Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA), Pub. L. 95-109; 91 Stat. 874, codified as 15 U.S.C. § 1692 –1692p, approved on September 20, 1977 (and as subsequently amended) is a consumer protection amendment, establishing legal protection from abusive debt collection practices, to the Consumer Credit Protection Act, as Title VIII of that Act. The statute's stated purposes are: to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy.[1] The Act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act. It is sometimes used in conjunction with the Fair Credit Reporting Act.[2]

People and entities covered by the FDCPA

The FDCPA broadly 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."[3] While the FDCPA generally applies only to third party debt collectors—not internal collectors for an "original creditor"—some states, such as California, have similar state consumer protection laws which mirror the FDCPA, and regulate original creditors. In addition, some federal courts have ruled that a collector of debt is not a "creditor" but is rather a "debt collector" under the FDCPA where the collector of debt buys defaulted debt from an original creditor for the purpose of debt collection.[4][5][6] The definitions and coverage have changed over time. The FDCPA itself contains numerous exceptions to the definition of a "debt collector," particularly after the October 13, 2006, passage of the Financial Services Regulatory Relief Act of 2006. Attorneys, originally explicitly exempted from the definition of a debt collector, have been included (to the extent that they otherwise meet the definition) since 1986.

The FDCPA's definitions of "consumers" and "debt" specifically restricts the coverage of the act to personal, family or household transactions. Thus, debts owed by businesses (or by individuals for business purposes) are not subject to the FDCPA.

In the federal tax case of Smith v. United States, the United States Court of Appeals for the Fifth Circuit stated that the taxpayer's: ". . . . invocation of the Fair Debt Collection Act is entirely without merit, as the statute expressly excludes 'any officer or employee of the United States . . . to the extent that collecting or attempting to collect any debt is in the performance of his official duties' from the definition of 'debt collector.' 15 U.S.C. section 1692a(6)(C)."[7] In 1998, however, Congress amended the Internal Revenue Code by adding a new section 6304, "Fair Tax Collection Practices," which refers to and includes certain rules that are similar to some provisions of the Fair Debt Collection Practices Act.[8]

Prohibited conduct

The Act prohibits certain types of "abusive and deceptive" conduct when attempting to collect debts, including the following:

Required conduct

The Act requires debt collectors to do the following (among other requirements):

Enforcement of the FDCPA

The Federal Trade Commission originally had the authority to administratively enforce the FDCPA using its powers under the Federal Trade Commission Act.[29] However, under the sweeping reforms of the 2010 Dodd-Frank Act, the FDCPA is enforced primarily by the newly created Consumer Financial Protection Bureau.[30]

Aggrieved consumers may also file a private lawsuit in a state or federal court to collect damages (actual, statutory, attorney's fees, and court costs) from third-party debt collectors. The FDCPA is a strict liability law, which means that a consumer need not prove actual damages in order to claim statutory damages of up to $1,000 plus reasonable attorney fees if a debt collector is proven to have violated the FDCPA.[31] The collector may, however, escape penalty if it shows that the violation (or violations) was unintentional and the result of a "bona fide error" that occurred despite procedures designed to avoid the error at issue.[32][33]

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.

Criticisms of the FDCPA

By consumer groups

Some consumer groups argue that the FDCPA does not go far enough, and does not provide sufficient deterrence against unscrupulous collection agencies. Consumer groups have complained that the maximum statutory damages contained in the original 1977 version of the law has not kept up with inflation; $1,000 in 1977 dollars is worth $3912 today.[34]

By the credit industry

Conversely, many in the credit industry and some courts have taken the stance that the FDCPA has often been used to file frivolous lawsuits and seek damages for minor technical violations and has, at times, seriously impeded their ability to collect valid debts.[35] Given the strict liability nature of the FDCPA, the collections industry and the insurance companies who provide liability coverage for them have repeatedly lobbied Congress to relax provisions of the law to reduce their civil exposure for these "hyper-technical" violations.[36]

The accounts receivable management industry has also raised concerns that the FDCPA contains contradictions that often lead to liability on the part of collection agencies in civil cases, especially when dealing with technology that did not exist when the law was written. For example, the FDCPA requires a collection agency to identify itself as such in any communication with a consumer. At the same time, a collection agency cannot disclose the debt of a consumer to anyone else. These two requirements are at odds when a collector leaves a message on an answering machine or voicemail system. If the collector identifies himself and his company, a third party could hear the message, thus resulting in a third party disclosure violation. Case law has tackled this issue but has not yet resolved it.[37]

Regulatory Agencies & the FDCPA

For its part, the Federal Trade Commission (FTC) produces an annual report to Congress of its findings with respect to its FDCPA enforcement activities. This report details consumer complaints to the FTC about alleged debt collector violations of the FDCPA. The 2013 report indicated that the FTC received 125,136 consumer complaints about third party debt collectors in 2012, which is an decrease from the 144,451 received in 2011. The FTC receives more complaints about debt collectors than about any other specific industry, though the number of complaints represents a small percentage of the overall number of contacts by debt collectors with consumers.[38]

The FTC has authority to issue formal opinions regarding debt collectors' conduct under the FDCPA,[39] but the Dodd-Frank Wall Street Reform and Consumer Protection Act transfers authority for rule making to the new Consumer Financial Protection Bureau (CFPB) effective between January 21, 2011 and July 21, 2011. The FTC will retain FDCPA enforcement authority, but the CFPB will take over the FTC's advisory opinion function. Good faith conformity with a formal opinion of the FTC constitutes a second statutory defense under the FDCPA.[40] The FTC has only rarely exercised its authority to issue advisory opinions, however.[41] Prior to 2000, the FTC had not issued any advisory opinions regarding the FDCPA, it has issued only four such opinions through 2009.[41]

See also


  1. Dlabay, Les R.; Burrow, James L.; Brad, Brad (2009). Intro to Business. Mason, Ohio: South-Western Cengage Learning. p. 472. ISBN 978-0-538-44561-0.
  2. https://www.law.cornell.edu/wex/fair_debt_collection_practices_act
  3. 15 U.S.C. § 1692a
  4. Holmes v. Telecredit Service Corp., 736 F. Supp. 1289, 1293 (D. Del. 1990)
  5. Kimber v. Federal Financial Corp., 668 F. Supp. 1480, 1485 (M.D.Ala. 1987)
  6. Federal Trade Commission Staff Opinion Letter Dated Dec. 22, 1993 (http://www.ftc.gov/os/statutes/fdcpa/letters/arbuckle.htm)
  7. Smith v. United States, United States Court of Appeals for the Fifth Circuit, case no. 08-10288, Dec. 2, 2008 (per curiam).
  8. See generally 26 U.S.C. § 6304, as enacted by section 3466(a) of the Internal Revenue Service Restructuring and Reform of 1998, Pub. L. No. 105-206 (July 22, 1998).
  9. 15 U.S.C. § 1692c(a)(1)
  10. 15 U.S.C. § 1692c(c)
  11. 1 2 15 U.S.C. § 1692d
  12. 15 U.S.C. § 1692c(a)(3)
  13. 15 U.S.C. § 1692c(a)(2)
  14. 1 2 3 4 15 U.S.C. § 1692g(b)
  15. 1 2 15 U.S.C. § 1692e
  16. 15 U.S.C. § 1692(d)
  17. 15 U.S.C. § 1692f(1); Hodges v. Sasil Corp., 915 A.2d 1 (N.J. 2007)
  18. 15 U.S.C. § 1692c
  19. 15 U.S.C. § 1692b
  20. How to Stop Debt Collection Buyers Telephone Harassment
  21. 15 U.S.C. § 1692f(8)
  22. 15 U.S.C. § 1692f(7)
  23. 15 U.S.C. § 1692e(8)
  24. 15 U.S.C. § 1692e(11)
  25. 15 U.S.C. § 1692g(d)
  26. 15 U.S.C. § 1692g(a)(4)
  27. 15 U.S.C. § 1692i
  28. Bates v. C & S Adjusters, Inc., 980 F.2d 865 (2d Cir. 1992) (reasoning that bill collectors can mark envelopes, "do not forward")
  29. 15 U.S.C. § 1692l
  30. "ARM Firms to Get New Regulator Under Treasury Proposal". insideARM.com. Retrieved July 1, 2009.
  31. 15 U.S.C. § 1692k(a)(2)
  32. 15 U.S.C. § 1692k(c)
  33. Johnson v. Riddle, 443 F.3d 723 (10th Cir. 2006).
  34. Federal Reserve Bank of Minneapolis Community Development Project. "Consumer Price Index (estimate) 1800–". Federal Reserve Bank of Minneapolis. Retrieved October 21, 2016.
  35. Rubinstein, Kenneth; Rheaume, Alexander (July 20, 2007). "Courts, Congress send mixed messages to debt collectors". New Hampshire Business Review. Retrieved 2007-08-23.; O'Connor v. Check Rite, Ltd., 973 F. Supp. 1010 (D.Colo. 1997) (awarding plaintiff statutory damages of only $0.01, and then finding plaintiff liable for a defendant’s attorneys’ fees and costs because of the plaintiff’s lack of discretion in filing the action).
  36. Bailey v. Security Nat. Servicing Corp., 154 F.3d 384 (C.A.7 (Ill.), 1998); Carroll v. Wolpoff & Abramson, 53 F.3d 626 (C.A.4 (Md.), 1995)
  37. "Legal Ruling Further Muddies Waters on Third-Party Disclosure vs. Mini-Miranda". insideARM.com. Dec 12, 2008. Retrieved 2010-08-11.
  38. "Federal Trade Commission Annual Report 2013; Fair Debt Collection Practices Act" (PDF). Federal Trade Commission. Retrieved 2013-11-06.
  39. See 16 CFR Ch. 1, Subpart A
  40. 15 U.S.C. 1692k(e)
  41. 1 2 See http://www.ftc.gov/os/statutes/fdcpajump.shtm

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