Consumers, Collectors and the Fair Debt Collection Practices Act
In America's credit-oriented economy, consumer debt is at an all-time high and the collection of past-due accounts has become a major problem for businesses of all types. Millions of dollars are owed to creditors in overdue bills, and many of them are referred to independent collection agencies. The majority of these collectors perform a valuable service both to their creditor clients and to the consumer public because their collection efforts reduce losses and, therefore, help to hold the line on prices.
The publicity sometimes given to unethical tactics of a small percentage of debt collectors, however, sometimes overshadows the beneficial work done by the great majority of ethical collectors. Not only do independent collectors help keep prices down, but many actively participate in counseling services for individuals with financial problems.
Responding to problems caused by the conduct of the unethical few, Congress passed the Fair Debt Collection Practices Act (FDCPA) in 1977. This law addressed the problems of unfair and deceptive collection tactics.
If I owe past-due bills, what does this law do for me?
The FDCPA provides you with assurances of fair and ethical treatment by outlawing certain collection tactics and setting a basic national standard of conduct for professional "third-party" collectors. This law DOES NOT provide consumers with a means to avoid paying their legal debts.
Does the law cover everybody who collects debts?
The only debt collectors covered by this law are independent, or "third-party" collectors and attorneys who collect debts for others. The law does not cover credit granters collecting their own accounts.
What types of debts are covered by this law?
The collection of debts primarily for family or personal purposes such as medical expenses, retail purchases and the like are the ones covered. The collection of commercial debts for business purposes are not covered by the Act.
What if a collector tries to collect a debt I don't owe?
No collector wants to spend time and effort talking to the wrong consumer about a debt and all ethical collectors have procedures to correct problems such as these. If you do not owe the debt the collector has written to you about, report this fact immediately and provide the collector with facts supporting your position.
If you challenge the validity of the debt in writing within 30 days of the first notice to you, the collector will halt collection efforts until verification has been received from the creditor. Once the creditor has responded, the collector will verify the debt to you in writing. If the creditor is unable to verify the debt, the collector will cease collection efforts.
What if I won't pay a debt for a faulty product or inadequate service?
The Fair Debt Collection Practices Act does not deal with this type of problem between a consumer and a creditor. However, consumers should not wait until an account has been turned over to a collector before complaining about faulty merchandise or inadequate service. You should attempt to resolve the problem with the creditor before the account ever gets to a collection stage. Otherwise, it might appear that you are using this technique to further delay payment. However, there are cases where a consumer has pursued a legitimate complaint, yet the account is still turned over to a collector.
In this situation most debt collectors are prepared to assist in clarifying the problem in order to arrive at a solution that is satisfactory to all. If you don't intend to pay a bill because the product was faulty, or similar reasons, contact the collector immediately and explain the problem. Collectors are prepared to listen and may try to help.
What collection tactics have been prohibited by this law?
Debt collectors may not make threats of violence, use obscene language, make harassing telephone calls or calls at times known to be inconvenient, impersonate government officials or attorneys, misrepresent a consumer's legal right, obtain information under false pretenses, collect more than is legally due, misuse post-dated checks or hold debtors up to public ridicule.
Collectors also are prohibited from discussing your debt with third parties such as a neighbor, friend or employer unless the collector has your permission or the consent of a court.
Will credit bureaus still get information from collection agencies?
Yes. Congress recognized that accurate credit information includes information on debts placed for collection. Collection agencies still can report the status of their accounts to credit bureaus. Also, the Act requires that if a debt has been reported to a credit bureau, and the collector later learns it is disputed, this fact must be reported to the credit bureau.
Can a debt collector add additional charges or interest to an account?
This cannot be done unless state law allows it or the original credit agreement you signed expressly allows such charges or interest to be added.
Can a collector call my employer about my past-due bills?
No. The collector can discuss your debt only with you, your spouse, your attorney, or a credit bureau. He may also discuss it with his attorney or the creditor's attorney. Generally, the only time a collector may discuss the debt with your employer, or any uninvolved third party, is with your specific permission.
Does the law allow collectors to seek my current address or place of employment?
Yes. When seeking that type of information on a debtor in preparation for collecting a debt, the debt collector can contact anyone he reasonable believes can assist in finding out the debtor's address, home telephone number and place of employment. The key restriction on the collector when seeking location information is that he not reveals the existence of the debt or discuss it with third-party sources or information.
What should I do if I am the victim of illegal collection tactics?
If you believe you have been subjected to unethical collection tactics, you should immediately contact the manager or owner of the collection agency involved. All ethical collectors support this law and will correct any activities that may be in violation of it. If the owner or manager of the agency is unresponsive to your complaint, you should consider contacting the original creditor, your attorney, your state's consumer advocate, or the Federal Trade Commission. The best procedure, however, is to first attempt to work out the problem with the collector.
What are the penalties for violating the law?
As with most consumer legislation, Congress recognized that despite the very best efforts of businesses, occasional errors would be made. Taking this into account, the law provides protection for the ethical collector who may make an occasional error if that collector has "reasonable procedures" to avoid unintentional violations.
Collectors, however, are subject to civil suits that will award the successful consumer his actual damages, reasonable attorney's fees and additional damages of up to $1,000. There are also provisions for class action suits against collectors.
Before suing a debt collector, all consumers should be aware that the law also protects the ethical collector against nuisance or harassing lawsuits. If the court finds that a consumer's lawsuit was brought in bad faith and for the purpose of harassment, the consumer may be required to pay the cost of the collector's defense.
What if I simply refuse to pay a debt?
If a consumer informs a collector in writing that he or she refuses to pay the debt, the collector will stop his collection efforts for the debt in question. It should be remembered, however, that if the collector an creditor can no longer attempt to recover the debt, it may force them into taking legal action against a consumer who refuses to pay and this could result in attachment or assets or wage garnishment, if permitted by state law.
A consumer's decision to inform the collector that he refuses to pay is a serious one and should not be done hastily. Refusal to pay a just debt may limit a consumer's ability to receive credit in the future, because the delinquency can become part of the consumer's credit history for up to seven years.
Will this law enable some people to avoid paying their bills?
No. Some individuals will always attempt to avoid paying their debts, but the law does not provide any specific means to accomplish this. The dual purposes of the law are to set national standards for conduct in the collection industry and to eliminate any competitive advantage unethical collectors may have enjoyed in the past. Congress clearly recognized that it is in the interests of all consumers for debts to be collected, because it will aid in controlling business and professional losses and, therefore, hold down prices. While standards of conduct have been set on a national basis, there is nothing in the law to prevent collection agencies from using energetic collection methods so long as they do not harass or deceive the debtor.
|
