Fair Debt Collection Practices Act in a Nutshell

In the United States, in order to lessen the hassle and problem related to debt collection, the legislature enacted the Fair Debt Collection Practices Act.

What is Fair Debt Collection Practices Act?

Fair Debt Collection Practices Act is a U.S statute added in 1978 to the Consumer Credit Protection Act. Its purpose is:

• To eliminate abusive practices in the collection of consumer debts

• To promote fair debt collection

• To provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy

Who are covered by the Act?

The following are the individual covered by Fair Debt Collection Practices Act:

• Third party debt collectors

• Debt buyers

What are the prohibited acts under Fair Debt Collection Practices Act?

The Act prohibits certain deceptive and abusive acts when collecting debts including the following:

• Hours for phone contact. Calls between 8:00 am – 9:00 pm are prohibited.

• Contact after being ask to stop. This refers to contacting costumer after the latter serve a notice that he refuses to pay the debts.

• Causing the telephone to ring or engaging other person in telephone conversation repeatedly or continuously

• Contacting consumers at their place of employment after having been advised in writing that this is not acceptable

• Contacting consumer known to be represented by an attorney

• Contacting consumer after request for validation

• Misrepresentation or deceit

• Publishing the consumer’s name or address

• Seeking unjustified amounts

• Threatening arrest or legal action

• Abusive or profane language

• Contact with third parties

• Contact by embarrassing media

• Reporting false information on consumer’s credit report

Enforcement of FDCPA

The Federal Trade Commission is authorized to enforce the FDCPA.

An aggrieved consumer under the act can file a claim to the state or federal court in order to collect damages from third party debt collectors. The aggrieved party need not prove actual damages in order to claim statutory damages.

Legal actions available to debt collectors

A debt collector who brings an action against a third party shall:

• If the action involve is a real property he can bring the action in the court of the place where the property is located.

• If the subject of the action is not real property he can file the action in the district or legal entity,

o Where he signed the contract

o Where the consumer resides at the commencement of the action

Civil Liability under FDCPA

Any debt collectors who fail to comply any of the required act provided by FDCPA shall be liable for,

• The actual damages sustained by the person

• Additional damages not exceeding $1,000

• Reasonable attorney’s fee in certain circumstances

Exemption from FDCPA

The Commission exempts from the regulation of this act any class of debt collection practices within any state if the Commission determines that under the law the class of debt has the same requirement to that imposed by this title.

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