Everyone gets into debt at one point of their lives, either unintentionally or intentionally. Many people have to use some form of debt consolidation to eliminate their debts. Debt consolidation is not all sunshine and lollipops, the debtor can be taken advantage of from predatory lenders and collection agencies. To stop this type of abuse from happening, legislation had to be implemented to enforce the predatory lending and other unfair debt collection practices. In 1979, the Fair Debt Collection Practices Act also known as FDCPA, was created to obtain the debtors information and that their debt information was accurate and validated by the debt collector.
There are strict rules and guidelines that the Fair Debt Collection Practices Act has to abide by. The FDCPA has two forms of conduct that they have to follow, prohibited conduct and required conduct. Prohibited conduct should not be deceptive or abusive towards the debtor. Examples of prohibited conduct: using profane or abusive language when communicating with the debtor, calling the debtor's place of employment to obtain debt information, communicating with third parties, threatening legal action, publishing the debtor's debt information on bad debt lists, contacting debtors after the hours of 8:00 a.m. to 9:00 p.m., reporting false or misleading debt information on a debtor's credit report, debtors cannot be harassed, or called repeatedly over the telephone, and trying to collect debts that are unjustified and inapplicable under federal law.
Creditors required conduct under the FDCPA is as follows: notify's the consumer and identifies themselves as being a debt collector, name and address has to be given of the original creditor, the consumer has to be notified that they have a right to dispute any debts that they have, the consumer's debt has to be verified, and file a lawsuit where it is appropriate where the debtor lives or signed a contract.
Under the Federal Trade Commission Act, the Federal Trade Commission (FTC) has the authority to enforce the FDCPA. If there is a financial regulation reform, another Consumer Financial Protection Agency has to enforce the FDCPA, under a current proposal administrated by the U.S. Treasury Department. A private lawsuit may be filed by a consumer in a state or federal court against third party collectors to collect damages. These damages include, statutory damages, actual damages, court costs and attorney fees. Consumers have to prove actual damages, the FDCPA is under a strict liability law. $1,000 of statutory damages and attorney fees may be awarded to the consumer if the debt collector is in violation of the FDCPA.
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The FDCPA is without its criticisms. Consumer groups argue that statutory damages from the 1978 version of the law is not affected by inflation. $1,000 in statutory damages would be $3,505 in the year 2009. Consumer groups also proclaim that the FDCPA does not go that far in regards to handling incompetent collection agencies.
The credit industry also has its critique on the FDCPA. The credit industry has said that some consumers take advantage of the law to file ridiculous lawsuits to seek unwarranted damages for trivial violations of the FDCPA.The credit industry wants Congress to make stricter provisions to disallow abuse and to collect consumers debts validly.
The FTC has an annual report about the FDCPA and they give their findings to Congress involving enforcement of the law and complaints. Debt collectors receive more complaints than any other industry.Overall, the complaints are from a small percentage of consumers that have filed.