What Is the Fair Debt Collection Practices Act (FDCPA)?

What Is a Debt Collector Under the FDCPA?

The FDCPA defines a debt collector as any party that regularly collects or attempts to collect debts owed to another party. Debt collectors may be hired to collect unpaid debt such as:

• Credit card balances
• Personal loans
• Student loans
• Auto loans
• Utility bills
• Bank fees and overdrafts
• Rent payments
• Medical bills
• Fines and fees imposed by a court, law enforcement or government agency

These debt collectors can include collection agencies, debt buyers and attorneys. Often, companies that are trying to collect outstanding debt from a customer hire debt collectors and pay them a percentage of the amount collected.

Example: If you default on an apartment lease and owe the landlord $4,000, the landlord could hire a debt collector to attempt to collect the money. The debt collector may try to contact you, send you letters and report the past-due amount to the credit bureaus. It could even sue you in civil court and attempt to get a judgment.

Before a lawsuit, you might offer to settle the debt for $3,500. If the debt collector accepts, you don't owe the remaining amount, and the collector can pass on the money to the landlord minus its cut, which may be around 25% to 50% of the amount collected.

Learn more: How to Negotiate With Debt Collectors

How Does the Fair Debt Collection Practices Act Work?

The FDCPA creates a variety of protections for consumers and rules for debt collectors. To understand the FDCPA, it's important to understand three major components of the law: who it applies to, how it regulates debt collector communication and the practices it prohibits.

Who the FDCPA Applies To

The FDCPA doesn't apply to every type of debt or collection activity. It only applies to:

Third-Party Debt Collectors

The FDCPA only applies to collectors that regularly attempt to collect consumer debt on someone else's behalf. It doesn't apply to one-off situations or to attempts by a person or organization to collect a debt owed to them.

In simple terms, this means the FDCPA applies to third-party debt collectors. However, one exception is that the FDCPA may apply to an original creditor if it uses a different name to collect a debt. In other words, it looks like the company is using a third-party collector even if it's not.

Consumer Debt

The FDCPA also only applies to consumer debt, meaning debt that you take on for personal or household use, such as a consumer credit card, auto loan, mortgage, student loan or personal loan. It doesn't apply to the collection of business or commercial debts.

How the FDCPA Regulates Debt Collector Communication

The FDCPA places specific limitations on when and how debt collectors can contact you about the debt.

Contact Limitation

Debt collectors are only allowed to contact you between 8 a.m. and 9 p.m. in your time zone, unless you agree to contact outside those hours. They also generally can't call you more than seven times during a seven-day period, or within seven days after speaking to you about a debt.

Collectors can try to contact you at home and work, but they have to stop trying to contact you at work if you tell them you're not allowed to accept calls while working or if they have a reason to believe your employer prohibits the calls.

Third-Party Disclosure Requirements

Except in certain cases, debt collectors aren't allowed to discuss your debt with anyone besides you, your spouse, your parents (if you're a minor), your attorney, and your guardian, executor or administrator.

For example, a debt collector cannot call your neighbor and tell them about your debt. However, a debt collector that doesn't have your contact information is allowed to contact other people, including your employer, to ask for your contact information. But they can't discuss your debt, and generally can't contact that person more than once.

Mail Communication Rules

Debt collectors can send you mail about the debt, but they can't send postcards, and the exterior of the envelope can't include the debt collector's logo or language that identifies the letter as coming from a debt collector.

Text and Online Communication Rules

Debt collectors can't continue contacting you by email, text message or social media once you tell them to stop.

Written Debt Validation Letters

Debt collectors must send you a debt validation letter within five days of initially contacting you about the debt. The letter should contain specific information, including the collector's name, the original creditor's name, the account number associated with the debt and the amount you owe.

Debt Collector "Mini-Miranda"

Debt collectors must make it clear that they are a debt collector, are attempting to collect a debt and are going to use the information they collect to pursue that debt. You might see or hear these disclosures, sometimes called a mini-Miranda, in the collector's initial debt validation letter and other messages or calls.

Credit Reporting Agency Communication

Debt collectors may report accurate information about your collection account to the credit reporting agencies (Experian, TransUnion and Equifax). Additionally, debt collectors can access your credit reports to assist them with the review or collection of an account, according to the Fair Credit Reporting Act.

Learn more: How to Know if a Debt Collector Is Legitimate

Debt Collection Practices Prohibited by FDCPA

In general, the FDCPA prohibits debt collectors from engaging in abusive, harassing or oppressive behavior. Some of the prohibited practices include:

• Calling you repeatedly to harass you, or calling you outside of the 8 a.m. to 9 p.m. window without your permission
• Calling you more than seven times during a seven-day window or seven days of talking to you about the same debt
• Threatening to sue you, unless the debt collector actually intends to do so
• Threatening violence or physical harm
• Communicating with you if the debt collector knows an attorney is representing you in relation to the debt
• Using obscene language
• Publishing your information as part of any list of consumers who, allegedly, refuse to pay their bills
• Misrepresenting their identity when they call you
• Making any threat of action that cannot be legally taken, such as suing to collect debts that are outside their statute of limitations
• Depositing a post-dated check from you earlier than the date on the check
• Adding interest or fees to the amount collected, unless it's allowed contractually or by law

Learn more: Can You Ask Debt Collectors to Stop Contacting You?

What Is Your Legal Recourse Under FDCPA?

If you believe your rights have been violated and you've been subjected to abusive or illegal debt collection practices, you may be able to take legal action.

Generally, you have one year from the date of the alleged violation to file a lawsuit against a debt collector. After one year, the statute of limitations expires. You can either file the lawsuit on your own, or hire an attorney to file on your behalf.

You can recover any actual damages you may have suffered due to the FDCPA violations, plus up to $1,000 of statutory damages. Because the FDCPA has what's called a fee-shifting statute, the collector may have to cover your reasonable attorney's fees if you win.

Reminder: You can also report what you believe is an FDCPA violation to the Consumer Financial Protection Bureau (CFPB) using their online complaint form. You'll be able to identify the exact alleged violation from their list of options.

Learn more: How to Deal With Debt Collectors

Frequently Asked Questions

Check Your Credit Reports for Collection Accounts

If you receive calls or letters from debt collectors, you may want to check your credit reports for the collection accounts. You can check your credit reports for free weekly from each of the national consumer credit reporting companies through AnnualCreditReport.com. You can also use Experian's free credit monitoring to keep an eye on your Experian credit report and FICO^® Score^Θ, and get alerts about inquiries and other changes to your credit report.