What is the Fair Debt Collection Practices Act (FDCPA)?
The FDCPA protects you from abusive or dishonest debt collectors
Debt collection is when a company attempts to collect payment on past-due and unpaid debt, such as a loan or medical bill. It can be overwhelming to have debt collectors chasing you, particularly if their tactics are harsh or unethical.
The Fair Debt Collection Practices Act (FDCPA) is a federal law intended to protect consumers from unfair, abusive and deceptive acts by debt collectors. It specifies such things as how and when a debt collector can contact you, the disclosures they must provide and what you can do if you think you’ve been mistreated.
- The FDCPA is a regulation intended to protect consumers from abusive, unfair and deceptive acts by debt collectors.
- Debt collectors covered under the FDCPA include companies whose primary business activities involve collecting debt from consumers and that didn’t originate the debt they’re trying to collect.
- The lender that originated the debt, such as your credit card issuer, is not covered by the FDCPA.
What is FDCPA?
The Fair Debt Collection Practices Act (FDCPA) is a regulation designed to protect consumers from debt collection practices that are unfair, abusive and deceptive. The FDCPA is also meant to shield trustworthy debt collectors from competition by debt collectors that behave badly.
Preventing debt collectors that engage in harmful acts from participating in the industry makes it easier for debt collectors acting honestly to do their jobs without undue pressure.
What the FDCPA covers
The FDCPA covers the collection of consumer debt, including such things as credit cards, home mortgages, personal loans, medical debt and other debt used for individual, family or household reasons.
It does not cover business debt. It also doesn’t cover the company or creditor to which you originally owed the debt (e.g., your credit card issuer). Instead, the FDCPA covers professional debt collectors.
Debt collectors covered under the FDCPA are companies that collect debt as a part of their ordinary course of business and didn’t initially issue the debt. Examples include attorneys or lawyers, debt collection agencies and those that buy debt with the intent to collect on it.
The FDCPA also specifies that nonprofit companies offering consumer credit counseling and other bona fide debt relief services aren’t covered by the FDCPA. Debt relief and debt settlement companies that help consumers manage their debt are heavily regulated and monitored by the Federal Trade Commission (FTC). However, this is largely accomplished via the FTC’s Telemarketing Sales Rule.
How the FDCPA protects you
The FDCPA protects you with rules on what actions debt collectors can and cannot take. This includes how debt collectors communicate with you, what they need to do to validate the debt they claim you owe and what actions are considered unfair, abusive or deceptive.
Some major ways the FDCPA protects you are:
- Debt collectors are prohibited from contacting you at unusual or inconvenient times or places. For example, unless you’ve told the debt collector otherwise, a normal time to contact you would be between 8 a.m. and 9 p.m. in your time zone. Communication outside these times is typically not normal.
In addition, debt collectors can’t contact you at your place of work if they know this type of contact isn’t allowed by your employer. Furthermore, they must stop attempting to communicate with you if you’ve told them in writing that you won’t pay the debt or you don’t want to talk to them about the matter.
Once you’ve notified the debt collector in writing that you no longer want to communicate with them, it can only contact you to do such things as let you know it’s stopping collection efforts or tell you it’s taking normal actions to collect your debt (e.g., repossessing your vehicle).
Additionally, the Consumer Financial Protection Bureau (CFPB) published a rule in 2021 regarding debt collector communications. Under this new rule, debt collectors can’t call you more than seven times in seven days or within seven days of speaking with you about a debt.
- Unfair treatment
- At the highest level, debt collectors can’t take any unfair actions against you when collecting a debt or attempting to collect a debt.
For example, they can’t threaten to take your property when they don’t have a security interest in it (in other words, you didn’t give the creditor your property as collateral for the debt). They can and should notify you that your property (e.g., your car) will be repossessed if they have it as collateral and this is a natural collection step.
Another example of unfair treatment is depositing a postdated check early or threatening to do so. Because you don't expect the money to be taken out of your account early, this could cause you financial harm. Fair treatment in this case would be waiting until the agreed-upon date to deposit the check.
- Harassment or abuse
- Debt collector harassment or abuse includes such things as:
- Threatening or using violence against you
- Using profane or obscene language
- Calling you repeatedly with the intent to annoy you
- Calling you without disclosing identity when trying to collect a debt
It’s perfectly fine for a debt collector to contact or call you as long as it’s not in a harassing or abusive way. For example, calling you one time during normal hours of the day (8:00 a.m. to 9:00 p.m.) each week is acceptable unless you’ve told the debt collector in writing not to do so. Calling you repeatedly or when you’ve asked in writing for no calls could be harassment.
- Deceptive acts
- Deceptive acts by a debt collector include such things as:
- Implying or making it appear the debt collector is affiliated with the government or is an attorney when this isn’t true
- Being untruthful about the amount or type of debt you owe
- Saying you committed a crime meant to when you didn’t
“The FDCPA mandates debt collectors to provide you with specific information about the debt they are attempting to collect, including the amount of the debt, the name of the creditor, and your rights under the FDCPA,” said Loretta Kilday, a spokesperson for Debt Consolidation Care, a debt advice resource.
- Debt validation
- No more than five days after the debt collector has initially contacted you about the debt collection, it’s required to send you a written notice describing the name of the creditor to which you owe the debt and how much you owe. The written notice must include:
- A notification that the debt collector will assume the debt unless you pay or dispute it in writing within 30 days after receipt of the notice
- A disclosure that if you submit a written dispute in the 30-day window, it’ll provide you with proof the debt is still owed (as applicable)
- A notification that it’ll share the name and address of your original creditor with you, as applicable, if you ask for it in writing within 30 days after receipt of the notice
In addition to the rules specified by the FDCPA, the CFPB’s Debt Collection Rule specifies that the notification the debt collector provides to you must include a form you can easily tear off and send to the collector to dispute the claim or take other required actions.
If you don’t dispute the debt's validity, the FDCPA states that the courts can’t say this means you agree that you owe it.
FDCPA vs. state laws
In addition to the FDCPA, many states have their own laws about debt collection, as well as laws related to unfair and deceptive practices. These laws may vary from the FDCPA. Debt collectors that practice in your state must adhere to federal and state laws and could therefore be found liable for violations of both.
State debt collection laws are designed to give you even more protection than you’re afforded under the FDCPA. You can contact your state’s attorney general to research the debt collection laws in your state.
What to do if a collector violates the FDCPA
Gates Little, president of The Southern Bank Company in Gadsden, Alabama, advised, “Violations [to the FDCPA] can be reported to the FTC or handled via lawsuit, which may entitle you to damages if the collector is found to violate the FDCPA.”
In addition to reporting violations to the government, you can also sue the debt collector in a court of law. You must do this within a year of when the violation occurred. Even if you can’t prove the actual damages, the courts might award you damages plus attorney fees and other costs.
Debt collectors found in violation of the FDCPA might be liable for:
- The actual damages (e.g., an amount equivalent to the actual losses suffered)
- Up to $1,000 in additional damages for actions taken by individuals
- Up to $500,000 or 1% of the debt collector’s net worth (whichever is less) in the case of class-action lawsuits
- The costs of the lawsuit plus legal fees
Additionally, the FTC has sued many debt collectors for violating the law, going so far as to ban them from doing business and requiring them to pay penalties. You can view the banned debt collectors list to verify those that contact you aren’t prohibited from doing so.
- Article sources
- ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- American Bar Association, "The Proposed Debt Collection Rule & State Collection Laws." Accessed Feb. 17, 2023.
- Consumer Financial Protection Bureau, "Are there laws that limit what debt collectors can say or do?" Accessed Feb. 17, 2023.
- Consumer Financial Protection Bureau, "How to tell the difference between a legitimate debt collector and scammers." Accessed Feb. 17, 2023.
- Consumer Financial Protection Bureau, “Submit a complaint about a financial product or service.” Accessed Feb. 17, 2023.
- Consumer Financial Protection Bureau, "Understand how the CFPB’s Debt Collection Rule impacts you." Accessed Feb. 17, 2023.
- Consumer Financial Protection Bureau, "What's the difference between a credit counselor and a debt settlement or debt relief company?" Accessed Feb. 17, 2023.
- Federal Reserve, "Consumer Compliance Handbook: Fair Debt Collection Practices Act." Accessed Feb. 17, 2023.
- Federal Trade Commission, "Debt Collection." Accessed Feb. 17, 2023.
- Federal Trade Commission, "Debt Collection FAQs." Accessed Feb. 17, 2023.
- Federal Trade Commission, “Debt Relief Services & the Telemarketing Sales Rule: A Guide for Business.” Accessed Feb. 17, 2023.
- Federal Trade Commission, "Fair Debt Collection Practices Act." Accessed Feb. 17, 2023.
- Federal Trade Commission, "Legal Library: Banned Debt Collectors." Accessed Feb. 17, 2023.
- Federal Trade Commission, "Telemarketing Sales Rule." Accessed Feb. 17, 2023.
- Federal Trade Commission, "Think your company’s not covered by the FDCPA? You may want to think again." Accessed Feb. 17, 2023.
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