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[top]Fair Debt Collection Practices ActThe Fair Debt Collection Practices Act (or FDCPA), 15 U.S.C. § 1692 et seq., is a United States statute added in 1978 as Title VIII of the Consumer Credit Protection Act. Its purposes are to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy. The Act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act. It is sometimes used in conjunction with the Fair Credit Reporting Act. [top]People and entities covered by the FDCPAIn the United States, debt collectors may use different names such as "collection agency," "factoring company" or some other name that may or may not be understood by a consumer to be a third-party collector (and that might be used to claim immunity from the Act). However, the FDCPA broadly defines debt collectors as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." While the FDCPA generally only applies to third party debt collectors --not internal collectors for an "original creditor" -- some states, such as California, have similar state consumer protection laws which mirror the FDCPA, and regulate original creditors. In addition, courts have generally found debt buyers to be covered by the FDCPA even though they are collecting their own debts. The FDCPA's definitions of "consumers" and "debt" specifically restricts the coverage of the act to personal and non-commercial transactions. Thus, debts owed by businesses are not regulated. [top]Prohibited conductThe Act prohibits certain types of "abusive and deceptive" conduct when attempting to collect debts, including the following:
[top]Required conductFurther, the FDCPA requires debt collectors to:
(If a written dispute or request for verification is sent within 30 days after receiving the first written notice concerning the consumer's rights, then the debt collector must either provide the requested validation information or cease their collection efforts altogether. The so called 30-day "g" validation notice is required to be sent by debt collectors within five days of the initial communication. The consumer's receipt of this notice starts the clock running on the 30-day right to demand validation of the debt from the debt collector. Consumers may still dispute a debt later, but they lose the right to compel the debt collector to produce verification of the debt if they dispute it after the 30-day period has elapsed. A consumer may also verbally dispute a debt--though the consumer does not preserve all of his/her rights by doing so.) [top]Enforcement of the FDCPAThe Federal Trade Commission has the authority to administratively enforce the FDCPA using its powers under the Federal Trade Commission Act. Aggrieved consumers may also file a private lawsuit in a State or Federal court to collect damages (actual, statutory, attorney's fee and court-costs) from third-party debt collectors. The FDCPA is a strict liability law, which means that a consumer need not prove actual damages in order to claim statutory damages of up to $1,000 if a debt collector is proven to have violated the FDCPA. The collector may, however, escape penalty if it shows that the violation (or violations) was the result of a "bona fide error." Alternately, if the consumer loses the lawsuit and the court determines that the consumer filed the case in bad faith and for the purposes of harassment, the court may then award attorney's fees to the debt collector. Historically, courts have only very rarely ordered consumers to pay debt collectors' attorney fees in a FDCPA case. [top]Debt collection: Your rights and responsibilitiesSource: State of Wisconsin Department of Financial Institutions Strengthening Wisconsin's Financial Future (The following is a DFI Your Money Matters program brochure reproduction) Being contacted by someone who wants to collect a debt can be upsetting. This brochure explains some of your rights and responsibilities under the law and answers some frequently asked questions about debt collection. What should I do if a collector calls me? The most important thing to do is to remain calm; arguments do not solve anything. If you get angry you may forget important information. In responding to complaints that bill collectors were abusive, it is often discovered it was actually the consumer who was abusive. If you are contacted
How do I dispute a debt? If a collection agency is involved, write them within 30 days of receiving the initial notice and inform them you are disputing the debt. The collection agency must then halt collection activity until a copy of the verification is sent to you. It can then resume collection efforts. If the debt cannot be verified, the collection agency must cease activity on your account. During this time you are disputing the debt, the collector may not disclose any information about the debt, without also stating that it is being disputed. The creditor called yesterday and threatened to sue me if I didn’t pay my debt. Is that legal? Yes. A creditor can threaten legal action against you. This includes threats to garnishee your wages or seize collateral. However, such action can only be threatened if it is taken in the regular course of business or is intended with respect to your particular debt. Only the creditor has the authority to decide whether legal action should be taken. A collection agency cannot initiate legal action on its own but can recommend legal action to the creditor. What is considered harassment? Harassment is difficult to describe in exact terms, but it usually means that a collector used obscene or threatening language with you. This includes calling you names, demeaning your occupation, or questioning the decisions that lead to your account being placed with a collection agency. It is also considered harassment to contact you at unusual hours (usually defined as before 8:00 a.m. or after 9:00 p.m.), or to call so often that it becomes harassing. Remember it is not against the law to be rude, and there is a distinction between rudeness and harassment. Is a collection agency allowed to contact my employer? The collector can contact your employer only for the following reasons – to verify employment or the amount of your earnings, or to communicate with an employer who has an established debt counseling service or procedure. Collectors can also contact an employer after a final court judgment has been made on the debt. What do I do if I simply can’t afford to pay off the debt? Try to propose to pay off the full debt in regular but specific payments. Be prepared to provide evidence concerning your current financial condition. Make sure that the payments are in an amount you can afford. Write both the creditor and collection with your proposal, and you might want to consider including a payment with that letter in the amount of the proposed payment. The payments should be in an amount that would pay off the debt in a reasonable amount of time. Offering to pay $5 a month on a $1,000 debt probably would not be accepted by a creditor or collection agency. If the collector approves these new payments, it is extremely important that you do not miss any payments. I’ve had problems paying my bills and I’m trying to set up payment plans but the collectors are demanding full payment. Can they do that? Yes. Once your account goes into default, a creditor or collector can demand any amount they wish, up to full payment of the debt. Although many collectors might accept smaller payments on a regular basis, they are not obligated to accept any offer you make them. The collector threatened to tell my neighbor about my debt. Can he do that? No. A collector cannot disclose, or threaten to disclose, information about your personal or credit reputation to anyone, without a legitimate business need to know it. Remember, however, that collectors can report accurate information to the credit bureau and that information could end up on your credit report. The collector called my neighbor and asked if I live here. I thought collectors couldn’t call anyone except me. A collector can contact a third party only to determine if you reside at the location listed on the account. If you’ve moved, they can also ask for the new address, phone number, and where you are employed. Any further discussion between a third party and a collector is prohibited in Wisconsin. What should I do if I have questions or concerns about a collection agency’s activities? Call or write at: Office of Consumer Affairs Department of Financial Institutions P. O. Box 8041 Madison WI 53708-8041 (800) 452-3328 (Wisconsin residents only) or (608) 264-7969 Fax: (608) 264-7968 Please keep in mind that DFI can only act on complaints filed in writing or submitted through our Website. [top]Fight back against unethical debt collectorsHere's some expert advice on how to fight back against unethical collectors. The Fair Debt Collection Practices Act requires that debt collectors treat you fairly. This doesn't mean you won't have to pay your legitimate debt. But here are some basic rights:
Once you're contacted by phone, you have the right to get a notice that outlines your debt, whom you owe money to, and what action to take if you don't owe the money. Keep in mind that a debt collector can collect a debt owed by an ex-spouse. If the debt was incurred while you married, you may be liable for the debt after a divorce even if the divorce papers state your spouse is responsible for paying off the debt. If you've been contacted by a debt collector, but you don't think you owe a debt, you must write a return letter stating that the debt is not yours within 30 days. Once a collector receives your letter, they should send you proof of the debt, such as a copy of the bill. Don't be coerced into paying a debt you don't owe. If you do pay just to get rid of the debt collectors, it's an admission of guilt, and it will have a negative impact on your credit score. Keep in mind that some debt has an expiration date. There is a limit to how long collectors can legally collect your debt. Generally this limit - called the statute of limitations - can range from three to 15 years according to Ridout. Check with your state's attorney general's office to find out the limit in your state. You can find out who to contact at NAAG | Welcome. Sometimes debt collectors will try to collect on this old debt called zombie debt because it never goes away. Make sure you don't accept a new credit offer from a creditor you never repaid. Once that creditor renews your credit relationship, the clock starts ticking all over again on your state's statute of limitations. If you think you've been treated unfairly by a debt collector, take action. File a complaint with the Federal Trade Commission at 877-FTC-HELP or go to Federal Trade Commission - Home. You should also contact your state attorney general's office. You also have the right to sue a debt collector in state or federal court within a year of the date the law is violated. A victory will allow you to recover money for the damages you suffered plus an additional amount up to $1,000. A group may also sue a collector and for damages up to $500,000, or one percent of the collector's net worth, whichever is less. And the federal government plays by slightly different rules. In 1996, Congress passed the Debt Collection Improvement Act which allows the government to take a portion of federal retirement, federal salary and Social Security benefit checks to cover non-tax debts owed to the government. There are some debts that you can't get rid of. If you don't pay your federal student loans for example, debt collectors can garnish your Social Security wages and prevent you from renewing any state licenses according to Mark Kantrowitz of FinAid! Financial Aid, College Scholarships and Student Loans. Debt collectors can even dip into your tax refund. Other debts like past-due child support and federal tax liens tend to stick with you. [top]Wisconsin Department of Financial InstitutionsURL: Wisconsin Department of Financial Institutions About the State of Wisconsin Department of Financial Institutions DFI provides financial education through our Your Money Matters program including: Speakers for meetings and seminars, conventions, professional and civic groups, high school and college classes, and other audiences of 30 or more. Presentations for the public on current financial topics. Education Centers featuring on-line access. Informational brochures on Investing, Credit, Financing and Entrepreneurship. DFI regulates the following: Division of Banking – regulatory responsibility for state-chartered banks, mortgage bankers and licensed financial service providers. Division of Corporate and Consumer Services – responsible for the Uniform Commercial Code (UCC) filings, and maintaining the state wide data base of UCC lien filings for secured transactions, and for organizing or licensing domestic and foreign corporations, limited partnerships, limited liability companies, and limited liability partnerships. Office of Credit Unions – supervision of state- chartered credit unions. Division of Savings Institutions – supervision of savings and loans, and savings banks. Division of Securities – regulates offerings of securities including mutual funds; franchise offerings; broker-dealers and securities agents; investment advisers and investment adviser representatives. Office of Consumer Affairs – Counsels consumers and merchants regarding their rights and responsibilities under the Wisconsin Consumer Act, which governs consumer credit transactions and the collection of consumer debt. More About DFI DFI is a self-supporting agency funded by fees charged to those it regulates. Visit DFI at: 345 West Washington Avenue, Madison, Wisconsin. Office hours are Monday through Friday, 7:45 a.m. to 4:30 p.m. To learn more about DFI visit their Website at: Wisconsin Department of Financial Institutions DFI Department of Financial Institutions 345 West Washington Avenue Madison, WI 53703
You can file a complaint by contacting: Department of Financial Institutions s Wisconsin Consumer Act Section PO BOX 8041 Madison, WI 53708-8041 [top]Debt Collection Discussion ForumLatest threads from the forum Debt Collection Debt collection statutes, state and federal law, etc.
[top]External LinksThe FTC Report For its part, the Federal Trade Commission (FTC) produces an annual report to Congress of its findings with respect to its FDCPA enforcement activities. This report details consumer complaints to the FTC about alleged debt collector violations of the FDCPA. There were more than 66,000 consumer complaints made to the FTC about unlawful collection activities in 2005. This was an overall increase of more than 14% over 2004. Fair Debt Collection Practices Act - United States Federal Trade Commission ACA International's FDCPA Web Page FTC's FDCPA Web Page National Association of Consumer Advocates: Find a Lawyer Public Citizen UK Debt Collection - UK Debt Collection providing debt collection and debt recovery services in the United Kingdom and abroad. How to Update Wiki The Law Wiki is still very new and so it's a great time to jump in and start updating it and learning how to use it. You really can't mess anything up, because all revisions are stored and can be rolled back by a moderator, so play away and you can help make this a great resource for WORLDLawDirect visitors.
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