Unfair Debt Collection

Debt collectors generate more complaints to the FTC than any other industry.  Unfortunately, many consumers do not know that federal and state laws regulate debt collector’s interactions with you through statutes like the federal Fair Debt Collection Practices Act and California’s Rosenthal Fair Debt Collection Practices Act.  Even fewer consumers know that these statutes allow them to hold debt collectors accountable for their unfair debt collection practices at no costs to themselves.

WHY WERE THE DEBT COLLECTION STATUTES ENACTED?

Congress enacted the Fair Debt Collection Practices Act while declaring the following:

(a) Abusive practices.  There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.

(b) Inadequacy of laws.  Existing laws and procedures for redressing these injuries are inadequate to protect consumers.

(c) Available non-abusive collection methods.  Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.

(d) Interstate commerce.  Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.

(e) Purposes.  It is the purpose of this title to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

With these purposes in mind, the various statutes regulating unfair debt collection practices seek to provide consumers with a means to end abusive collection efforts.

WHAT ARE COMMONS TYPES OF UNFAIR DEBT COLLECTION PRACTICES?

The FDCPA was drafted in the 1970s.  While its terms are not as archaic and dense as some statutes, the FDCPA’s requirements remain heavily litigated to this day.  What follows is a discussion of what the law says vs. what the law means.

What The Law Says

15 U.S.C. § 1692b – Acquisition Of Location Information

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall –

  • Identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;
  • not state that such consumer owes any debt;
  • not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;
  • not communicate by post card;
  • not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and

after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period

What The Law Means

15 U.S.C. § 1692b is intended to protect consumers from the embarrassment of third-party disclosures.  The unfair debt collection laws do permit limited communications with individuals such as your family, friends, co-workers, etc.  The debt collector; however, cannot engage in these communications more than once and cannot disclose that you owe a debt.  If such conduct has occurred, the debt collector may be found to have violated the Fair Debt Collection Practices Act.

What The Law Says

15 U.S.C. § 1692d – Harassment Or Abuse

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

  • The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.
  • The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.
  • The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 1681a(f) or 1681b(3) of this title.
  • The advertisement for sale of any debt to coerce payment of the debt.
  • Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

Except as provided in section 1692b of this title, the placement of telephone calls without meaningful disclosure of the caller’s identity

What The Law Means

15 U.S.C. § 1692d prohibits more egregious forms of debt collection abuse.  A debt collector cannot threaten to hurt a consumer – physically or otherwise – nor can a debt collector swear at the consumer. 

The FDCPA also prohibits public means of collection intended to embarrass the consumer into paying their debt such as public displays of debtor lists and advertisements listing debts.

Finally, debt collectors are not allowed to call a consumer’s phone over and over again as a means to annoy them into paying their debt.

If any of these issues have occurred, the debt collector may have violated your rights pursuant to the FDCPA.

What The Law Says

15 U.S.C. § 1692f – Unfair Practices

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

  • The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
  • The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.
  • The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.
  • Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.
  • Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.
  • Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if—
  1. there is no present right to possession of the property claimed as collateral through an enforceable security interest;
  2. there is no present intention to take possession of the property; or
  3. the property is exempt by law from such dispossession or disablement.
  • Communicating with a consumer regarding a debt by post card.

Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.

What The Law Means

15 U.S.C. § 1692f is a catch-all section of the FDCPA that prohibits unfair or unconscionable debt collection efforts.  For example, a debt collector cannot inflate the amount of the debt they are seeking from the consumer.  The request for post dated checks to satisfy a debt and depositing such checks early may also constitute an illegal debt collection practice.

This section also prohibits a debt collector from mailing debt collection letters that display to anyone handling the mail that they are attempting to collect a debt.  This could include statements such as “Past Due” on the envelope or other statements that understood to mean that the consumer owes money to the sender.

If any of this conduct has occurred, the debt collector may have violated the FDCPA.

What The Law Says

15 U.S.C. § 1692g – Validation Of Debts

1692g(a) – Notice of debt; contents

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—

  • the amount of the debt;
  • the name of the creditor to whom the debt is owed;
  • a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
  • a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
  • a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the
  • original creditor, if different from the current creditor.

What The Law Means

15 U.S.C. § 1692g requires a debt collector to properly convey the consumer’s rights regarding disputes of a debt.  The initial written communication must: state how much is owed, identify the creditor, explain that the consumer can dispute the debt orally or in writing within 30 days after receipt of the letter.  A debt collector’s failure to properly state these consumer rights may be a violation of the FDCPA.

1692g(b) – Disputed debts

If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

What The Law Means

If a consumer disputes a debt within 30 days of receipt of the initial written communication, the debt collector must validate the debt prior to engaging in further collection attempts pursuant to 15 U.S.C. § 1692g(b).

1692g(c) – Admission of liability

The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

What The Law Means

While 15 U.S.C. § 1692g(a)(3) allows the debt collector to assume a debt is valid absent a timely dispute, 1692g(c) confirms that this lack of dispute is not something that a debt collector can use in court against the consumer.

What The Law Says

15 U.S.C. § 1692k – Civil Liability

(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of—

(1) any actual damage sustained by such person as a result of such failure;

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.

Factors considered by court (b) In determining the amount of liability in any action under subsection (a), the court shall consider, among other relevant factors—

(1) in any individual action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or

(2) in any class action under subsection (a)(2)(B) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector’s noncompliance was intentional.

Intent

(c) A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

Jurisdiction

(d) An action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

Advisory opinions of Commission

(e) No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Commission, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined

    What The Law Means

    15 U.S.C. § 1692k answers the following question: What type of damages can a consumer seek as the result of unfair debt collection practices?

    First, a consumer is allowed to seek pecuniary loss and emotional distress damages – known as “actual damages” – which have been incurred as the result of unfair debt collection practices.

    Second, a consumer may also recover statutory damages of up to $1,000.  As their name suggests, statutory damages are damages awarded pursuant to the statute and are intended to deter violations by imposing a cost on the defendant even if his misconduct imposed no cost on the plaintiff.

    Third, 1692k permits the successful consumer to recover their attorneys’ fees and costs if successful.  This means that bringing a lawsuit as the result of a debt collectors unfair debt collection practice will not cost the consumer any money at any time.

    What The Law Says

    15 U.S.C. § 1692c – Communication In Connection With Debt Collection

    1692c(a) – Communication with the consumer generally

    Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt—

    • at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock antimeridian and before 9 o’clock postmeridian, local time at the consumer’s location;
    • if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or
    • at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communications.

    What The Law Means

    15 U.S.C. § 1692c regulates when and where live collection efforts will take place.  It assumes that calls after 8:00 a.m. and before 9:00 p.m. are acceptable unless the consumer notes otherwise.  Note that the law does not prohibit debt collectors from placing telephone calls on holidays or the weekend.

    This section precludes contact with a consumer who is represented by an attorney IF the debt collector has knowledge of the representation.

    Similarly, 15 U.S.C. § 1692c also prohibits a debt collector from calling you at work IF you have told them that such calls are not permitted.

    1692c(b) – Communication with third parties

    Except as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

    What The Law Means

    Likewise, 15 U.S.C. § 1692c(b) seeks to avoid the embarrassment of a debt collector speaking to other people about your debt.  It allows debt collectors to speak to you, your attorney, the credit bureaus, the creditor, the creditor’s attorney, or the debt collector’s attorney.

    1692c(c) – Ceasing communication

    If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except—

    • to advise the consumer that the debt collector’s further efforts are being terminated;
    • to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or
    • where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

    If such notice from the consumer is made by mail, notification shall be complete upon receipt.

    What The Law Means

    15 U.S.C. § 1692c(c) allows a consumer to tell a debt collector to not contact the consumer anymore as long as it is in writing.  With three limited exceptions, any future collection attempts may be a violation of the FDCPA.

    What The Law Says

    15 U.S.C. § 1692e – False Or Misleading Representations

    A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

    • The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.
    • The false representation of—
    1. the character, amount, or legal status of any debt; or
    2. any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.
    • The false representation or implication that any individual is an attorney or that any communication is from an attorney.
    • The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
    • The threat to take any action that cannot legally be taken or that is not intended to be taken.
    • The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to—
    1. lose any claim or defense to payment of the debt; or
    2. become subject to any practice prohibited by this subchapter.
    • The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.
    • Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.
    • The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.
    • The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
    • The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.
    • The false representation or implication that accounts have been turned over to innocent purchasers for value.
    • The false representation or implication that documents are legal process.
    • The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.
    • The false representation or implication that documents are not legal process forms or do not require action by the consumer.

    The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 1681a(f) of this title.

      What The Law Means

      15 U.S.C. § 1692e is lengthy section of the FDCPA that prohibits a number of common and illegal debt collection practices.  In general terms, this section prohibits any misrepresentations made in connection with the collection of a debt.

      Such misrepresentations include, but are not limited to, claiming that the debt collector is an entity affiliated with the United States Government, that they are an attorney if that is not true, that the debt collector is a credit bureau, reporting inaccurate information to the credit bureaus, or using a name other than the true name of the debt collector.

      Debt collectors are also not allowed to tell a consumer that they will be arrested or go to jail if the consumer does not pay their debt or imply that the consumer is a bad person because they did not pay their debt.

      If a debt collector utilized any of these false, deceptive, or misleading tactics, they may have violated the FDCPA.

      What The Law Says

      15 U.S.C. § 1692h – Multiple Debts

      If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer’s directions.

        What The Law Means

        15 U.S.C. § 1692h applies if a consumer owes multiple debts to a single debt collector and requires the debt collector to apply payments towards the debts as directed by the consumer.

        What The Law Says

        15 U.S.C. § 1692i – Legal Actions By Debt Collectors

        (a) Any debt collector who brings any legal action on a debt against any consumer shall—

        (1) in the case of an action to enforce an interest in real property securing the consumer’s obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

        (2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity—

        • in which such consumer signed the contract sued upon; or
        • in which such consumer resides at the commencement of the action.

        (b) Nothing in this subchapter shall be construed to authorize the bringing of legal actions by debt collectors.

          What The Law Means

          15 U.S.C. § 1692i limits where a consumer can be sued for a debt.  Such collection actions must be filed either where the contract was signed or where the consumer lives at the time the lawsuit is filed.

          What The Law Says

          15 U.S.C. § 1692j – Furnishing Certain Deceptive Forms

          (a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

          (b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 1692k of this title for failure to comply with a provision of this subchapter.

            What The Law Means

            15 U.S.C. § 1692j prohibits the use of forms that misrepresent who is seeking to collect the debt from the consumer.

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