Fair Debt Collection Practices Act (FDCPA)
What it is:
How it works (Example):
The Fair Debt Collection Practices Act protects consumers’ rights in the context of debt collection. In other words, debt collectors must adhere to a certain set of rules when they are pursuing consumers who owe money.
Some of these rules relate to preventing fraud on the part of collectors. For example, it is illegal for collectors to use false information from a consumer’s credit report or threaten to use it.
Also, some regulations try to ensure the respectful treatment of debtors. For example, it is illegal for collectors to use abusive of profane language when discussing debt issues with debtors and to repeatedly call or contact a debtor with the intension of harassment.
Privacy is another concern in debtor and debt collector interactions. According to the FDCPA, it is illegal for collectors to discuss debt-related issues with uninvolved third parties or show up to a debtor’s place of employment without specific permission from the employer.
Instead, collectors are required to inform the consumer of who they are and what collection agency they represent. Also, collectors must provide verification of the debt and inform the consumer that they do have the legal right to dispute the amount of the debt within 30 days.
Why it Matters:
Regulatory acts like the Fair Debt Collection Practices Act are important for protecting the rights of consumers in the context of debt repayment. The amount owed by a consumer can often contain errors, and debt collectors sometimes pursue debtors with excessive and harassing tactics.
Although debt collectors are known to be aggressive with their collection tactics, acts like the FDCPA give consumers more rights and assurance that they will be treated with respect and have the opportunity to contest the amount of debt they owe.