A study by Pew Research Center found that around 80% of all Americans are in debt. Whether it be student loans, credit cards, medical bills, or mortgages, many people have debt, and third-party collection agencies often pressure debtors to the point of harassment. Third-party debt collectors work for a person or business and request payment from the debtor on behalf of their client.
However, federal laws help protect debtors from unlawful practices by these third-party collectors. So, what are these federal laws, and what do they do?
What Is the Fair Debt Collection Practices Act (FDCPA)?
Essentially, the FDCPA is a law that restricts third-party debt collectors. In other words, the FDCPA limits the method and frequency of communication that debt collectors have with the debtor. If a collector violates this law, the debtor can sue them in court for damages and fees within one year of the violation.
Debts covered by the FDCPA:
- Credit card debt
- Auto loans
- Medical bills
- Student loans
- Mortgages
- Household debts
Unfortunately, business debts are not covered by the Fair Debt Collection Practices Act, but if a collector calls about your auto loan or medical bill, they have to follow the guidelines set forth by the FDCPA.
Debt collectors are allowed to inform you of the amount of money you owe and the creditor or company you owe it to. They can also work with you if you believe the debt isn’t yours.
What to Do If You Receive a Call About the Wrong Debt
Debt collectors work with clients across the country, and sometimes, they make a mistake. If you receive a collection call about a debt you believe belongs to someone else, there are steps you can take to resolve the situation.
- Ask for the collector’s name and the company’s information to verify that the call is from a legitimate collector and not a scam.
- Avoid giving the caller your personal information. While these calls may make you feel fearful or pressured to provide info., it is important to understand that it may be harder to dispute the debt if you give the debt collector your information.
- Legitimate debt collectors send a written validation notice that tells you how much you owe and the name of the creditor. The notice is physical proof of the debt you owe, and it can help you figure out if the debt is legitimate. If you do not receive a validation notice, the call may be a scam.
- Call the company you allegedly owe money to and work with them to validate the collector’s claim. They will know if the debt collector has the right to collect a debt from you.
- If you believe the debt is not yours, you can also dispute the claim by sending a letter to the collector. Be sure to include as many details as possible that prove you don’t owe the money. As mentioned previously, avoid giving the agency more personal information than necessary. The letter of dispute should be sent no more than 30 days after you receive the validation notice.
The Federal Trade Commission has additional resources you can use when disputing a debt. Keep in mind that these suggestions only apply if you don’t recognize the debt. Debt collection agencies have the right to call you on behalf of their client if you owe money, but they must follow the FDCPA.
What Debt Collectors Can’t Do
The FDCPA protects debtors from unlawful collection practices by third-party collection agencies. These prohibited practices include threats, scams, and deception. So, what exactly does that mean, and how do you know if it’s happening to you?
Prohibited Practices: Harassment or Abuse
Debt collectors can’t threaten you with violence, physical harm, or harm to your reputation. The FDCPA also does not allow collection agencies to publish your debt and information to coerce payment. To better understand this situation, here’s an example:
Debt Collector A calls you about a debt you allegedly owe. Throughout the conversation, Collector A threatens to tell your family, coworkers, and employer about your debt. Not only do they call you once, but they continue to contact you late at night and very early in the morning.
Collector A is using harassment and threats to force you into paying your debt. The FDCPA does not allow this behavior and, under the law, you are within your rights to sue the agency for unlawful collection practices.
Prohibited Practices: False Representation
Another prohibited collection practice is false or misleading representation. This means that a debt collector cannot claim affiliation with the government, accuse the debtor of a crime, etc.
Other misleading practices include the following:
- Falsely representing the amount or legal status of the debt
- Claiming to be an attorney
- Threatening to take illegal action
- Claiming that failure to pay the debt will result in imprisonment or seizure of property and wages
- Communicating false credit information
- Using forged documents
- Using a name other than the real name of the agency and the business they represent
All of these are prohibited practices under the FDCPA, but how would a collector use these methods to get payment?
You get a call from Collector B, and they notify you of a debt that you owe to Company C. After they inform you of the debt, they claim to be a representative of the federal government and warn you that individuals who don’t pay go to prison.
In this scenario, Collector B is falsely representing the United States government, and they are threatening you with imprisonment. Some collectors may use fake documents to validate their association with the government, which is also against the Fair Debt Collection Practices Act.
Unfair Practices
In addition to using harassment or false representation, collectors cannot use unfair practices or means to collect a debt. What does this mean?
If a debt collector charges communication fees, for example, they are using unfair practices to acquire payment. Collection of interest outside of the original debt agreement is also against FDCPA rules.
Key Takeaways
Ultimately, the purpose of the FDCPA is to prohibit third-party debt collectors from using unlawful, misleading, and coercive collection methods. Mortgages, credit cards, medical bills, and household debts are protected by the FDCPA, which means that if a collector calls you about any of these debts using prohibited methods, you can sue the agency.
While you are within your rights to sue, litigation can be complicated and expensive without the help of an experienced attorney. If you believe you have a case involving prohibited debt collection practices, call a lawyer as soon as possible.
Contact our team at the Law Office of Simon Goldenberg, PLLC today.