The Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., is a consumer protection statute designed to establish legal protection from abusive debt collection practices. The statute is intended to allow and promote fair debt collection, provide a mechanism for consumers to dispute and obtain validation of a debt, and to eliminate abusive practices in the collection of consumer debts. The FDCPA’s definitions of “consumer” and “debt” specifically restricts the coverage of the act to personal, family or household transactions. See 15 U.S.C. § 1692a. The FDCPA does not apply to the collection of commercial debts.
Who is a “Debt Collector”?
An often-disputed part of any FDCPA lawsuit is whether the person or corporate entity attempting to collect a debt qualifies as a “debt collector” under the statute. The FDCPA defines a “debt collector” 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.” See 15 U.S.C. § 1692a(6). Though the definition of “debt collector” is quite broad, there are a number if exceptions, and these are the most common.
-A Creditor’s Employees – These individuals are not debt collectors and cannot be held accountable for their employer’s decisions to try and collect a debt.
-Individuals Collecting for Creditors – As long as individuals have no legal stake in the debt collection, and do not collect debts for a living, he/she is not considered debt collectors even if they have a connection to the creditor they are serving.
-Government Employees – When a government employee is attempting to collect a debt for government purposes, the employee is not considered a debt collector.
-Nonprofit Consumer Credit Counseling Organizations – Organizations that handle debt liquidation for consumers by receiving payments directly to pay creditors are not debt collectors under the FDCPA.
-Creators of the outstanding debt in the first place.
-Collectors who obtained the debt when it was not in default.
-Collectors of debt for trust and escrow purposes.
Lawful Performance Under the FDCPA
If and when the debt collector decides to proceed with performing his/her/its duties, the FDCPA provides clear guidelines as to how it shall be performed.
-Appropriate Times – Generally, only attempt to contact consumers between 8:00 a.m. to 9:00 p.m. local time. See 15 U.S.C. § 1692c(a)(1).
-Identify Themselves and Notify the Consumer – In every communication which is from the debt collector, the debt collector must inform the consumer that any information is being used to collect a debt. See 15 U.S.C. § 1692e.
-Right to Dispute the Debt – A consumer does have the right to dispute the debt. Under 15 U.S.C. § 1692g a 30-day notice is required to sent by the debt collector within five days of the initial communication with the consumer.
-Verifying the Debt – When a consumer sends a written dispute or request for verification within 30 days of receiving the above mentioned §1692g notice, then the debt collector must either cease collection efforts altogether or mail the consumer the requested verification information.
Unlawful Acts Under the FDCPA
The easiest way a debt collector can violate the statute is by performing actions which are explicitly forbidden. A few of the forbidden actions are: Threats of violence, use of obscene language to intimidate the consumer, advertising the consumer’s debt for sale, excessive telephone calls, and providing false representations. If the debt collector becomes aware the consumer is represented by counsel, all communications from the debt collector to the consumer must cease, and future communications must be made with the attorney only. See 15 U.S.C. § 1692c(a)(2).
Enforcing the FDCPA
The FDCPA provides consumers with a private right of action against debt collectors. It is critical to note the statute of limitations to file suit based on the FDCPA is one year. Moreover, the statute begins to toll from the date of the alleged violation, and not from the date the alleged wrongdoing was discovered. Rotkiske v. Klemm, 140 S.Ct. 355 (2019).
The recoverable damages for a consumer are actual, statutory, court costs, and attorney’s fees. The consumer does not need to prove actual damages to recover the statutorily permitted $1,000 maximum to recovery attorney’s fees and costs. See 15 U.S.C. § 1692k(a)(2). This fact makes any FDCPA claim very valuable for plaintiff’s attorneys as they could possibly recover all of their attorney’s fees under the FDCPA if the debt collector was found to have made too many phone calls, and the consumer did not have any actual damages. Alternatively, 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.
A common defense by debt collectors is to allege the alleged improper act was unintentional and the result of a bona fide error despite procedures which were in place to prevent the unlawful act. See 15 U.S.C. § 1692k(c).
Before you seek to collect a debt, please remember the FDCPA may apply, and you mut be cognizant of its application. Failure to abide by the statute may result in a lawsuit and subject to the debt collector to damages as well as a plaintiff’s lawyer’s attorney’s fees.