPA were violated, the consumer can recover from both the debt collector and the
creditor any and all actual damages sustained by the consumer, together with such
additional damages as a court may allow (including court costs and attorneys' fees). But a
consumer need not prove any actual damages in order to receive a money judgment. The FDCPA
also allows an award of "statutory" damages in the amount of $1,000, apart from
attorneys' fees and costs. Additionally, in a class action (where many consumers bring a
lawsuit against a debt collector at one time) statutory damages of up to $500,000 may be
awarded (or 1% of the debt collector's net worth whichever is less).
In determining the amount of recovery, the court may look to, among
other things, the frequency and persistence of the debt collector's violations, the nature
of the violations and the extent to which the violations were intentional.
Polk & Associates
May 2000