The Fair Debt Collection Practices Act was brought into being to address problems relating to harassing and threatening behavior by some debt collectors. Collection agencies do, however, benefit from this legislation. By acting in a professional manner when attempting to collect debts, collection agencies can avoid possible penalties.
Those that are in the business of extending credit have a reasonable expectation of being paid back. Whether a product is delivered with the agreement to pay upon receipt or an individual is issued tens of thousands of dollars in unsecured credit card cash advances, the lender is entitled to being paid back.
Clearly, there are instances when the lender is not receiving the payments they are due. There can be several reasons for this. Sometimes, the borrower may be experiencing financial difficulties and needs more time to pay their debt. However, at other times, they may simply be irresponsible about paying their debt and they default. Whatever the reason, the lender is fully within their rights to seek and expect payment.
This is where collections agencies come into play. Their goal is to acquire the payment due their clients. However, they may not take a Wild West style approach and do anything they wish to do in order to recoup a debt. This is where the Fair Debt Collection Practices Act comes into play.
The Fair Debt Collection Practices Act was enacted in 1978. There have been added amendments and modifications to the Act that have altered it in some ways. For example, a new clause to The Fair Debt Collection Practices Act states that a debtor in collections can request the collection agency to cease further contact with him/her, and the collections rep must comply with this request.
However, it should be noted that this does not prevent the collection agency from continuing to pursue a valid debt. Collection agencies are still within their rights to let the debtor know of their intention to pursue the debt by other legal means, through an attorney.
This can only happen if the debtor makes this request in writing. If communication has stopped due to the collection agency’s inability to reach the debtor, then it is legal to contact third parties in a non-threatening, nor harassing manner. Also, the collections rep cannot disclose the nature of the call, so that it doesn’t violate the debtor’s privacy rights. The rep can only ascertain the whereabouts of the debtor from the third party. While these rules can appear skewed in favor of the debtor, they’re also designed to steer the collection agency clear of potential trouble and from engaging in unprofessional conduct.
As these laws and regulations clearly demonstrate, the aim of The Fair Debt Collection Practices Act is to curtail the abusive and unprofessional behavior on the part of some collection agencies. This behavior undermines the credibility and reputation of the business. It also makes it difficult to collect revenues. After all, no one wants to deal with rude, abusive collection agencies.
Collection agencies that violate The Fair Debt Collection Practices Act can be penalized in a number of ways, to include legal actions, and up to a revocation of their license. Commonly, fines can be levied against the offending agency. Of course, they are within their rights to appeal these fines.
The Fair Debt Collection Practices Act is both lengthy, and can be somewhat complex. Thankfully, it is posted in its entirety on the Federal Trade Commission’s website.
David P. Montana has been a published writer, lecturer and business consultant in commercial collection agencies services for three decades. He offers additional resources in regards to The Fair Debt Collection Practices Act.