Fair Debt Collection
The Fair Debt Collection Practices Act, or FDCPA, is one tool consumers have to fight back against debt collection. So anytime you are bill collected, it’s worth inquiring into whether your rights under the FDCPA have arisen, and to have your collection account reviewed by an experienced Fair Debt attorney. Although a lot of the FDCPA’s provisions and definitions are intuitive things the average consumer might realize, it is actually the FDCPAs technical requirements—the things most non-lawyer consumers don’t know—that are most frequently violated. And although it’s a broad, federal statute, there are certain threshold issues that must be met before the FDCPA will apply. Section “a” addresses and defines these thresholds.
For example, the act only applies to consumers—you have to be a person, it doesn’t protect businesses. On that same point, the debt has to be a consumer debt—it must be for personal, family, or household purposes. So for example your credit cards, auto loans, cable and utility bills, medical bills, and things like these are all covered, but if you own an LLC, any debts it has incurred likely aren’t. Debts like parking tickets and back taxes are also not covered.
Second, for the most part, the FDCPA only applies to third party debt collectors—people and companies hired to collect debts owed to somebody else. That means except for certain limited instances, the act usually does not apply to “creditors” or the company with which you signed up for the account or service. Similarly, government agencies are generally exempted from the FDCPA.
Last, the law governs all communications with or from debt collectors. This means calls, voice messages, letters and even credit reporting. So anytime you hear from a debt collector or see one on your credit report, it’s worth inquiring into whether your rights under the FDCPA have been violated. And although a lot of the FDCPA’s provisions are things the average consumer might realize, the FDCPAs technical requirements are what’s most frequently violated, and those things are not always recognizable to the average consumer. If your FDCPA rights have been violated, you may be entitled to a monetary award, even if you have suffered no harm, and the debt collector must also pay your attorney fees, meaning you can usually enforce your FDCPA rights at no cost to you.
And even if the FDCPA doesn’t apply or wasn’t violated for one reason for another, the collector or someone else in the account chain may have violated other rights of yours, for example, the account could be improperly credit reported in violation of the FAIR CREDIT REPORTING ACT or taking electronic payments illegally in violation of the ELECTRONIC FUND TRANSFER ACT. Things like collection letters, collection voice mails, collection call logs, and detailed notes of conversations with collectors, as well as credit report entries showing collector pulls and reporting, can each form powerful evidence in the fight against debt collection and help you to level the playing field.
15 USC 1692a
1692a(1)
(1) The term “Bureau” means the Bureau of Consumer Financial Protection.
1692a(2)
The term “communication” means the conveying of information regarding a debt directly or indirectly to any person through any medium.
Analysis
This subsection outlines what qualifies as a “communication” under the FDCPA. The term includes calls, letters, text messages, emails, faxes and personal visits, as long as the communication is accompanied by an attempt to collect the debt. Granted, most debt collector communications are attempts to collect a debt, but an example of a communication not in an attempt to collect a debt could include the collector sending you a paid in full letter.
A more common example of debt collector contacts that do not usually qualify as communications under the Act include formal legal action (e.g., filing of a lawsuit or other petition/pleadings with a court).
1692a(3)
The term “consumer” means any natural person obligated or allegedly obligated to pay any debt.
Analysis
The definition includes only a “natural person” and not a corporation or other business.
1692a(4)
The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.
Analysis
The “creditor” is the party that actually extended credit on an account in the normal course of business, for example, your credit card company or auto lender. The exemption applies to the original creditor collecting his own debts in his own name, and also applies when a creditor assigns a debt originally owed to him, but retains the authority to collect the obligation on behalf of the assignee to whom the debt becomes owed. However, and importantly, the term excludes a party that was assigned a delinquent debt only for collection purposes only.
1692a(5)
The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
Analysis
Most ordinary debt consumers incur are covered by the FDCPA, including things like credit cards, loans, utility bills, medical bills, NSF checks and most other consensual consumer transactions. However, certain debts are not covered, including what the law considers “non-consensual” transactions. These sorts of debts include things like unpaid taxes, municipal fines, alimony, and tort claims like damages arising from a car accident.
1692a(6)
The term “debt collector” means 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. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include—
(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.
Analysis
A “debt collector” covered by the Act includes any company whose ordinary and regular business is the collection of another entity’s delinquent accounts, and includes the collection company’s employees. This does not include a person or entity who collects in isolated instances only. The term also doesn’t cover creditor collecting its own debts to the extent that they collect their own debts in their own name.
However, the term specifically applies to “any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is” involved in the collection. For example, a creditor is a debt collector for purposes of the FDCPA if (a) he/she uses a name other than his own to collect his debts, including a fictitious name; (b) has salaried attorney employees who collect debts and who use stationery indicating the attorney is independent or separate from the creditor (e.g., ABC Corp. sends collection letters on stationery of “John Jones, Attorney-at-Law”); or, (c) has a collection division or related corporate collector that appears to be a separate entity.
The exemptions also include where the collector and creditor have “common ownership or . . . corporate control” (for example, a company is exempt when it attempts to collect debts of another company after the two entities have merged); State and federal officials in the performance of their “official duties;” marshals, sheriffs, and any other process servers while conducting their normal duties relating to serving legal papers; non-profit credit counselors; as well as collection activity in the context of bona fide fiduciary obligations or escrow arrangements (for example, entities such as trust departments of banks, escrow companies or a debtor’s trustee solely for the purpose of conducting a foreclosure sale). (i.e., exercising a power of sale in the event of default on a loan).
1692a(7)
The term “location information” means a consumer’s place of abode and his telephone number at such place, or his place of employment.
1692a(8)
The term “State” means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.
(Pub. L. 90–321, title VIII, § 803, as added Pub. L. 95–109, Sept. 20, 1977, 91 Stat. 875; amended Pub. L. 99–361, July 9, 1986, 100 Stat. 768; Pub. L. 111–203, title X, § 1089(2), July 21, 2010, 124 Stat. 2092.)