This section addresses the limitations and regulations governing debt collectors, specifically how, where, and when they can communicate with you. Understanding these regulations is essential, as they are fundamental to the Fair Debt Collection Practices Act (FDCPA).
Throughout my career, I have encountered numerous accounts of debt collectors using abusive language. Degrading, offensive, and hostile behavior is unfortunately common among some collectors, who often operate on a commission-only basis. This high-pressure environment can lead to aggressive and sometimes unscrupulous tactics.
Collection agencies typically have a success rate of about 20-30%, meaning they recover approximately $30 for every $100 they are tasked with collecting. Despite their experience, these agencies employ various tactics, some of which may seem deceptive. This guide will clarify what debt collectors are legally permitted to do and what they are prohibited from doing.
As outlined in Part 1, it is crucial to first determine if the debt is covered by the FDCPA and if the collector qualifies as a debt collector under the law. Once this is established, the FDCPA imposes specific rules that collectors must follow. This section details the FDCPA regulations concerning debt collection practices, including whom debt collectors can contact, their conduct, permissible statements, and restrictions on their methods of communication.
Contacting Third Parties
Can Debt Collectors Contact Anyone Else About My Debt?
Generally, debt collectors are restricted from contacting third parties about your debt, with a few exceptions:
Allowed Contacts:
- Your Attorney: If you have legal representation, collectors must communicate with your attorney unless you authorize direct contact or your attorney does not respond.
- Credit Reporting Agencies and Original Creditors: Collectors may contact these entities as part of the collection process.
- Family and Co-Debtors: Collectors may contact your spouse, parents (if you are a minor), or co-debtors. However, they must cease communication if you request it in writing.
Restrictions on Third-Party Contacts:
Collectors can contact third parties only to obtain your location information and must:
- Identify Themselves: Clearly state their name and the purpose of the call.
- Avoid Revealing Debt Information: Do not disclose that you owe a debt.
- Limit Contact: Contact the third party only once unless the information provided was incomplete.
- Cease Contacting Third Parties: Stop contacting third parties if you have legal representation.
Mini-Miranda Disclosures
What Are Mini-Miranda Disclosures?
Debt collectors must provide specific disclosures during their communications:
- Initial Communication: Must state that they are attempting to collect a debt and that any information obtained will be used for that purpose.
- Subsequent Communications: Must include a statement that the communication is from a debt collector.
- Language Requirements: Disclosures must be provided in the same language as the rest of the communication.
Contacting You
Debt collectors must adhere to specific guidelines for contacting you:
Prohibited Times and Places:
- Avoid Inconvenient Times: Generally before 8:00 a.m. or after 9:00 p.m., or during times you specify as inconvenient.
- Cannot Contact You at Work: If your employer prohibits such calls.
- Attorney Representation: Must not contact you directly if they are aware you have legal representation.
Methods of Communication
How Can Debt Collectors Contact Me?
- Letters and Phone Calls: These communications must follow FDCPA restrictions.
- Email and Text Messages: Allowed, but must adhere to limitations to prevent harassment.
- Social Media: Public messages are prohibited. If contacting you privately, they must disclose their identity as a debt collector.
- Yes, you can receive an Instagram DM from a Debt Collector.
Harassment and Abuse – 15 U.S.C. 1692d
What Constitutes Harassment or Abuse?
Debt collectors are prohibited from:
- Using Violence or Threats: Employing violence, threats, or criminal means to harm anyone’s well-being, reputation, or property.
- Using Abusive Language: Using obscene, profane, or abusive language that insults or targets the recipient.
- Publicly Listing Your Debt: Publicly listing or advertising your debt, though reporting to a credit reporting agency is permitted.
- Repeatedly Calling or Failing to Identify Themselves: Making repeated calls or failing to identify themselves as debt collectors. They are not required to identify themselves if they are only trying to obtain location information.
- Making Too Frequent Phone Calls: Collectors cannot call more than seven times within a seven-day period for each debt.
False or Misleading Representations – 15 U.S.C. 1692e
What Are the Prohibited Misrepresentations?
Debt collectors cannot:
- Misrepresent Their Identity or Affiliations: They cannot falsely claim affiliation with the U.S. Government or use misleading identification.
- Provide False Information: Collectors must not provide false details about the debt’s character, amount, legal status, or their compensation.
- Falsely Represent Legal Documents: They must not misrepresent documents as legal summonses or imply that valid legal documents are not legal.
- Misrepresent Their Role: Debt collectors cannot falsely claim to be an attorney or suggest communications are from an attorney.
- Make Unwarranted Threats or Claims: They must not make threats or claims about legal actions that are not intended or permissible.
- Use Deceptive Practices: They cannot use false or deceptive means to collect a debt or obtain information.
- Misuse Business Names: They must use only the true name of their business.
- Falsely Represent Consumer Reporting Agencies: They must not falsely imply affiliation with consumer reporting agencies.
The FDCPA is designed to protect consumers. Courts assess whether a representation made by a debt collector is misleading from the perspective of an average consumer with modest education and limited commercial knowledge.
Understanding Settlement Offers from Debt Collectors
Debt collectors often send letters to consumers with settlement offers that may include language such as:
- “We would like to offer you a unique opportunity to satisfy your outstanding debt with a 25% discount off your current balance. Pay $[_] in one payment, due within 40 days from the date of this letter.”
- “Act now and receive 30% off if you pay by March 31st!”
- “We are offering a substantial 50% discount on your current balance if payment is received by May 14th.”
While settlement offers are not inherently improper, the language used can mislead consumers. Offers framed as limited-time promotions may create the impression that missing the deadline will forfeit the chance to settle for less. However, collectors often renew these offers if the initial one is not accepted.
To prevent misleading consumers, debt collectors should include a clear disclaimer stating: “We are not obligated to renew this offer.” This disclaimer sets accurate expectations and indicates that while renewal is possible, it is not guaranteed. Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769
Courts have addressed this issue to balance consumer protection with the ability of debt collectors to make settlement offers. Liability for failing to include such a disclaimer may depend on whether evidence shows that a significant number of unsophisticated consumers are likely to be misled.
Unfair Practices – 15 U.S.C. 1692f
What Practices Are Prohibited as Unfair or Unconscionable?
Debt collectors are prohibited from:
- Collecting Unauthorized Charges: Collecting any interest, fee, charge, or expense beyond the principal debt unless it was agreed upon or is permitted by law.
- Handling Post-Dated Payments: Accepting a check or payment dated more than five days in the future unless they notify you in writing between three and ten business days before depositing the check.
- Soliciting Post-Dated Payments for Threats: Requesting post-dated payments and then threatening to deposit the check early, causing it to bounce, and pursuing criminal charges for issuing bad checks.
- Depositing Post-Dated Payments Early: Depositing or threatening to deposit a post-dated check before the date written on it.
- Incurring Communication Charges: Causing communication charges by concealing the true purpose of the communication.
- Unlawful Repossession or Seizure: Threatening or repossessing property without legal right or if prohibited by law.
- Using Postcards: Contacting a consumer about a debt using a postcard.
- Misleading Envelope Information: Using any language or symbols on the envelope other than the collector’s address.
Collection of Time-Barred Debts
Debt collectors cannot:
- Threaten or Initiate Legal Action: Take legal action to collect a debt that is past the past the statute of limitations, even if they are unaware of the debt’s status. 12 C.F.R. § 1006.26(b). This prohibition includes both explicit threats and implicit or vague representations that could be perceived as threats by unsophisticated consumers.
- Misleading Settlement Offers: Offering to settle a debt when the statute of limitations has expired may be deceptive. Such an offer implies that the collector is waiving the right to sue, but the collector must first disclose that the statute of limitations prevents them from initiating a lawsuit.
- Misconception about Debt Extinguishment: The expiration of the statute of limitations does not extinguish the debt. Collectors can still contact consumers to seek payment, though they cannot file or threaten litigation. The CFPB rules allow collection contacts for time-barred debts, provided they do not involve threats of legal action.
- Deceptive Practices Regarding Time-Barred Debts: Collecting on a time-barred debt without disclosing that the collector cannot sue and that partial payment or acknowledgment may revive the statute of limitations can be considered deceptive under existing FDCPA case law.
Click here to read Part 3 of our series, where we discuss how damages are calculated under the FDCPA, including considerations for extreme circumstances.
