Federal law limits how far businesses can go in their debt collection efforts. Are you aware of your rights?
Debt collection is a fact of life in any credit-based consumer economy, and there’s no doubt that it’s absolutely necessary. It’s so necessary, in fact, that some companies make it their primary business. However, some debt collectors can be too vigorous in their dunning.
Since 1978, the Fair Debt Collection Practices Act (FDCPA) has regulated what bill collectors can and can’t do in attempts to elicit payment. In Part I of this article, we introduced the FDCPA, and listed prohibited actions. This time, let’s look at the required actions…and the penalties for breaking the law.
What Debt Collections Must Do
The list of actions required of debt collectors isn’t particularly long, especially when compared to the list of what they can’t do (see Part I), but it’s just as important to know. Among other things, the debt collector must:
• Identify themselves in every single communication, and notify you that the communication is an attempt to collect a debt.
• Notify you in the initial communication that they will use any information obtained to attempt to collect the debt.
• Provide the name and address of the original creditor within 30 days upon request (assuming the collector is not the original creditor).
• Notify you of your right to dispute the debt in part or in full with the debt collector.
• Provide verification of the debt within 30 days of a dispute.
• File lawsuits only in appropriate venues — that is, only where you live or signed the contract.
Penalties and Enforcement
As of this writing, the Federal Trade Commission polices the FDCPA, though enforcement may soon pass to a new Consumer Financial Protection Agency.
The FTC can enforce the Act administratively, as long as their investigation verifies a complaint, or you can file a private lawsuit in Federal or state court.
In either case, you can claim damages of up to $1,000 (plus legal fees) for each violation, though you don’t have to prove actual damages. Note that this amount hasn’t changed since 1978; critics claim it ought to exceed $3,500 by now.
Also, keep in mind that if the court finds that you’ve filed a lawsuit falsely or in bad faith, for harassment purposes, they can award attorney fees to the debt collector. You don’t have to worry about paying damages, though.
The FDCPA isn’t perfect, but it does provide a legal umbrella to protect you from unscrupulous debt collectors and their excesses. Better yet, it’s a Federal law, which means you don’t have to depend on inconsistent state laws to cover you.
That being the case, don’t hesitate to take advantage of your debt collection rights whenever necessary!