When Debt Collectors Attack: How Are You Protected by Federal Law?

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The FDCPA is the Fair Debt Collection Practices Act. Enacted in 1977, it’s the Federal law that protects consumers from abusive collection practices from third-party debt collectors. There are also many states that have similar protective statutes. For example, those of you who live in California enjoy the FDCPA protections, as well as those afforded to you by the Rosenthal Act.

I certainly hope you’ll never have to deal with collection agencies — but if you do, it’s important that you understand these rights under the Federal act.

Communication Must Occur at Convenient Hours

Collectors may not contact debtors before 8am or after 9pm local time, based on where the consumer is located. That means no calls at 8am Eastern Time to a debtor living in Texas and no calls at 10pm Eastern Time from a collector working in California.

Calls Cannot be Made to the Debtor’s Workplace

There is an exception to this rule. If you give the collector permission to contact you at work or if communicating with the debtor at work isn’t disallowed by their employer, then, in general, it’s allowed. If you tell the collector that you are not allowed to receive calls at work or if you could get in trouble because of their calls, then they must stop.

Disclosure to Third Parties is Not Allowed

In general, the collector is not allowed to communicate with anyone other than the debtor regarding the debt. In other words, the collector can’t call your neighbors and tell them that you owe $5,000 in past due credit card charges. I’ve had some interesting cases where I’ve served as an expert witness that have included evidence of messages left on answering machines. It was argued that this is a violation of this provision because someone other than the debtor was able to listen to the messages.

They Must Stop if You Ask Them

Despite beliefs to the contrary, consumers can actually demand that the collector stop communicating with them. This must be done in writing, not verbally. So, you can’t just tell them “I demand that you stop calling me.”

There are two exceptions to this rule. The collector may contact the debtor after they’ve received a valid written demand to cease communications to let them know that the collector is not attempting to collect the debt any longer. And, they may also notify the debtor that they attempt other methods normally used by collectors to collect debt. Read between the lines…this means a potential lawsuit from a collection attorney.

No Abusive Behavior

We’ve all seen the hidden videos where collectors are threatening to have you thrown in jail or take away your children if you don’t pay your debts. This is clearly not allowed. They are also not allowed to threaten violence, use profanity or insensitive remarks, publish your name as someone who won’t pay their bills (credit reporting is an exception), or call you over and over in an abusive manner. I had a case where the collector called the consumer over 200 times in one year. Is that abusive?  Before you answer, remember that 200 calls over 365 days is much less than one phone call per day. What do you think?

They Must Disclose Who They Are

If you’ve ever received a call from a debt collector it was probably prefaced with “I’m calling from XYZ and the purpose of this call is to collect a debt.” And, if you’ve ever received a letter from a collection agency it probably had language that disclosed that the communication was from a debt collector and that any information they receive may be used in furtherance of collecting a debt. These are required disclosures. They can’t sneak up on you.

No Misrepresentations

What gets a collector in hot water very quickly is any act of dishonesty. Collectors are not allowed to:

1. Imply that they are with a governmental organization

2. Misrepresent the balance of the debt

3. Pretend to be an attorney

4. Imply that non-payment will result in garnishment unless the collector intends to pursue garnishment

5. Threaten legal action if none is intended

6. Imply that not paying debt is a criminal offense

Must Show the Debt As In Dispute, If So

This is an obligation under the Fair Credit Reporting Act (FCRA). If the debtor challenges the validity of the collection the collection agency must show the account as being in dispute not only within their own records but also along with the account as reported to your credit files. This is a fairly common FCRA violation in the cases I’ve been involved with.

There are actually several more rules outlined in the FDCPA but these are the highlights and the more common violations. In fact, we’re on pace to hit 12,000 FDCPA lawsuits this year, which is 3,000 more than last year. So what do you think?  Any interest in owning a collection agency?

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.