Importance Of The Fair Debt Collection Practices Act

By David Montana

The Fair Debt Collection Practices Act was enacted to address and reduce the problems associated with harassing debt collectors. It does, however, offer benefits to collection agencies as well. Through these laws and regulations, the Fair Debt Collection Practices Act encourages collection agencies to act in a professional manner when attempting to collect a debt.

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.

Of course, there will be those instances where the lender is not receiving the payments he or she is due. There can be many reasons for this. Sometimes, the individual borrower needs a little more time to navigate out of a bad financial situation. In other instances, the borrower is simply negligent and defaults. Regardless of the reason, it is within the rights for the lender to seek payment.

This is the area where collection agencies become important. Their goal is to get the payments due their clients. They cannot, however, act recklessly in attempting to collect these debts. 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.

Consider though, that this does not prevent the collection agency from pursuing a valid debt. Collection agencies are still within their rights to inform the debtor of their intention to pursue the debt via other legal channels, namely 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.

Collection agencies found to be in violation of The Fair Debt Collection Practices Act can be penalized in a number of ways, to include legal actions. They can also have their license revoked. Most common are fines levied against offending agencies. However, collection agencies are within their rights to appeal these fines.

The Fair Debt Collection Practices Act is both a lengthy law, and can be rather complex. It is posted in its entirety on the Federal Trade Commission's website. Those wishing to explore the entire treatise are invited to do so.
About The Author
David P. Montana, who has been an author, lecturer and business advisor in debt collection services for thirty years, provides more tips and tools on The Fair Debt Collection Practices Act
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