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The ins and outs of fair debt collection laws

Feb 03, 2013 Philip Burgess

The ins and outs of fair debt collection laws

In recent years, debt collectors have come under a large amount of scrutiny from individuals, consumer advocates, businesses, state lawmakers and federal officials, as organizations which do not adhere to the law give the industry a bad reputation. This has led to a push for more stringent regulations, as well as aggressive enforcement practices, to protect consumers and businesses from abusive debt collectors.

This is likely the result of the credit crisis that came following the economic recession in the United States and several nations abroad, as many consumers and businesses started to have serious issues when trying to pay off debts. With credit swaps becoming more commonplace, the volume of debt collectors with shoddy practices rose as well. 

However, those professionals in the industry that do follow the law should not worry, as widespread bad-blood will not be an issue when collecting debts the right way. There are a variety of laws, best practices and regulations related to the process of debt collections, and organizations partaking in these responsibilities should always ensure they are adhering to such statutes properly. 

Major act explained

The Orlando Sentinel recently published a blog that sought to educate readers in the basic requirements of the Fair Debt Collections Practices Act (FDCPA). According to the news provider, this piece of legislation was passed to protect consumers from abusive debt collection practices, and covers all individuals who either have or are believed to have a financial obligation to an organization or investor of any kind.

The source explained that the FDCPA demands debt collectors follow a variety of guidelines when communicating with those with outstanding bills to pay, no matter the medium they choose to use. Any type of threatening or violent behavior, as well as profane or abusive language, is considered illegal as a result of this act.

The news provider added that debt collection agencies are prohibited from publishing lists of debtors or making any associated information public in any way, while professionals in the industry will not be allowed to communicate with any consumers without first telling the debtor who they are. Further, speaking with a consumer who has a lawyer for the matter is illegal under the act.

The Orlando Sentinel asserted that statutory damages of $1,000 per case are levied upon the collection agency when a court finds them guilty of violating the law. Additionally, certain states have varying guidelines, such as Florida which allows consumers to try and receive punitive damages from the collection agency, while the federal law only enables prosecutors to seek out actual damages. 

The source noted that debt collection agencies should not even come close to potentially violating the Fair Debt Collections Practices Act or any other regulations covering the industry. The damages to reputations and the direct loss of money can be devastating to these firms and should be avoided at all costs. 

Need for proper practices on the rise
As consumers and businesses continue to hold more debt than ever before, the collection industry will likely increase in the coming months and years. This might cause a variety of issues for professionals already working in the sector, as well as new-comers who might not yet have enough knowledge to partake in debt collection practices.

Any business that does not feel entirely comfortable with the laws governing the collection of debts should consider using a firm that specializes in the responsibilities, especially as state and federal laws can be extremely complicated. With these services, companies can expedite the collection process while avoiding the potential damages that result from illegal and abusive debt retrieval practices.