The Fair Debt Collection Practices Act: Things Your Business Needs To Know

The Fair Debt Collection Practices Act has proven to be very useful to people in need of reducing problems associated with harassing debt collectors. And, yes, it also has many benefits for the collection agencies as well. Through the enactment of sensible laws, the Fair Debt Collection Practices Act compels collection representatives to act in a professional manner that will ultimately benefit them as well.

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 first enacted in 1978. Since then there have been amendments added and modifications to the Act that have altered the law in some ways. For instance, an added clause to The Fair Debt Collection Practices Act states that a borrower in collections can request that the collection agency cease contact with him/her, and the collections rep must cease further contact.

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.

Those collection agencies that violate the Fair Debt Collection Practices Act can be penalized in a variety of ways, including legal actions, and up to license revocation. The most common would be a fine levied against the offending agency. Of course, it would also be possible for the collection agencies to appeal such fines since they are entitled to equal protection under the law.

The Fair Debt Collection Practices Act is a complex and lengthy law. Thankfully, it is posted complete and in its entirety online through the Federal Trade Commission website. Those wishing to read the entire treatise are recommended to do.