The FDCA
It is very common for people who fall behind on their bills to have trouble with collection agencies. While collection agencies have a number of options when it comes to collecting debts, the law sets some limits on their conduct. The Fair Debt Collection Practices Act is a federal law which regulates the conduct of bill collectors and proscribes certain behaviors.
The Fair Debt Collection Practices Act, often referred to as the “FDCPA”, was passed by Congress in response to abusive conduct by collection agencies, and concern that the abuses were causing an increase in the filing of bankruptcies. The purpose of the Act is to provide guidelines for collection agencies which are seeking to collect legitimate debts while providing protections and remedies for debtors.
The act regulates the conduct of debt collectors: any person who regularly collects debts owed to others. This definition includes lawyers who perform debt collection services on a regular basis. Even where money is legitimately owed, a debt collector’s conduct is restricted by this law.
In-house collection agents are not ordinarily covered by the Act. For example, if you have a store credit card, and the store’s own collection department contacts you, the FDCPA does not apply. However if the same store uses an outside collection agency to contact you in relation to that same debt, the outside agency’s conduct is restricted by the FDCPA. Similarly, if the same store uses an in-house collection agent, but suggests to you that the collection is being performed by a third party, the FDCPA may apply to them as a result of that representation.
FDCPA Proscribed Actions
The FDCPA restricts debt collectors from engaging in certain conduct, including:
- Contacting a third party who does not owe the debt, such as a relative, neighbor, or your employer. Co-signers to the debt, however, may be contacted by the debt collector;
- Threatening to refer your account to an attorney, harm your credit rating, repossession or garnishment, without actual intention of action on the threat. Please note that a debt collector may warn you of an actual impending intention to refer your case to an attorney or to report your debt to a credit agency. What they cannot do is use a false threat to try to intimidate you into paying;
- Making repeated telephone calls or telephone calls at unreasonable times. The act defines unreasonable times as contact before 8:00 AM or after 9:00 PM unless you have given the debt collector permission to contact you during those hours;
- Placing telephone calls to an inconvenient place. For example, contacting you at work in violation of a policy by your employer that is known to the debt collector or following a request by you that they not contact you at work;
- When placing a telephone call to you at work, informing your employer of the purpose of the call, unless first asked by the employer;
- Using obscenity, racial slurs or insults;
- Sending letters which appear to have come from a court;
- Seeking collection fees or interest charges not permitted by your contract or by state law;
- Requesting post-dated checks with the intention to prosecute if they bounce;
- Suing in courts far removed from your place of residence;
- Making certain false representations in association with efforts to collect the debt, including the false claim that the person contacting you in relation to the debt is an attorney, falsely claiming to have started a lawsuit, using a false name, or using stationery that is designed to look like an official court or government communication;
- Using false claims to collect information about the debtor, such as pretending to be conducting a survey;
- Threatening you with arrest if you do not pay the debt.
State Law Regulating Collectors
Minnesota law further regulates creditors collection practices by adding on to the federal law. First, it is also against state law to violate the federal law; a state action arises from violating the federal law. The Minnesota statute requires far more disclosure on the part of the collector who exactly he is. For instance, the collector must disclose that they are a collection agency (with their name and telephone number) and that they are fully licensed in the state of Minnesota.
Written by Sean Taylor