How the Fair Debt Collection Practices Act Protects US Citizens

When a consumer is unable to make payments on a debt, the creditor they owe money to will often hire a third-party collection company to help them collect the amounts due. These third-party collection agencies historically used abusive methods designed to harass and embarrass debtors to try to collect the amounts due. For example, making calls anonymously, yelling at the debtor, and lying to a debtor were very common. Eventually federal legislatures recognized a need to protect consumers from this type of unfair and inhumane behavior and they passed the Fair Debt Collection Practices Act(“FDCPA”), 15 U.S.C. §§ 1692-1692. The goal of the FDCPA is to eliminate this type of behavior in debt collection by prohibiting debt collectors from using harassment, deception, and unfair practices to collect a consumer debt and penalizing them if they do.

Prohibited Conduct Under the FDCPA

The FDCPA restricts the types of actions that debt collectors can take in attempting to collect a consumer debt. A consumer debt is one related primarily to “personal, family, or household purposes.” Debts resulting from car insurance premiums, homeowner’s association fees, and bounced checks for household supplies are common examples of consumer debts.

The restrictions on debt collectors actions fall into these categories: prohibitions on when and how the debt collector can contact the consumer; harassment and abusive actions; false or misleading representations; and generally unfair practices.

Some of the things debt collectors are prohibited from doing to collect a debt are:

  • Threatening to physically harm a debtor
  • Making public disclosure of debtor’s identity
  • Harassing a debtor through continuous calls
  • Refusing to identify themselves
  • Threatening legal action that the collector cannot take or does not intend to take
  • Make false statements about the legal impact of failing to pay the debt
  • Sending the consumer documents that appear to be from a court or government agency but are not
  • Contacting a consumer directly if the consumer is represented by an attorney
  • Calling the consumer before 8:00 a.m. or after 9:00 p.m.
  • Ignore a consumer’s request that the debt collector provide verification of the debt

Penalties for Violations of the FDCPA

Unfortunately, some debt collectors simply choose to ignore the FDCPA’s prohibitions and continue to use unfair and intimidating actions of harassment to try to collect a debt. There are penalties for doing so.

The Federal Trade Commission, the federal agency in charge of administering the FDCPA investigates potential violations of the FDCPA and if it determines there has been a violation, can sue the debt collector to obtain a court order stopping the behavior and the assessment of financial penalties against the debt collector. It is not uncommon for these penalties to reach hundreds of thousands or even millions of dollars. Consumers can submit complaints about debt collectors who they believe are violating the FDCPA to the FTC.

Another way debt collectors are penalized for violating the FDCPA is through civil lawsuits brought by the debtors who have been subjected to the collector’s unfair collection practices. Debtors can sue the debt collector within one year of the action or actions that violated the FDCPA. If the debtor successfully proves the violations, they can recover monetary compensation for the damages, like emotional and physical distress, that they suffered; flat damages of up to $1,000 not tied to showing injury; and the costs and attorneys fees for bringing the lawsuit.

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