NCJ Number
76839
Journal
American Business Law Journal Volume: 18 Dated: (September 1980) Pages: 19-37
Date Published
1980
Length
19 pages
Annotation
This article discusses major provisions of the 1977 Federal Fair Debt Collection Practices (FDCP) Act and analyzes its potential impact on collection abuses, consumers and the courts.
Abstract
When a default on a credit obligation occurs, the creditor usually turns the account over to a professional debt collector rather than pursue expensive, time-consuming legal remedies. Congress and social scientists have found that many persons who were subjected to abusive debt collection practices, such as harassing phone calls or intimidating letters, were not deadbeats but were making legitimate attempts to repay the money. Because debt collection methods rely heavily on telephone and mail service, and few States protect consumers from abusive debt collection practices, Congress enacted the FDCP. The FDCP Act only applies to independent debt collectors and debts arising from purchases of goods or services primarily for personal or household use. The act stipulates that State laws on debt collection practices are not affected by the Federal law. Violation of the FDCP Act is considered an unfair or deceptive trade practice in violation of the Federal Trade Commission Act. The law contains explicit provisions regarding the manner in which information concerning a consumer is obtained; the conduct of communications in connection with debt collection; and the prohibition of harassment, abuse, or deception in debt collection activity. The act requires that consumers receive written notice of a debt 5 days after an initial communication from a debt collector. If the consumer notifies the collector in writing that part or all of the debt is disputed, the collector must cease attempts to collect the debt until the information is verified. The major enforcement agency is the Federal Trade Commission, and aggrieved consumers are given the right to file civil suits, both individually and as a class. Minimum amount restrictions are waived, and cases may be brought before any appropriate Federal court. The FDCP will probably curb some abuses, but enforcement will be hindered by problems in identifying debt collectors who often use assumed names and by the lack of criminal sanctions. Other areas of concern about the FDCP Act include class action certification, definitions of statutory damages, and the likelihood that the courts will be flooded by minor consumer suits. Approximately 140 footnotes are provided.