The Fair Debt Collection Practices Act, Pub. L. 95-109; 91 Stat. 874, codified
as 15 U.S.C. § 1692 –1692p, approved on September 20, 1977 is a consumer
protection amendment, establishing legal protection from abusive debt collection
practices, to the Consumer Credit Protection Act, as Title VIII of that
Act. The statute's stated purposes are: to eliminate abusive practices in the
collection of consumer debts, to promote fair debt collection, and to provide
consumers with an avenue for disputing and obtaining validation of debt
information in order to ensure the information's accuracy. The Act creates
guidelines under which debt collectors may conduct business, defines rights of
consumers involved with debt collectors, and prescribes penalties and remedies
for violations of the Act. It is sometimes used in conjunction with the
Fair Credit Reporting Act. People and entities covered by the FDCPA
The FDCPA broadly defines a debt collector as "any person who uses any
instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debts, or who
regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another." While the FDCPA generally
applies only to third party debt collectors—not internal collectors for
an "original creditor"—some states, such as California, have similar state
consumer protection laws which mirror the FDCPA, and regulate original
creditors. In addition, some federal courts have ruled that a collector of
debt is not a "creditor" but is rather a "debt collector" under the FDCPA where
the collector of debt buys defaulted debt from an original creditor for the
purpose of debt collection. The definitions and coverage have changed
over time. The FDCPA itself contains numerous exceptions to the definition of
a "debt collector," particularly after the October 13, 2006, passage of the
Financial Services Regulatory Relief Act of 2006. Attorneys, originally
explicitly exempted from the definition of a debt collector, have been included
since 1986. The FDCPA's definitions of "consumers"
and "debt" specifically restricts the coverage of the act to personal, family
or household transactions. Thus, debts owed by businesses are not subject to
the FDCPA. In the federal tax case of Smith v.
United States, the United States Court of Appeals for the Fifth Circuit stated
that the taxpayer's: ". . . . invocation of the Fair Debt Collection Act is
entirely without merit, as the statute expressly excludes 'any officer or
employee of the United States . . . to the extent that collecting or attempting
to collect any debt is in the performance of his official duties' from
the definition of 'debt collector.' 15 U.S.C. section 1692a(6)(C)." In 1998,
however, Congress amended the Internal Revenue Code by adding a new section
6304, "Fair Tax Collection Practices," which refers to and includes certain
rules that are similar to some provisions of the Fair Debt Collection
Practices Act. Prohibited conduct
The Act prohibits certain types of "abusive and deceptive" conduct when
attempting to collect debts, including the following:
Hours for phone contact: contacting consumers by telephone outside of the
hours of 8:00 a.m. to 9:00 p.m. local time
Failure to cease communication upon request: communicating with consumers in
any way after receiving written notice that said consumer wishes no further
communication or refuses to pay the alleged debt, with certain exceptions,
including advising that collection efforts are being terminated or that the
collector intends to file a lawsuit or pursue other remedies where permitted
Causing a telephone to ring or engaging any person in telephone conversation
repeatedly or continuously: with intent to annoy, abuse, or harass any person at
the called number. Communicating with consumers at their
place of employment after having been advised that this is unacceptable or
prohibited by the employer Contacting consumer known to be
represented by an attorney Communicating with consumer after
request for validation has been made: communicating with the consumer or the
pursuing collection efforts by the debt collector after receipt of a consumer's
written request for verification of a debt made within the 30 day validation
period and before the debt collector mails the consumer the requested
verification or original creditor's name and address
Misrepresentation or deceit: misrepresenting the debt or using
deception to collect the debt, including a debt collector's misrepresentation
that he or she is an attorney or law enforcement officer
Publishing the consumer's name or address on a "bad debt" list
Seeking unjustified amounts, which would include demanding any amounts not
permitted under an applicable contract or as provided under applicable law
Threatening arrest or legal action that is either not permitted or not actually
contemplated Abusive or profane language used in the
course of communication related to the debt
Communication with third parties: revealing or discussing the nature of
debts with third parties Contact by embarrassing media, such as
communicating with a consumer regarding a debt by post card, or using any
language or symbol, other than the debt collector’s address, on any envelope
when communicating with a consumer by use of mail or by telegram, except that
a debt collector may use his business name if such name does not indicate that
he is in the debt collection business Reporting false information on a
consumer's credit report or threatening to do so in the process of collection
Required conduct The Act requires debt collectors to do
the following: Identify themselves and notify the
consumer, in every communication, that the communication is from a debt
collector, and in the initial communication that any information
obtained will be used to effect collection of the debt
Give the name and address of the original creditor upon the consumer's
written request made within 30 days of receipt of the §1692g notice;
Notify the consumer of their right to dispute the debt, in part or in full,
with the debt collector. The 30-day "§1692g" notice is required to be sent
by debt collectors within five days of the initial communication with the
consumer, though in 2006 the definition of "initial communication" was amended
to exclude "a formal pleading in a civil action" for purposes of triggering the
§1692g notice, complicating the matter where the debt collector is an attorney
or law firm. The consumer's receipt of this notice starts the clock running on
the 30-day right to demand verification of the debt from the debt collector.
Provide verification of the debt If a consumer sends a written dispute or
request for verification within 30 days of receiving the §1692g notice, then the
debt collector must either mail the consumer the requested verification
information or cease collection efforts altogether. Such asserted disputes must
also be reported by the creditor to any credit bureau that reports the debt.
Verification should include at a minimum the amount owed and the name and address
of the original creditor. File a lawsuit in a proper venue If a
debt collector chooses to file a lawsuit, it may only be in a place where
the consumer lives or signed the contract Note, however, that this does
not prevent the debt collector from being sued in other venues for violating
the Act, such as when the consumer moves outside the venue and a letter demanding
payment is forwarded to the new address, even if the debt collector is unaware of
such a change in residence. Enforcement of the FDCPA
The Federal Trade Commission has the authority to administratively enforce
the FDCPA using its powers under the Federal Trade Commission Act. But under
sweeping financial regulation reforms, a recent proposal by the U.S. Treasury
Department would call for the FDCPA to be administered by a new Consumer
Financial Protection Agency, the Consumer Financial Protection Bureau.
Aggrieved consumers may also file a private lawsuit in a state or federal
court to collect damages from third-party debt collectors. The FDCPA
is a strict liability law, which means that a consumer need not prove actual
damages in order to claim statutory damages of up to $1,000 plus reasonable
attorney fees if a debt collector is proven to have violated the FDCPA. The
collector may, however, escape penalty if it shows that the violation was
unintentional and the result of a "bona fide error" that occurred despite
procedures designed to avoid the error at issue.
Alternatively, if the consumer loses the lawsuit and the court determines that
the consumer filed the case in bad faith and for the purposes of harassment, the
court may then award attorney's fees to the debt collector.
Criticisms of the FDCPA = By consumer groups =
Some consumer groups argue that the FDCPA does not go far enough, and does
not provide sufficient deterrence against unscrupulous collection
agencies. Consumer groups have complained that the maximum statutory
damages contained in the original 1977 version of the law has not kept up with
inflation; $1,000 in 1977 dollars is worth $3892 today.
= By the credit industry = Conversely, many in the credit industry
and some courts have taken the stance that the FDCPA has often been used to
file frivolous lawsuits and seek damages for minor technical violations and has,
at times, seriously impeded their ability to collect valid debts. Given
the strict liability nature of the FDCPA, the collections industry and the
insurance companies who provide liability coverage for them have
repeatedly lobbied Congress to relax provisions of the law to reduce their
civil exposure for these "hyper-technical" violations.
The accounts receivable management industry has also raised concerns that
the FDCPA contains contradictions that often lead to liability on the part of
collection agencies in civil cases, especially when dealing with technology
that did not exist when the law was written. For example, the FDCPA requires
a collection agency to identify itself as such in any communication with a
consumer. At the same time, a collection agency cannot disclose the debt of a
consumer to anyone else. These two requirements are at odds when a
collector leaves a message on an answering machine or voicemail system.
If the collector identifies himself and his company, a third party could hear
the message, thus resulting in a third party disclosure violation. Case law has
tackled this issue but has not yet resolved it.
Regulatory Agencies & the FDCPA For its part, the Federal Trade
Commission produces an annual report to Congress of its findings with respect to
its FDCPA enforcement activities. This report details consumer complaints to
the FTC about alleged debt collector violations of the FDCPA. The 2013 report
indicated that the FTC received 125,136 consumer complaints about third party
debt collectors in 2012, which is an decrease from the 144,451 received in
2011. The FTC receives more complaints about debt collectors than about any
other specific industry, though the number of complaints represents a small
percentage of the overall number of contacts by debt collectors with
consumers. The FTC has authority to issue formal
opinions regarding debt collectors' conduct under the FDCPA, but the
Dodd-Frank Wall Street Reform and Consumer Protection Act transfers
authority for rule making to the new Consumer Financial Protection Bureau
effective between January 21, 2011 and July 21, 2011. The FTC will retain FDCPA
enforcement authority, but the CFPB will take over the FTC's advisory opinion
function. Good faith conformity with a formal opinion of the FTC constitutes a
second statutory defense under the FDCPA. The FTC has only rarely exercised
its authority to issue advisory opinions, however. Prior to 2000, the
FTC had not issued any advisory opinions regarding the FDCPA, it has issued only
four such opinions through 2009. See also
Consumer protection Fair Credit Reporting Act
Consumer Credit Protection Act Debt buyer
References External links
Fair Debt Collection Practices Act Federal Trade Commission
Fair Debt Collection Practices Act Congressional Research Service
National Association of Consumer Advocates
FTC's FDCPA Web Page