FDCPA Violations Explained: Protect Yourself From Debt Abuse

Debt is a common aspect of our society. When consumers purchase products or services on credit, they become debtors, while the individual or business owed money is the creditor. According to the Federal Reserve Bank of New York, household debts hit US$18.04 trillion in Q4 2024. Debt collection agencies collect payments from debtors. The federal Fair Debt Collection Practices Act (FDCPA) limits the methods that companies, financial institutions, and other organizations can use to collect money owed by borrowers. 

In this article, we will explore how third-party debt collection agencies commit FDCPA violations and other regulations to collect money from borrowers. We will also examine how the FDCPA protects you during financial turmoil and what you can do to confront debt collectors with confidence. Let’s take a closer look at how the FDCPA regulates the actions of debt collectors. 

The Fair Debt Collection Practices Act (FDCPA): An Overview

In 1977, Congress enacted the FDCPA in direct response to concerns about abusive consumer debt collection practices. The FDCPA supplements both the Fair Credit Reporting Act (FCRA) and the Consumer Credit Protection Act (CCPA), which establish federal compliance obligations for debt-collecting organizations. 

The primary aspect of the FDCPA is that its scope is limited to consumer debt collection efforts. In addition, the FDCPA restricts the actions of debt collection agencies. However, it does not apply to organizations that place credit in the first place. The U.S. Department of Justice (DOJ), Federal Trade Commission (FTC), and Consumer Financial Protection Bureau (CFPB) also shared responsibilities for FDCPA. 

The FDCPA initially focused on phone calls and in-person visits. However, in 2020, the CFPB amended its scope to include electronic communications, such as text messages, emails, and social media posts. Let’s understand some of the grounds that FDCPA covers. 

What Types of Debt Are Covered by the FDCPA?

The FDCPA does not protect you from all debt collection calls. For instance, if you have a missed payment with a credit card company, the FDCPA does not apply if the credit card company itself contacts you. 

Here are some of the types of debts covered by the FDCPA:

• An individual with medical bills, mortgages, and other household debts. 
• Credit card debts and car loans. 
• Student loans 

If you're curious about your rights during the debt collection process, here are five things to expect from the FDCPA. 

5 Ways the FDCPA Protects Consumers

Debt collection agencies often behave improperly towards borrowers. The FTC has sued more than 30 debt collection companies for violating the law, even banning some from conducting business and forcing them to pay hefty financial penalties. 

Here are five ways FDCPA protects you:

1. Limits on How and When a Debt Collector Can Contact You

If you are receiving constant calls from your debt collectors, they could be violating FDCPA regulations. They cannot:

• Call you before 8 a.m. or after 9 p.m. 
• Send emails or call you at work unless you have given permission. 
• Post publicly on social media platforms regarding your debts. 
• Call you more than seven times a day. 

2. Prohibits conducting abusive and harassing practices

Apart from dictating how debt collection agencies can contact you, it also regulates their tone of communication. 

• Threaten you, either physically or by harming your reputation or property. 
• Publish lists of individuals who owe you money. 
• Avoid using any form of profane or obscene language. 

3. Prohibits Unfair Debt Collection Practices 

FDCPA also focuses on how debt collectors can collect the money you owe. They cannot:

• Threaten to take your property unless legally permitted. 
• Threaten to get you to write a post-dated check.
• Accept a check that is post-dated for more than five days without prior written notification. 
• Collect anything more than the principal, interests, and fees that are part of your debt agreement. 

4. Prohibits debt collection through deceptive, false, and misleading methods

In any instance, debt collectors are not allowed to lie to you. Debt collection agencies cannot:

• Threaten legal actions when no legal action can or will be taken. 
• Forge documents to impersonate any official government agency. 
• Lie about how much you owe to a creditor. 

5. Requires debt collectors to validate your debt

A debt collector must send a debt validation letter within five days of first contacting you. The letter must include:

• The name and billing address of the debt collector. 
• The creditor's name. 
• The total amount owed, including both interest and fees. 
• Considerations if the debt is not yours. 
• Your rights concerning debt collection.

While the FDCPA restricts the actions of third-party debt collection agencies, it doesn’t apply to organizations that extend credit in the first place. However, if an organization is not under the FDCPA, it still may need to comply with CCPA, FCRA, and various other federal laws and regulations. 

Common Violations of the FDCPA 

Under the FDCPA, third-party debt collection agencies, debt buyers, and law firms are subject to prohibitions and affirmative obligations related to consumer debt collection activities. In 2022, 4,525 FDCPA cases were filed by consumers, so violation is common. 

Some of the most common FDCPA violations include: 

1. Inadequate Consumer Debt Collection Disclosures

The FDCPA mandates the disclosure of validation information during initial communication processes. Organizations governed by the FDCPA can send a validation letter via mail or electronic communication. 

Required disclosures include:

• The debt collector’s name and contact information. 
• A statement that the communication is from a debt collector. 
• The itemization of the debts owed, including interests, fees, and payments. 
• The end date for the 30 days the borrower has to dispute the subject debt. 

Inexperienced debt collectors may be unaware of their disclosure obligations and the flaws in the organization’s internal systems that could potentially result in disclosure violations. 

2. Consumer Harassment

FDCPA prohibits debt collection agencies from harassing borrowers. Using abusive language and making threats of violence are serious violations under the FDCPA. Debt collection agencies risk losing their business if found guilty of such actions. 

3. Social media and Email Communications 

According to the CFPB, a debt collector may not use any social media platform to publicly post about a debt, as this is a major violation of the FDCPA. However, agencies can connect privately through social media or text messages. Debt collectors must provide a straightforward method of communication regarding debt collection. 

Also read: Creating Your Own FDCPA Debt Collection Letters: Rights and Requirements.

Consequences of Noncompliance with the FDCPA

The annual cost of compliance is approximately US$5.47 million. While this may appear costly, the price of non-compliance is nearly three times greater, amounting to US$14.82 million. Organizations that violate the FDCPA can encounter severe repercussions. Therefore, compliance is crucial when addressing allegations under the FDCPA. 

The consequences of non-compliance with the FDCPA are:

1. Civil Liability in Private Right of Action Litigation

• The FDCPA grants consumers a private right to pursue civil litigation for the violations mentioned above. 
• Consumers may pursue statutory damages or actual damages of up to US$1,000 for each violation. 
• Damages in civil litigation under the FDCPA are generally low, and debt collectors with repeated violations can face single-plaintiff cases. However, class actions under the FDCPA are common. 

2. Civil or Administrative Penalties Under the FTC Act

• Businesses and organizations that violate FDCPA guidelines may also incur civil and administrative penalties in federal enforcement actions. 
• According to the FTC Act, violations of the FDCPA are considered unfair or deceptive practices under 15 U.S.C. Section 16921. 
• The FTC can impose both civil and administrative fines of more than US$50,000 per violation. 

While compliance with the FDCPA is straightforward, debt collection agencies can easily violate it. A proactive approach to resolving debt management and relief issues is necessary for remaining compliant with the FDCPA and other governing bodies. 

3 Steps to Effectively Assert Your FDCPA Rights

Responding to a debt collection notice requires a systematic approach and a solid understanding of FDCPA rights. 

Here is a step-by-step guide to asserting your FDCPA rights:

Step 1: Record All Communications

The first step is to maintain detailed records of all debt collectors, including letters, emails, and phone calls. Proper documentation is essential in case of disputes regarding unlawful collection practices. 

Step 2: Send Written Correspondence

Maintaining communication with debt collectors and keeping a clear record of interactions and agreements ensures effective correspondence. Using certified mail with a return receipt guarantees proper communication with debt collectors.

Step 3: Understand When and How to Pursue Legal Action

If debt collection agencies violate your FDCPA rights, you can take legal action against them. Consulting attorneys who specialize in debt collection practices can prove helpful in pursuing your legal remedies. Legal actions primarily include filing a lawsuit for damages or stopping unlawful collection activities. 

At Shepherd Outsourcing Collections, we offer specialized support for debt recovery solutions and ensure compliance with FDCPA and other regulations. Our team is dedicated to fostering fair interactions in any debt resolution scenario. 

Conclusion

Understanding your rights under the FDCPA is crucial to safeguarding yourself against unfair debt collection practices. Adhering to legal boundaries in debt collection is essential for organizations. The FDCPA provides consumer protection from deceptive practices, harassment, and unlawful collection methods. 

If you are facing debt collection challenges, knowing how to assert your FDCPA rights makes all the difference. At Shepherd Outsourcing Collections, we are committed to fair and transparent debt collection methods that proactively align with FDCPA guidelines. Whether you are seeking professional guidance on resolving debts or on compliance, contact us today to explore tailored solutions for all your financial needs. 

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Frequently Asked Questions (FAQs)

1. What is the Fair Debt Collection Practices Act?

FDCPA is a federal law that safeguards customers from aggressive and unlawful debt collection agencies. This law outlines how frequently such agencies can contact you and what they are permitted to say or do in order to collect debts. 

2. What if the debt is not mine?

If you receive calls from debt collection agencies, identify who is calling and ensure that the debt is yours. Once you receive a verification letter, send a letter disputing the debt. 

3. What is FDCPA compliant?

An FDCPA complaint involves a debt collection agency or practice that follows the rules and regulations established by the FDCPA, which aims to protect individuals from abusive and deceptive collection practices. According to the FDCPA, it is illegal for a U.S. citizen or company to pay or promise to pay money or anything of value to any foreign official in exchange for retaining business. 

4.  What are FDCPA violations?

FDCPA violations arise in situations involving abusive or unfair debt collection practices, such as deceptive treatment, harassment, or improper communication. The FDCPA is U.S. legislation that prohibits offering anything of value to a foreign government official or political party for an unfair advantage.

5. What is the validation period for FDCPA?

Under the FDCPA, consumers have a 30-day validation period from the receipt of the initial debt collection notice during which they can dispute the debt in writing.

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