What does the FDCPA do?
FDCPA, Fair Debt Collection Practices Art was initially enacted in 1978. The basic function of FDCPA is to protect consumers from unprofessional, unethical and illegal behavior from debt collectors. It applies to third party debt collectors, debt buyers and debt collection law firms. It does not apply to original creditors such as Chase, Bank of America and Wells Fargo. They do not have to abide by the FDCPA as they are not a third party but the first party.
Moreover, this law also does not apply to business debt but only consumer debt. The FDCPA regulates the consumer debt space; it does not regulate the commercial debt space.
What does the FDCPA prevent?
There are a few things that debt collectors cannot do. They cannot contact the customer or consumer before 8 am or after 9 pm; the consumer’s time zone, not the time zone the debt collector is in. Debt collectors cannot use foul or profane language in a conversation or even in writing. They cannot pretend to be law enforcements. Customers still receive phone calls in which the debt collectors claim to “…send the sheriff”, or “We’re at the sheriff’s office and we’re going to come arrest you.” Or they may not even say this but hint it as well. It really scares a debtor and in actuality this violates the FDCPA. It is absolutely not allowed.
Furthermore, debt collectors cannot speak in detail about a debt owed to anyone other than the debtor, or with someone authorized by the debtor. They also have to cease all communication when prompted by a debtor in writing. This is called a cease and desist notice. Once this notice is sent, all communication must be stopped.
What are some of the proposed changes to the FDCPA?
Nothing has come into law yet, but the CFPB (Consumer Financial Protection Bureau) is trying to put together a proposal to put all of this in motion in October. September will determine whether or not these changes will come into effect or not. The changes are fairly reasonable and there is pressure from consumers and debt collectors to update the law which has been in place since 1978. Some changes are as follows.
The debt collectors will be limited to calling a consumer a maximum of seven times a week. As of now, the limit does not exist. The debt collectors can call multiple time a day; the new law will limit this. Debt collectors will have to wait a week before calling a debtor again if they had had a conversation. For example, the debt collector calls the debtor on both Monday and Tuesday with no answer either of the days. They call again on Wednesday when the debtor picks up and claims to get back in a while. However, the debt collector cannot initiate contact until a week later.
Debt collectors can use text messages or emails as methods of communication. However, the text message or the email has to have an option of unsubscribe at the bottom in order for the debtor to opt out of communication. Moreover, debt collectors must restrict certain communication platforms if the debtor restricts them to do so. For example, if a debtor owes a company some money and they call to ask for the debt back, the debtor will have the option to say, “Okay great. I will definitely get back to you but please do not call me anymore. You can send a text message or an email, but please do not call anymore.” And the debt collector will have to abide by this.
Furthermore, debt collectors must restrict their time and place to reach a debtor, if instructed by the debtor. For example, the debtor can set limitations such as “Only call me on Mondays after 7 pm”, or “I do not receive calls on Fridays.” The debt collector has to abide by the limitations placed by the debtors.
Debt collectors must also disclose if the debt is time barred, meaning outside the statute of limitations. In Texas, for example, the stature of limitations is four years. The debt collector must put in writing that the debt is time barred and they must not imply that legal action can be taken on a time barred debt. They will be allowed to treat personal representatives of the deceased debtor the same as the debtor themselves.
Lastly, the debt collectors may not report derogatory information on a credit report before communicating with the debtors. Sometimes, some debt collectors such as medical collections do not make contact with the debtors. They may send a couple of letters but not more than that. This is because they tend to subscribe to Experian monitoring alerts and whenever they would see an inquiry from the mortgage or auto industry, that is when the debt collector will go ahead and report. Because the consumer will most likely return the debt when they are pursuing financing for a house or a car.
But with this new proposal, the debt collector cannot report derogatory information before communicating with the debtor, although it does not specify which method of communication.
Most common FDCPA violations
- Harassment – a lot of contacting especially when the debtor has asked the debt collector to stop.
- Misleading information – misleading the debtor on how much debt is owed.
- No response – by not responding to debt validation notices.
- Communication – communicating with third parties who are not authorized by the debtor.
- Debt validation – refusing to validate a debt.
Clayton Wesley and FDCPA Violations
Clayton Wesley helps uncover these potential FDCPA violations and then further refer these possible violations to the law firm J Gannon Helstowski. FDCPA violations can result in not only deletion, but also some monetary damages for the clients. The most common violations to be noted these days is the refusal to validate the debt or the refusal to reply.