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Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practice Act (FDCPA), or Regulation F, is a federal regulation intended to protect consumers from abusive practices by debt collectors and to ensure there are rules in place to promote consistency for debt collection practices. It applies mainly to consumer debt incurred for personal, family, or household purposes. It also places controls on legal actions taken by a debt collector and civil liability debt collectors might face. In this article we will explain the rules and requirements of the Act. The tenets of the regulation can be divided into 5 main sections:

  1. Debt Collector Communications
  2. Harassment and Abuse
  3. Notice of Debt
  4. Legal Actions
  5. Civil Liability

This article summarizes the main points of the FDCPA. However, the very act of summarizing means we're taking out details, so this is by no means an authoritative or complete guide. We encourage you to consult with your legal team to ensure you stay in compliance with the regulation.

 

FDCPA requirements

Debt collectors have strict rules and limitations in how and when they can contact a consumer regarding their debt in order to prevent harassment, abuse, or misleading representations.

  • Debt collectors are limited in when and what they can communicate with a third party regarding another person’s debt.
  • If a debtor requests that a debt collector stop contacting them, the debt collector must do so.
  • A debt collector must give a notice of debt, or validation notice, on initial contact or send a notice of debt within 5 days of initial contact with a consumer regarding their debt.
  • A consumer can dispute a debt or request the original creditor information about a debt in writing within a 30 day time period after receiving a notice of debt.
  • If a debt collector receives a dispute, they must cease collection of the disputed debt until they obtain verification of the debt or a copy of a judgment.
  • If a consumer requests the name and address of the original creditor, the debt collector must cease collections on the debt until the name and address of the original creditor is mailed to the consumer.
  • If a consumer has multiple debts and makes any single payment to a debt collector, the debt collector must apply the payment according to the consumer’s directions.

The Act regulates which venues a debt collector can bring legal action against a consumer regarding a debt.

The Act regulates factors of civil liability that debt collectors might face, such as amount of damages, court consideration, and jurisdiction.

Who is considered a debt collector?

It might be important to know going into this whether or not you are considered a debt collector. Under the FDCPA, a debt collector is defined as any person who regularly collects or attempts to collect consumer debts for another person or institution or uses a different name when collecting on its own debts.

Debt collector communications

[15 USC 1692 ref. §805]

Since a lot of the collections process involves communicating with the debtor, it shouldn't be surprising that there are strict requirements for what debt collectors can and can't say to consumers and third parties about a debt, and the list of Don'ts is a lot longer than the Dos. Take a look at the following fold for the specifics of what a debt collector can't do without permission from the consumer that owes the debt.

Since a lot of the collections process involves communicating with the debtor, it shouldn't be surprising that there are strict requirements for what debt collectors can and can't say to consumers and third parties about a debt, and the list of Don'ts is a lot longer than the Dos. Take a look at the following fold for the specifics of what a debt collector can't do without permission from the consumer that owes the debt.

What can't a debt collector do when communicating with the debtor?

A debt collector can't communicate about a debt with the consumer:

  • at any unusual time or place, or a time or place that is known to be inconvenient to the consumer (between 8:00 a.m. and 9:00 p.m. can be considered convenient unless otherwise notified by the consumer),
  • if the debt collector knows that the consumer is represented by an attorney in regards to their debt, the debt collector must contact only the attorney unless the attorney doesn’t respond within a reasonable period of time or the attorney consents to the consumer being contacted, or
  • at the consumer’s place of employment if it is known that the consumer’s employer prohibits the communication.
 
 

When it comes to third parties, the rules are pretty simple. A debt collector can’t communicate with third parties at all regarding the consumer’s debt unless the consumer or a court of competent jurisdiction gives permission, or as reasonably necessary to put into effect a judicial decision.

Acquisition of information

[15 USC 1692 ref. §804]

While debt collectors can't talk to third parties about another person's debt without permission from the debtor, they can communicate to ask about the consumer's location. If they do so, they must identify themselves and state that they are confirming or correcting location information about the customer. They only have to identify their employer if specifically requested.

What do debt collectors have to avoid doing when communicating to acquire location information on the debtor?

Over the course of this communication, they can't:

  • say the consumer owes debt,
  • contact any person other than consumer more than once (unless requested by the person, or the earlier response of the person was incorrect or incomplete—and only if the person now has correct information),
  • communicate by post card, or use language or symbols in any communication that indicate the business of debt collection
 
 

If the consumer is represented by an attorney, the debt collector can’t communicate with anyone but that attorney unless the attorney fails to respond in a reasonable time period.

Ceasing communication

If the consumer informs a debt collector that they refuse to pay the debt, or that they want the debt collector to stop contacting them, the debt collector has to stop all communication If the consumer is represented by an attorney, the debt collector can’t communicate with anyone but that attorney unless the attorney fails to respond in a reasonable time period.
other than to advise the consumer that further communications will not occur, to advise that the debt collector may invoke specified remedies, or to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

Harassment and abuse

[15 USC 1692 ref. §806, §807, §808, and §812]

While it's not something we generally like to think about, the truth is that there have been, and probably still are, a lot of debt collectors that use unethical methods for collecting on a debt. As such, one of the most emphasized points of the FDCPA is to set ironclad rules to prohibit harassment, abuse, deceptive representations, or unfair practices.

What qualifies as harassment or abuse?

  1. Use or the threat of using violence or other criminal means to harm a person physically, their reputation, or their property.
  2. Use of obscene, profane, or abusive language
  3. Publishing a list of consumers who refuse to pay debts to anyone other than a credit reporting agency (CRA).
  4. Advertising the sale of a debt to coerce payment of the debt
  5. Calling repeatedly or continuously with the intent to annoy or harass
  6. Placing calls without disclosing the caller’s identity
 
 

What is considered a false, deceptive, or misleading representation or means to collect debt?

  1. Falsely implicating that they are associated with the United States or any state 
  2. False representations of anything to do with the debt, such as its amount or legal status, or anything to do with services or compensation the debt collector may receive for the collection of a debt
  3. The false representation that an individual is an attorney
  4. Falsely representing the consequences of leaving the debt unpaid (such as stating an individual will go to jail if it is untrue)
  5. Threatening to take action that can’t be legally taken or is not actually intended to be taken
  6. The false implication that any sale, referral, or other transfer of interest will cause the consumer to lose any claim or defense to payment of the debt or to become subject to any consequences prohibited by this regulation
  7. Falsely representing or implying that the consumer committed a crime 
  8. Communicating false credit information to anyone, or failing to communicate that a debt is disputed
  9. Using or distributing any written communication that is falsely represented as being authorized, issued or approved by the United States or any individual state
  10. Using any false representation or deceptive means to collect or try to collect a debt, or to acquire information about a consumer
  11. Failing to inform the consumer that the debt collector is attempting to collect a debt and that any information they acquire will be used for that purpose, and failing to disclose in any following communications that the communication is from a debt collector.
  12. Falsely representing or implying that accounts have been turned over to innocent purchasers for value.
  13. False representations or implications that documents are legal process.
  14. Falsely representing or implying that documents aren't legal process forms or don't require action by the debtor.
  15. Using any name other than the true name of the debt collector's business, company, or organization.
  16. False representations or implications that a debt collector operates or is employed by a CRA.
  17. Creating or giving any form that could be used to instill in a consumer the false belief that any person other than the creditor is participating in the collection of a debt if such a person is not, in fact, participating.
 
 

What information does the notice of debt need to contain?

 If the notice of debt is given orally, the initial disclosure must be repeated in the first written communication. In each subsequent communication, it must be disclosed that the communication is from a debt collector.

Three other things important to keep in mind are that:

  1. If a consumer fails to dispute the validity of a debt, it can’t be taken as an admission of liability by the consumer
  2. A communication about a formal pleading can’t be treated as the initial notice of debt
  3. If any type of form or notice is sent as required by a state or federal law other than the FDCPA, that form or notice can’t be treated as the initial notice of debt
 
 

Disputed debts

If the consumer disputes the debt within the given 30 day timeframe, the debt collector has to immediately cease collection of the disputed debt until they have obtained verification of the debt or a copy of a judgment. They must also cease collection attempts if the consumer requests the name and address of the original creditor until the information is mailed. Any collection activities or communications during the 30 day period can’t overshadow or be inconsistent with the disclosure of the consumer’s rights.

Payment distribution

If a consumer owes multiple debts and makes a payment to any debt collector, the debt collector can’t apply the payment to a debt that has been disputed, and should, if possible, be applied according to the consumer’s directions.

Legal actions

[15 USC 1692 ref. §811]

There are rules debt collectors have to follow if they're bringing legal action against a consumer on a debt. If it’s in regards to enforcing an interest in a real property, they can bring the action only in a judicial district where the property is located. Otherwise, they should bring the action only in the judicial district where the consumer signed the contract or where the consumer resides.

A debt collection can't take legal action on a time-barred debt (a debt that is past the statute of limitations).

Civil liability

[15 USC 1692 ref. §813 and §814]

A debt collector that doesn't follow the requirements implemented by the FDCPA can be taken to court by consumers on either an individual basis or as part of a class action. If this happens, the debt collector may be held liable for damages depending on the court's decision.

Enforcement of this Act generally falls to the Federal Trade Commission.

 


LoanPro solutions

  • Custom forms can be used to create templates for various notices.
  • Event and trigger based notifications can be sent by a variety of methods, including physical mail, email, or text message.
  • You can easily keep track of all borrower information, take notes on interactions, and record promises.
  • Rules and wizards can be used to ensure that any contact with the debtor is in compliance with the FDCPA.

Resources

 


 

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Fair Debt Collection Practices Act (FDCPA) FDCPA requirements Who is considered a debt collector? Debt collector communications Acquisition of information Ceasing communication Harassment and abuse Disputed debts Payment distribution Legal actions Civil liability LoanPro solutions Resources