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Fair Debt Collection Practices

infographic on Fair Debt Collection Practices Act key points

For a lot of us, we don’t intend to leave a debt unpaid. Often, it is a tough decision that has to be made between buying groceries and medicine or paying the credit card payment. At some time or another, many of us end up with an outstanding debt on our credit report.  Businesses trying to collect those debts have been known to harass or threaten debtors. Lucky for us, in 1977 the government put a law in place to protect consumers from those bad practices. Keep in mind, this law only applies to 3rd party debt collectors.  Just recently, our legislators revised the Fair Debt Collection Practices Act (FDCPA) to account for new technologies.

Debt Collection is Big Business

According to a June 2021 report from the Congressional Research Service, “there are nearly 7,000 collection agencies in the United States”  with :annual revenue of $13.4 billion”. It isn’t just lenders and creditors using their services. The same report estimates that “60% of debt collection revenue included nonfinancial services debt, such as telecommunications, utility, medical, retail and government debts.”  With so much activity, it is no wonder that the CFPB says that complaints about debt collectors accounted for about 15% of all the complaints they received in 2020.

Phone Calls from Debt Collectors

Catching debtors by phone has been the most common way for debt collection agencies to reach people. Since FDCPA was enacted, there have been rules about how early and late a debt collector could call you. A debt collector may not contact you before 8 a.m. or after 9 p.m. your local time.  There was no change to the rule that debt collectors can call you at work until you tell them not to. However, there was one important change to phone call contacts.  Collectors are now limited to only seven calls per week per debt.  If you have just one outstanding debt, that’s a call a day or so.  What if there are three debts?  3 calls a day.

One way to curb those calls is to answer them. The new law says a debt collector can’t call you within a week after speaking with you by phone. So answer the phone and tell them to stop calling you altogether – they are supposed to comply. Any communication should be in writing from then on.

Emails, Texts and Private Messages

Here is where the updated law had the biggest changes.  Modern communication tools have provided new ways for debt collectors to reach us. The most important point is that there is NO LIMIT on the number of times a debt collector can contact you through email, text or private message.  I find this discouraging but there is a silver lining.  Each message much include information on how to opt out of receiving more messages.  So you can make them stop if you want them to.  Our legislators made an effort to continue to protect our privacy though. Even though debt collectors can use social media, they are not allowed to post any personal information that others can see.  Your protection from others knowing you may have outstanding debts has always been a part of the FDCPA.

Time Limitations on Collections

Some consumers are not aware there is a statute of limitations on debt. It varies by state but is generally three to six years. After the time limit has passed, the debt is not legally owed. Knowing a debt is time-barred can help a consumer prioritize their payments. Not knowing this, allows a sneaky debt collector to trap us into ‘resetting the clock’ on that debt.  Making a payment on a time-barred debt reinstates the debt.

If you acknowledge in writing that you owe that debt “I can’t pay that right now because….”) it can reinstate that debt.  Because of this the new FDCPA requires more debt validation information for consumers. The new law also allows the collector to provide that over the phone. This is important because it helps you know if a debt is time-barred. If you know the validity of a debt, then you’ll know if a debt collector is making unfounded threats to sue for the debt. A debt collector is in violation if they threaten a lawsuit after the statute of limitations has expired, whether or not they were aware it was time-barred.

Avoid Scammers

The business of debt collection and the amount of personal information associated with it make a rich environment for scammers.  Now that they can contact you electronically, chances of clicking a bad link are increased.  Check the link address to make sure it looks legit. Make sure any attachments are expected before you open them.

A legitimate debt collector knows and follows the law.  They will send you a follow up in writing within 30 days of their initial contact. They know to speak to you in a business-like manner. They will avoid empty threats and harassment.  Unscrupulous collectors will do all that and more.

Take Action to Stop Abusers

If you have been treated unfairly by a debt collector, you have rights! The Consumer Finance Protection Bureau (CFPB) is ready to take action on your complaint. Contact them at https://www.consumerfinance.gov/complaint/. The Federal Trade Commission has been focusing on fair debt collection for years. You can report a bad actor to them too at https://reportfraud.ftc.gov/#/?pid=B. If you live in Florida like me, your State Attorney General wants to know too.  Report a fraudster in Florida here: http://myfloridalegal.com/.

Finally, I’d like to remind us all that knowledge is power.  Knowing your rights under the FDCPA is important but knowing how to avoid over-extending on credit and managing your income is even better.  It can help you stay on a path to avoid defaulting on debt and bills.  St. Lucie Extension has created informative videos on a wide variety of financial topics. More videos are in the works too! You can find money topics and other subject covered at the St. Lucie Extension Youtube Channel. Subscribe so you know when we add more good information for you.