The Fair Debt Collection Practices Act

By: James C. Busch

The Fair Debt Collection Practices Act was adopted in order to eliminate abusive, deceptive and unfair debt collection practices. Congress passed this Act to ensure inter and intra collection practices did not lead to unnecessary personal bankruptcies, marital instability, loss of employment and invasions of privacy.

The Fair Debt Collection Practices Act applies to those entities and individuals who engage in the collection of consumer debts. This Act regulates conduct such as the acquisition of location information, communication with the debtor, harassment, false or misleading representations, and unfair practices. The Act further regulates aspects of collection such as notices, disputes of claims and jurisdictional issues. Violations of this Act can be severe and may be prosecuted by individual debtors, class actions, or the Federal Trade Commission.

Under the Fair Debt Collection Practices Act, privacy of consumers is protected by limiting communications about personal affairs to third parties. The Act restricts third party communication for location information so that the collector must (1) identify himself or herself and state that he or she is confirming or requesting location information, (2) the collector may identify his employer only if expressly requested to do so, (3) the collector may not communicate more than once with any individual source of information unless requested to do so, or there is a reasonable belief the initial information obtained was erroneous or incomplete, (4) the collector may in no circumstances communicate by postcard, (5) any communication affected by mail or telegram may not bear any language which would reveal the underlying reason for the request or that the request is being made by a debt collector or collection agency, and (6) upon the collector’s discovery that the third party is represented by counsel, all future communication must be directed to said counsel.

The Fair Debt Collection Practices Act also restricts third party communication for non-location information. Third party communication for non-location information may only be conducted with the express prior consent of the debtor, the express permission of a court of competent jurisdiction or as reasonably necessary to effectuate a post-judgment judicial remedy.

Further, the Fair Debt Collection Practices Act restricts communication with debtors so that debt collectors may not attempt to communicate with debtors at any time or place which is unusual or known to be inconvenient to the debtor. Thus, communications are restricted to between 8:00 a.m. and 9:00 p.m. in the time zone in which the debtor is located. Debt collectors may not contact debtors at their place of business if they know or have reason to know that the employer prohibits or discourages the debtor from receiving such communications. The Fair Debt Collection Practices Act also empowers the debtor to command a complete cessation of all communications between himself or herself and the debt collector. A debtor may indicate in writing his or her refusal to pay a debt asserted and order the cessation of future communication.

The Fair Debt Collection Practices Act also restricts what it defines as harassment and abuse. Thus, it restricts the use of threat or violence or other criminal means to harm the person, his or her reputation or property of the person. These threats need not be expressed and can be implied by the collector. This Act also restricts the use of profane or obscene language or language the natural result of which is to abuse the hearer. This Act also restricts the use of a telephone in a manner intended to annoy, abuse or harass any person at the number called.

The above is a general outline of some of the restrictions on collection efforts which result for the Fair Debt Collection Practices Act. These restrictions also outline to those who deal with individuals as customers why the classification of consumer debt or commercial debt is so important. If a debt is classified as a consumer debt, the restrictions of the Fair Debt Collection Practices Act apply; while if the debt is classified as a commercial debt, the Act would not apply. Thus, it is always important on credit applications to indicate in some way that the application is for a commercial or business account.

While the purpose of the Fair Debt Collection Practices Act is honorable in protecting the unsophisticated debtor from an deceptive collector it also provides a sophisticated debtor an opportunity to make collection efforts more difficult and surrounded by liability for violations of the Act.

Mr. Busch is an attorney specializing in commercial and construction litigation for Busch, Reed, Jones & Leeper, P.C. in Marietta, Georgia