The FDCPA is a law under the federal authority that restricts the actions of third-party collectors trying to collect debt on behalf of another person or entity. This law limits the way these collectors can contact debtors, the time of the day, and the number of times they can contact the debtor.
Suppose the fair debt collection practices act is violated. In that case, the debtor has the right to sue the debt collection company or an individual debt collector due to a violation of rights. In simple words, the FDCPA limits how, when, and how often a third-party debt collector can contact a debtor. It limits debt collection agencies from using unfair, abusive, and deceptive measures to collect a debt from consumers.
However, many debt collectors do not play by the rules even though the law is clear. Hence, complaints and lawsuits against debt collectors are many.
Third-party vs. in-house debt collectors
Not all debt collectors represent the debt issuer or the company that lent you the money. Some may represent the lender, but others buy the debt when the original lender gives up on chasing you to repay. So, in both cases, they should collect what they are owed but must stick to FDCPA laws.
However, FDCPA does not apply or restrict the in-house collectors. Inhouse debt collectors refer to the company that initially lent you the money. Many debt issuers use in-house departments to collect a debt and only turn to third-party collectors when the debt is not collected within a certain period.
Many original lenders sell the debts to third-party collectors after six months. Outside collection companies that assume debt must follow the laws of FCDPA. The law covers personal debt, family debt, home loans, auto loans, medical bills, and retail refinancing debt.
What debt collectors cannot do
Debt collection companies or individuals should not harass, abuse, or oppress the debtor through obscene or profane language. Also, they should not harass an individual by repeatedly calling them, causing annoyance. Additionally, they should not call the debtor’s family members, friends, or acquaintances other than when they ask for help to locate you with a phone number or address. They are also restricted from publishing the names of debtors who have not repaid their debts.
Debt collectors should not try to pretend to be someone else in an attempt to collect a debt. Many cases have been reported whereby third-party collectors impersonate police officers, attorneys, credit report agency officials, and other law enforcement personnel. Debt collectors should not threaten a debtor with legal actions they are not under the jurisdiction to take, including seizing your property if it is not loan collateral or slashing your wages without a formal court order.
Debt collectors are also restricted from lying to collect a debt. Some instances are when a debt collector falsely introduces themselves as a representative from the credit report agency, claiming you have committed a crime of the amount you owe.
A borrower is obligated by the law to pay their debt or liaise with a debt management firm to agree on a repayment plan. But the debt collector should collect what they are owed while following the FCDPA rules.