As a third-party debt collector, you must adhere to a particular set of rules that are set forth by a variety of state and federal laws. The Fair Debt Collection Practices Act (FDCPA) is the main consumer protection law with which debt collection agencies must conform. However, the state where the debtor lives or where the debt collection agency operates may have enacted more consumer protection laws with which the agency must also comply.
The FDCPA makes particular collection strategies that have been adopted by many collection agencies illegal. It explicitly refers to debt collection agencies and other third-party debt collectors. The act grants protections to consumers against abuse, unwanted contact, harassment, threats, and sharing of credit knowledge. Below are some of the most notable restrictions on what, as a bill collector, you can and cannot do.
- Misrepresentation: Debt collectors are prohibited from misleading consumers about their identity in person, through letters, or over the phone. Some consumers have filed reports about debt collectors that have appeared in person at their homes and flashed a badge to symbolize a connection with law enforcement falsely.
- Contact During Certain Hours: Debt collection agencies are not authorized to contact debtors before 8:00 in the morning or after 9:00 in the evening unless the borrower gives explicit consent otherwise. Also, debt collection companies cannot talk to a debtor’s employer if it knows that this sort of communication is not authorized at the debtor’s workplace.
- Breaking Confidentiality: Debt collectors are forbidden by privacy and consumer protection laws from revealing the presence of the debt to anyone other than the debtor or an authorized representative, such as a lawyer or spouse. This covers sending letters that distinguish the debt collector as a representative of a debt collection agency. Postcards are expressly forbidden. However, a debt collection agency can contact other third parties to attempt to determine the debtor’s current place of employment, address, or phone number.
- Continued Contact: If the debtor requests that the collection agency validate a debt, it must discontinue communication until it presents the consumer with confirmation of the debt. Likewise, if a consumer specifically requests that the debt collection agency suspend contact, the debt collection agency must stop all contact. However, the debt collection agency can talk to the debtor one last time to indicate that all contact will stop. Also, the debt collection agency can communicate with the debtor to provide information that it plans to take a specific action against the debtor, such as filing of a lawsuit.
- Contact With the Debtor: Debt collection agencies and their representatives are not allowed to communicate with a debtor personally if the debtor has engaged the services of an attorney to handle the debt collection. In that case, the debt collection company must talk to the lawyer instead of the debtor.
The primary benefit that debt collection agencies provide is an excellent knowledge of efficient collection procedures. However, if you are a third-party debt collector, it is important to be aware of the actions that you must avoid legally.
A debt collection agency cannot act in any unreasonable or unfair manner to collect a debt. For example, as a third-party debt collector, you are prohibited from adding unauthorized charges, fees, or interest that is not allowed by state law or the original agreement. You also cannot deposit a postdated check before the date written on the check or threaten to repossess or seize property if you have no right or intention of doing so.
If a debt collector violates one of these laws, the consumer may be able to use the violation to negotiate a better settlement. Likewise, the debtor may sue the debt collection agency or file a complaint with the Federal Trade Commission (FTC) or the Consumer Financial Protection Bureau (CFPB).
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