The Fair Debt Collection Act determines what collection agencies can and can't do by law when attempting to collect a debt. This federal act also gives debtors the right to request that collection agencies cease phone contact and provides legal recourse when an agency violates the law. Although these provisions won't erase a debt from the consumer's credit record or prevent a collection agency from filing suit against the debtor in court, it does protect debtors against undue harassment, threats, unfair practices and other scare tactics.
Collection Agencies: Rules of Engagement
Collection agencies can contact a debtor in person or by phone, fax, mail or telegram. However, they cannot do so at unusual times (such as before 8 a.m. and after 9 p.m.) or places unless given permission to do so. If the debtor requests that the collection agency refrain from phone contact, he must do so in writing. The collection agency cannot contact the debtor by phone again unless it's to confirm receipt of the correspondence. (Credit.com advises sending this correspondence by certified mail, return receipt requested, to ensure it is received by the collection agency.)
Third Party Contact
If a debtor has legal representation, collection agencies must contact the debtor's attorney rather than the debtor himself. Collection agencies can contact friends and relatives to inquire about the debtor's address, phone number and place of employment, but usually cannot do so more than one time unless the party gives the agency express permission. By law, a collection agency can contact the debtor's employer once to verify employment, but cannot obtain additional personal information from the employer or other co-workers. Collection agencies cannot discuss the debt with a third party other than the debtor's spouse or a representing attorney.
Harassment, False Claims and Deceptive Practices
The Fair Debt Collection Act restricts collection agencies from certain behaviors. Threatening to hurt the debtor or his family is strictly forbidden by law, as is using profanity. Collection agencies cannot harass the debtor by repeatedly contacting him by phone over and over. Nor can the collection agency threaten the debtor with arrest or threaten to take away his wages or property. Collection agencies cannot hold themselves out to be representatives of the federal government, a legal firm (if this isn't true) or operatives of a consumer reporting agency. Nor can collection agencies mail the debtor documentation that appears to be sent from a court (when it really isn't) or send legal documentation and inform the consumer that it isn't legal documentation. Collection agencies cannot communicate with debtors via postcard or apply extra fees and charges to the past-due balance unless authorized by state law.
Right To Recourse
Debtors whose rights have been violated under the Fair Debt Collection Act or state law have the right to bring suit against the collection agency in federal or state court within a year of the date in which the agency violated the law. According to Family Credit Management, plaintiffs who prevail in court may be awarded monetary damages as well as reimbursement for attorney's fees and court costs.
Reporting Collection Agencies That Violate the Law
Credit.com advises those who feel that a collection agency has violated the law to contact the Federal Trade Commission, which protects consumers against fraudulent, deceptive and abusive business practices, as well as their state's Attorney General's Office. The FTC's Consumer Response Center can be contacted at 1 (877) 382-4357 or by mail at the following address: Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580. To file a complaint online with the FTC or the relevant state Attorney General's Office, see the Resources links below.
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