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In October 2020, the Consumer Financial Protection Bureau (CFPB) announced a new rule for the Fair Debt Collection Practices Act (FDCPA), which is in place to stop debt collectors from engaging in unfair practices. Consumers must understand the new debt collector rules under the FDCPA to know their rights and protect themselves.
Your rights under the FDCPA
Approximately 28 percent of Americans with a credit report have had debt in collections, according to a 2019 report by the CFPB. Having a debt collector contact you repeatedly can feel overwhelming and intimidating. The government protects consumers by placing explicit restrictions on debt collectors under the FDCPA. By having a clear understanding of your rights, you’ll know when a debt collector is violating the law.
The FDCPA outlines the methods a debt collector can and cannot use to contact you. Some of the previously existing rules included:
- A debt collector cannot contact you at inconvenient times and places, including at work if they are told you’re not allowed to receive calls there. If a debt collector does contact you at work, you have the right to tell them to stop and they cannot continue calling your workplace. Additionally, debt collectors cannot call before 8 a.m. or past 9 p.m. unless you specifically say these times are okay.
- Debt collectors generally cannot tell others about your debt. They can only disclose your debt to yourself, your spouse, and your attorney.
- However, a debt collector can contact other people in an attempt to find your address, phone number or place of work. They can usually only contact these people one time.
- Debt collectors aren’t allowed to threaten you, use obscene language or harass you with phone calls.
- Debt collectors can’t tell you lies about your debt or the consequences of not paying your debt.
- Debt collectors are not allowed to collect more than the original debt owed (like interest, fees, or other charges) unless the original contract or state law allows it.
- If you don’t believe the debt is correct, you’re allowed to ask for a debt verification letter. After making this request, the debt collector cannot continue to pursue you until they have shown you written verification of the debt.
It’s important to note that these rules only apply to third-party debt collectors—when a debt has been sold to another party—not the original creditor. If you have a debt outstanding with your creditor, it’s best to start discussions with them before the debt is sent off to collections.
Updates to the FDCPA
The FDCPA has had many amendments since its original enactment in 1978. The rule was released in October 2020 and will likely go into effect in fall of 2021.
New methods of communication
Since the FDCPA was originally created before electronic communications existed, no parameters had been set for contacting consumers via texting and social media apps. The October 2020 ruling clarified this gray area, officially allowing debt collectors to reach consumers via electronic messaging.
Debt collectors can officially send:
- Text messages
- Emails
- Direct messages on social media sites
The CFPB doesn’t limit how frequently debt collectors can send messages but “excessive” communication is prohibited. Excessive communication would violate the FDCPA, which prohibits harassment, oppression and abuse by debt collectors.
Debt collectors that use electronic messaging to contact consumers must provide a straightforward and easy way for consumers to opt out. Consumers should most definitely use this opt-out feature if they wish to.
Additionally, public comments on posts aren’t allowed, and debt collectors have to disclose that they’re debt collectors before sending friend requests.
A representative for Facebook stated, “We are in the process of reviewing this new rule and will work with the Consumer Financial Protection Bureau over the coming months to understand its effect on people who use our services.”
Lack of verification
Another rule update is that debt collectors no longer have to confirm they have accurate details of a debt before attempting to collect. Previously, collectors had to verify the amount owed and the identity of the consumer before pursuing collection. This decision has met a lot of pushback as debt collectors have a history of pursuing debts that are already paid off, and this new rule will do nothing to stop that behavior.
New limits on collectors
The new provisions also set some limitations on debt collectors. Now, when the debt collector initially makes contact with the consumer, they must:
- Provide relevant information about the debt
- State the consumer’s rights about the collection process
- Provide clear instructions on how the consumer can respond to the collector
The consumer has the right to receive all this information before their debt is reported to a credit reporting agency.
Additionally, debt collectors cannot threaten to sue for debt that is past the statute of limitations. They can, however, still attempt to collect an old debt.
If a debt collector is verbally asked to stop calling, this now holds the same power as a written request and they must stop calling. However, this request doesn’t mean the debt collector has to stop all forms of communication. And a request to stop calls does not mean the debt collector has to (or will) stop attempting to collect on the debts.
Defining “harassment”
Collectors can’t call on an account more than seven times in a week, and once they have a conversation with someone on an account, they can’t call them for seven days after that. But this doesn’t help if you have multiple accounts with a collector.
This new rule also doesn’t apply to other communication methods, and voicemails don’t count against the seven-attempts limit.
Again, you need to be proactive about requesting that a collector stop contacting you. You should make this request in writing and keep a copy so you have a record. (And remember that the new amendments state that debt collectors must obey a verbal request to stop a particular form of contact).
Know when your rights are being violated
These new rules were originally proposed in 2019, were approved in October 2020 and will likely go into effect in November 2021. The new rules have received a mixed response, as some rules seem to protect consumers while other rules give debt collectors more leeway.
A debt collector has the right to collect an outstanding debt, but there are limitations in place to protect consumers. Understanding what these limitations are can help you protect yourself. Unfortunately, just because these rules are in place doesn’t mean every debt collector abides by them. The 2019 CFPB report on consumer complaints about debt collection revealed that 81,500 complaints were filed in 2018.
If your rights are being violated under the FDCPA, you can potentially sue the debt collector for damages (lost wages, medical bills, etc.). And if you can’t prove damages, you may still be awarded up to $1,000 in statutory damages plus coverage of your legal fees.
Ultimately, the vital step is for you to take action and stop further illegal harassment against you.
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