As my practice expands, I continually encounter new areas of law. One legal issue my clients face is interactions with debt collectors—specifically, when, why, and how they can contact you. The most significant statute governing these activities is the Fair Debt Collection Practices Act (FDCPA). This law is important because it empowers the courts to impose substantial financial penalties for violations. These penalties are statutory, meaning they do not require proof of actual damages to be awarded.
Recognizing the immense stress debt collectors can impose on individuals and families, the government enacted the FDCPA in 1977 to protect Americans. Unregulated debt collection practices can lead to severe consequences, including divorce, job loss, and privacy invasions. The FDCPA was designed to shield consumers from these harmful effects by establishing clear guidelines for collection practices and enforcing strict penalties for violations.
The FDCPA statute itself is relatively short, spanning about 20 pages. However, the surrounding case law and legal interpretations—covering various actors, the definition of communications, and the types of violations—are complex and can be daunting. This article aims to demystify the basics of the statute, outline its requirements, and provide readers with a clear understanding of how and why violations occur.
This article is structured into three parts. The first part clarifies what constitutes a debt under the FDCPA, defines who qualifies as a debt collector, and offers guidance on protecting yourself during the initial stages of the collection process. The second part examines the ways in which a debt collector can violate the FDCPA. The third and final part discusses how to pursue legal action for violations and explains how damages are assessed under the FDCPA.
What Types of Debts are Covered?
To be protected under the FDCPA, a debt must be classified as consumer debt. The FDCPA applies exclusively to debts incurred primarily for personal, family, or household purposes. This includes common types of debt such as credit card purchases, vehicle loans, mortgages, medical bills, utility bills, and other personal expenses. Debts incurred for business or agricultural purposes are not covered by the FDCPA.
Who is Covered Under the Act?
The FDCPA applies only to debt collectors as defined by 12 CFR § 1006.2.
A debt collector is:
- Regularly engaged in the business of debt collection.
- Collecting debts on behalf of another person.
- Collecting its own debts but using a name that suggests a third party is involved.
A debt collector is not:
- An original creditor collecting its own debts under its own name.
- An entity collecting debts that were not in default at the time of transfer.
- A debt buyer who purchases a defaulted debt outright and collects it for themselves. Henson v. Santander Consumer USA Inc.
- Unless the primary purpose of the debt buyer’s business is debt collection. Tepper v. Amos Financial LLC.
Other parties not covered include process servers and officers or employees of an institution collecting debts owed to the institution in its name.
The FDCPA defines a debt collector as a specific and limited group, granting original creditors considerable freedom to collect their own debts. However, the statute does offer consumers protections against debt collectors. Original creditors often assign debts to multiple collection agencies on a commission-only basis, allowing each agency to pursue the debt independently. The first agency to collect the debt typically earns a commission of up to 25%. This intense competition can lead to aggressive tactics, such as repeated daily calls, in an effort to secure payment. The FDCPA exists to curb these predatory practices and provide consumers with a means to challenge violations.
What Constitutes a Communication?
Once you have confirmed that the debt is covered by the FDCPA and that the collector qualifies as a debt collector, the next step is determining whether a “communication” has occurred. The FDCPA defines a communication as “the conveying of information regarding a debt directly or indirectly to any person through any medium.” This broad definition includes text messages, emails, phone calls, and mailed letters that convey information about the debt.
However, case law suggests that cover letters accompanying court filings or emails containing only hyperlinks are not “communications.” Additionally, collectors cannot be held liable for communications sent in error or for bona fide miscommunications.
Ensuring Proper Information from Debt Collectors
The first step in defending against abusive debt collectors is ensuring the collection agency has provided relevant information about the debt. Typically, this information will be included in the initial written communication from the agency.
At a minimum, the debt collector must provide:
- Information that identifies the debt, such as account numbers.
- A full itemization of the debt, including interest, fees, payments, and amounts credited.
- An easy-to-understand tear-off debt dispute form and an address where it can be mailed.
- The amount of the debt owed.
- The name and address of the debt collector.
- The creditor to whom the debt is owed.
- Information about consumer protections (or a link where this information can be found).
- Other disclosures required by law.
If this information is not included in the initial communication, the debt collector must provide it within five days.
Additionally, the debt collector must provide written notice including the following statements:
- Upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
- Unless the consumer disputes the validity of the debt, or any portion thereof, within thirty days after receipt of the notice, the debt will be assumed to be valid by the debt collector.
- If the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and mail a copy of such verification or judgment to the consumer.
If a debt collector instructs a consumer to dispute the debt with the original creditor rather than with the collector itself, this may constitute a violation of 15 U.S.C. § 1692g(a) or a deceptive practice under 15 U.S.C. § 1692e.
How to Fill Out a Tear-Off Dispute of Debt
Once you have received the initial debt collection notice, you can begin asserting your rights. Thankfully, the new dispute form makes this process straightforward for consumers. A typical dispute tear-off will have multiple checkboxes for grounds for disputing the debt, which may include:
[ ] This is not my debt: Check this box if you believe the debt belongs to someone else or was incurred by someone else.
[ ] The amount is wrong: Use this option if you believe that interest, costs, or fees were incorrectly applied to your account.
[ ] I want you to send me the name and address of the original creditor. It is important to request this information if a different creditor is trying to collect the debt. This situation involves a debt buyer, such as Midland Credit Management, Cavalry Portfolio Servicing, Midland Funding, Asset Acceptance, or Encore Capital Group.
[ ] Other: This option can be used to present additional legitimate concerns, such as:
- You have already paid off the debt
- The current owner of the debt has not properly proven ownership (lack of standing)
- The debt is uncollectible because it is past the statute of limitations
Attach any relevant information here. The clearer you present your case, the more likely you are to resolve the issue at this stage. Otherwise, you may face a lawsuit and a subsequent citation to discover assets further on down the road.
If you contest a debt and request information from the current creditor within the 30-day period, all collection activities must pause until the agency provides documentation proving you owe the debt. This pause also includes halting any negative reporting to credit bureaus. During this time, collection agencies are prohibited from reporting the debt as overdue; instead, they must mark it as disputed or use other neutral language until the dispute is resolved.
However, unless the dispute is clearly resolved in your favor, the agency may resume collection efforts once they provide the requested verification. It’s important to understand that the collector’s legal obligation at this stage is only to respond to your request, with little underlying evaluation of the debt itself.
Ready to dive deeper? Click here to explore part two of the series, where I uncover how debt collectors often cross the line and violate the FDCPA.
