It’s no secret that collection agencies, debt buyers, and other debt collectors don’t always play fair. Most people who have been through a financial crunch and fallen behind on their bills have had at least one bad experience with a debt collector who lied, shouted at the debtor, made outrageous threats, or otherwise attempted to trick or bully him or her into compliance. Needless to say, dealing with debt collectors is never something people enjoy.
What you may not know, though, is that federal law prohibits debt collectors from most of the tactics listed above, and many others as well.
Whether you’re in a financial bind and debt collectors have become part of your day-to-day reality or you’ve received a demand out of the blue regarding a debt you don’t recognize, it’s important to know your rights and how to assert them.
The Fair Debt Collection Practices Act (FDCPA)
Perhaps the most powerful protection for U.S. debtors (and those pursued for debts that aren’t theirs) is the federal Fair Debt Collection Practices Act. Many states have enacted similar consumer protection statutes, which may include protections and prohibitions not included in the federal statute.
The FDCPA prohibits third-party debt collectors such as collection agencies and debt buyers from engaging in a long list of dishonest and abusive practices. The statute also mandates certain notices and a verification process that the alleged debtor can kick off with a simple letter. When debt collectors willfully or repeatedly violate the FDCPA, the consumer may be entitled to collect damages.
False and Misleading Practices
Under the FDCPA, debt collectors are not allowed to lie to you or mislead you about things like:
- Your legal responsibility for the debt
- Action the debt collector plans to take
- The debt collector’s affiliation with any governmental entity
Some common examples of this type of deception by debt collectors include:
- Threatening to file a lawsuit on a debt that is outside the statute of limitations and can no longer be collected in court
- Threatening to file any lawsuit if the debt collector is not an attorney or law firm and so can’t actually take that action
- Claiming or implying that the debt collector is a law enforcement officer or connected with another governmental agency
While most of these violations involve statements made in telephone calls, bills, and collection letters, some are more subtle. For example, a debt collector can violate these provisions by including a seal on correspondence that is designed to make it appear as if it has come from a governmental entity, or by formatting documents to look like court pleadings or other legal documents.
Some abusive practices prohibited under the FDCPA fall clearly within the general definition of “abusive.” For example, a third-party debt collector is not allowed to threaten violence, or to use obscene language in communicating with the alleged debtor. However, the FDCPA also deems a list of specific practices abusive. Some of these additional prohibited activities include:
- Calling the alleged debtor repeatedly with the intention to harass
- Calling the alleged debtor at work after being advised that the employer objects to such contact
- Continuing to directly contact an alleged debtor who has advised that he or she is represented by an attorney and provided attorney contact information
- Calling the alleged debtor during “inconvenient” hours (this is typically before 8 a.m. or after 9 p.m. local time, but may vary if the debt collector is aware of different time restrictions in a specific case)
- Continuing to contact the alleged debtor after being instructed in writing to stop communications
Disputes and Verification of Debts
In addition to protecting consumers against dishonest and abusive practices, the FDCPA sets forth a system for alleged debtors to dispute debts they believe are not theirs, that they have already paid, or when balances appear to be inaccurate.
To ensure that consumers are aware of these rights, third party debt collectors are required to include certain notices in their communications. One such notice is the likely-familiar “This is an attempt to collect a debt…” warning. Another important notice requirement mandates letting the consumer know he or she has the right to dispute the debt.
The FDCPA requires that a debt collector send you a written notice of the debt. This notice must include, at a minimum, the amount of the debt, the name of the creditor, and a notice of your right to dispute the debt. This notice must be mailed within five days of initial contact with you.
The notice you receive will typically advise you that you have 30 days to dispute the debt in writing. You can dispute a debt over the telephone, and you still have the right to dispute a debt outside the 30-day window. However, you must dispute within 30 days and in writing to take full advantage of the process: verbal disputes and disputes made outside the 30-day window do not stop collection activity or credit reporting.
Disputing a Debt
The first step toward disputing a debt under the FDCPA is a clear and concise letter, sent within 30 days of the initial notice from the debt collector. The Consumer Financial Protection Bureau offers sample dispute letters on its website.
You should include copies of any documentation, such as receipts showing that the debt has been paid, with the letter. And, you’ll want to use certified mail or other proof of mailing.
Enforcing Your Rights Under the FDCPA
When a debt collector violates your rights under the FDCPA, whether through abusive tactics, deception, failure to verify the debt after dispute, or continued collection efforts after a debt has been disputed and prior to verification, you may be entitled to damages.
To learn more about your rights and options, schedule a free consultation with one of the experienced financial solutions attorneys at Bond & Botes.