The Fair Debt Collection Practices Act was first passed almost 40 years ago to govern the tactics used by debt collection agencies pursuing consumer debt. Whether you’re in the business of collecting your own outstanding accounts receivable, or looking to outsource that work, FDCPA compliance is very important to consider. The head of the Consumer Financial Protection Bureau (which works with the Federal Trade Commission to enforce consumer protection law) has stated multiple times that debt collection complaints comprise the bulk of consumer contact with the agency. It’s clear that debt collection practices are in the spotlight, so let’s take a look at FDCPA compliance and what it means for business. This blog will focus specifically on how a collection agency acquires debtor location information.
First, what was the impetus behind FDCPA legislation?
A Congressional inquiry found that there was “abundant evidence” of unfair and deceptive practice employed by debt collectors. Congress also found that inadequate laws, availability of alternative methods, and concerns about interstate commerce were enough to prompt comprehensive consumer protection laws. And so, 15 U.S.C. Sections 1692-1692p were enacted in 1977 and have been amended eight times since then to reflect changes in technology, case law, etc.
According to section 803, “location information” is defined as a debtor’s home and phone number, or place of employment.
What are some important restrictions that ensure FDCPA compliance?
Beyond defining who is and who is not a debt collector, the law also specifies how and when a debt collector can contact a debtor. Read this blog about three times you cannot contact a debtor. As for acquiring debtor location information, here are the requirements levied on those collecting consumer debts (direct quote from the text):
(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;
(2) not state that such consumer owes any debt;
(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;
(4) not communicate by post card;
(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and
(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.
As you can see, the laws in place are very centered around restricting actions that a collector can take, with an emphasis on protecting the debtor. This is only one section of the FDCPA, though. To learn more, check out our compliance page, or subscribe to our blog to get future FDCPA compliance primers!