In the United State – a country with a developed economy where the spending is mostly based on credit – by now pay later, the debt collection is particularly concerned and strictly controlled. In 1978, the US Congress enacted the Fair Debt Collection Practices Act (FDCPA) to control debt collection activities in the US, protect consumers’ interests, and create a transparent environment for debt collection. In this article, we will share with readers some typical contents of the US debt collection regulations:
1. Overview of the FDCPA
a) Law enforcement agency
FDCPA is enforced by the US Federal Trade Commission – a government agency responsible for consumer protection throughout the United States.
b) Regulated subjects
According to FDCPA’s provisions, the regulated subjects are debt collectors. Debt collectors are the party who performs the debt collection. Debt collectors may include debt collection companies, agencies, lawyers, and third-party companies that acquire debt and proceed with debt collection at a later stage (debt trading companies).
c) FDCPA’s features
The FDCPA does not protect the debtor from those trying to collect the debt. For example, if you owe money to your local hardware store and the store owner calls you to collect the debt, that person is not a debt collector under this Act’s scope of regulation. The FDCPA is only applied to third-party debt collectors, such as those who work for a debt collection agency. Credit card debt, medical bills, student loans, mortgages, and other household debts are all regulated by this Act.
2. Some basic contents of the FDCPA in the US
a) Time of communication in connection with debt collection
Debt collectors are not allowed to arbitrarily contact or communicate with the debtors for debt collection. With the prior consent of the consumers (verbally or in writing), the debt collector may contact the consumer before 8:00 a.m. or after 9:00 p.m. or during the consumer’s working hours.
b) Consumer’s right for refusal of meeting and response to debt collectors
Consumers have the right to request in writing that the debt collectors cease further communication with them for debt collection. To exercise this right, consumers should note the following:
– Send a written request to the debt collector for communication ceasing.
– Retain a copy of this document. Consumers should submit a request by post and request the post office to send them a report of successful delivery.
Accordingly, the consumers may have a valid proof of having sent a request of communication ceasing to the debt collectors.
c) Communication with a third party on consumers’ debt
If the consumers have an authorized attorney, the debt collector may contact the consumer’s attorney for the debt-related issue. Without an attorney, the debt collector may only contact a third party (including colleagues, friends, relatives, etc.) to inquire about the consumer’s home address and phone number. Normally, the debt collector is not allowed to contact the third party more than once nor to mention the pending debts.
d) The debt collector is responsible for proving the consumer’s debt
If the consumers send a written request to the debt collectors, stating that they do not owe the debt or ask the debt collector to provide proof of the debts, the debt collector must terminate communication with the debtor. The consumer must submit this request within 30 days of receiving the debt collection notice. However, debt collectors can continue to contact consumers after they provide proof of debt such as a copy of a spending bill.
e) The debt collector is not allowed to perform the following acts
- Threats
Debt collectors must not threaten or harass consumers or any third parties they contact for debt collection.
- False representations
Debt collectors must not use any false representations when contacting parties for debt collection.
- Unfair practices
Debt collectors must not perform unfair practices when collecting debts.
f) Rights of debt payment selection
For consumers with multiple debts, they have the right to choose which debt will be paid first. Debt collectors are not allowed to collect debts that consumers believe they do not owe.
g) What should consumers do if the debt collector is found to have violated the law?
Consumers have the right to sue the debt collector in a State or Federal Court within one year from the date of violation acknowledgment. If consumers win the case, they will be compensated by the debt collector with an equal amount to the incurred expenses arising from the debt collector’s fault (if sufficient evidence is provided), for example, a reduction in wages or medical bills and litigation costs. In the absence of evidence of damages, the court may order the debt collector to pay up to US$1000.
It can be seen that under the regulation of FDCPA, the debt collection process in the US is quite complicated and requires a deep and correct understanding of US law as well as the division in the US legal system. Vietnamese companies may review the regulations, obtain practical lessons as well as choose to conduct debt collection in the US effectively. The above is some legal knowledge of particular regulations of debt collection in the US. We hope that this article will be of help to you.
