The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act covers collection of any debt incurred for personal, family, or household purposes.

The Act applies to:

• Any person in the business of collecting debts owed to others, unless both are related by common ownership or control.
• Any creditor who, collecting from his/her own debtors, uses a name other than his/her own.
• Anyone who regularly collects or attempts to collect debts for another.

Not all debt collectors are subject to the Act. It does not apply to banks, other lenders, or businesses that collect their own accounts, using their own names, nor does it cover them when they collect an isolated debt for another.

Locating a Debtor

A covered debt collector may contact a person other than the debtor only to discover or verify the debtor's location. In doing so, the collector must:

• Identify himself, but he must identify his employer only if expressly requested to do so.
• Not reveal the consumer's indebtedness to anyone other than the debtor.
• Not use a post card or in any way reveal debt collection activity.
• Not communicate with that person more than once unless reasonably necessary. If the collector learns the identity of an attorney who is representing the debtor, the contact must be with that attorney.

Contacting the Debtor

The law, of course, allows a collector to make reasonable efforts to communicate with a debtor about a debt. A covered collector may not contact a debtor about an obligation:

• At an inconvenient or unusual time (the hours between 8 a.m. and 9 p.m. are considered convenient).
• At an inconvenient place.
• At a place of employment after you have sent them a letter certified mail/return receipt asking them not to contact you at work. Contact also may not be made after the debtor notifies the collector in writing of a refusal to pay a debt or objection to the contacts; however, contact may be made to explain the possible consequences to the debtor.

Prohibited Tactics

The law prohibits harassing, oppressing, or abusive conduct in connection with collection of a debt. This includes but is not limited to:

• The use or threat of violence or harm to the person, his/her reputation, or property.
• Use of obscene language.
• Publicizing the debt.
• Anonymous or annoying or repetitive telephone calls.
• False, deceptive, or misleading representations as to the collector's identity.
• False representations of the status of the debt and the consequences of nonpayment.
• Failure to adequately disclose the reason for contacting the consumer.
• Collecting an additional fee not authorized by law or the terms of the debt agreement.
• Accepting a check postdated by more than five days except under specified written conditions.
• Charging the debtor for collect calls or telegram fees.
• Communicating by post card.

Validating the debt

Within five days after contacting a debtor about paying a debt, the collector must send a written notice that includes the following information:

• The amount of the debt
• The name of the creditor
• That the debt will be assumed to be valid unless disputed within 30 days
• That if disputed, the collector will verify it and send a copy of the verification or of a judgment against the consumer.
• That upon request the name and address of the original creditor (if changed) will be provided. During a period when a debt is being verified, the collector may not attempt to obtain payment.

Legal remedies

Any debt collector who intentionally does not comply with this law may be sued by the debtor for actual damages and for additional damages as allowed by a court up to $1,000 (or the lesser of $500,000 or 1 percent of net worth in a class action). The debt collector may also be liable for court costs and reasonable attorney's fees.

Enforcement

Responsibility for enforcing the law is shared by the following federal agencies:

• Federal Trade Commission
• Comptroller of the Currency
• Federal Reserve System
• Federal Deposit Insurance Corporation
• Federal Home Loan Bank Board
• National Credit Union Administration
• Interstate Commerce Commission
• Civil Aeronautics Board
• Secretary of Agriculture

Information obtained from: The Fair Debt Collection Practices Act prepared by the Federal Reserve Bank of Philadelphia.

The above information should be understood to be a general discussion of the subject matter and DOES NOT constitute a legal opinion about the situation. For further information please consult a qualified attorney.

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