Americans use a great deal of credit. From big-ticket purchases like cars to student loans to credit cards for medical bills, we are in the habit of borrowing first and paying back later. Problems can arise for all kinds of legitimate reasons, leading to debt collection attempts. Consumers can avoid problems by learning about their rights.
The federal Consumer Credit Protection Act, enacted in 1977, contains a section known as the Fair Debt Collection Practices. This section instructs debt collectors on actions that are appropriate and those that are not. For example, the Act prohibits collectors from “predatory” practices, such as calling late at night, using harassing language, and trying to collect a debt from the wrong person.
In a case in the District Court of Northern Ohio in March 2019, a debt collector was accused of going too far. Consumer Carolyn Holloway filed against JTM Capital Management, LLC., contending that JTM’s request for a credit report was an attempt to collect a debt. Carolyn Holloway’s stance was that the debt could not be validated because it had been discharged from her responsibility by an earlier bankruptcy proceeding.
Holloway’s complaint didn’t allege that JTM ever communicated with her in a collection process, but that JTM can still be considered a debt collector. The FDCPA defines “debt collector” as any person “who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect debts, directly or indirectly, owed or due or asserted to be owed or due another” (15 U.S.C. § 1692a(6)).
Holloway alleges JTM meets this definition because JTM’s principal purpose is the collection of consumer debts owed to third parties. The Court accepted Holloway’s allegations as true and agreed that Holloway’s allegations plausibly support her claim that JTM is a debt collector under the FDCPA. The court stated JTM had violated the Fair Debt Collection Practices Act by initiating communication with a third party—the credit report agency—for a debt that no longer existed.
Unfortunately, these situations are far from unusual. One of the most common complaints made by consumers against debt collection efforts is the issue of whether the debt is valid in the first place; there are several provisions outlined in Section 809 of the FDCP Act which cover this issue.
Some of the other common infractions of the FDCP Act that directly impact consumers are the following actions by debt collectors:
- Continuous communication, including calling too early or too late in the day;
- Misrepresenting the amount owed, sometimes by adding collection fees without separating those out for the consumer’s understanding;
- Not identifying themselves, or refusing to do so when asked by the consumer;
- Continuing attempts to collect the debt before it is validated by the creditor;
- Using threatening or obscene language in the course of collection efforts;
- Refusing the stop communications when expressly requested by the consumer, especially if the consumer believes a violation has taken place;
- Contacting a debtor at work, especially after being told it is against the company’s policies for personal communications.
Consumers must document their requests in writing to be protected by the FDCP Act. By doing so and knowing what is allowed under this Act, savvy consumers can exert much more control over collection efforts than they may have previously believed.
If you are being pursued by a debt collector, you have control over the communication, specifically regarding when, how, and with whom that collection agency can call. Some other ways to protect yourself from violations of the Act are to:
- Know the statute of limitations on debt in your state and understand that the statute may be different depending on the type of debt, such as a student loan or a medical bill.
- Ask questions: Who is the creditor? What agency is the collector representing?
- Above all, is this debt really yours? Have you been the target of identity theft that may be reflected in this “outstanding” debt?
- Keep records of all the interactions between the debt collector and yourself.
There is no question that the ruling in Carolyn Holloway’s case is a win for consumers everywhere. If you continue to be harassed or you are unclear on the provisions of the Act in your particular case, it may be best to contact an attorney for assistance. There is more involved that the dollar amount of the debt; there is also your future credit worthiness at stake.
Sources:
https://www.acainternational.org/news/court-rules-credit-inquiry-is-attempt-to-collect-a-debt
https://www.stopcollections.org/ask-an-attorney/common-fdcpa-violations
https://www.nerdwallet.com/blog/finance/fair-debt-collection-practices-act/
https://www.nerdwallet.com/blog/finance/statute-limitations-debt/
