| How The Fair Debt Collection Practices Act Impacts Your Business |
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| Written by David P. Montana |
| Thursday, 21 May 2009 15:05 |
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The Fair Debt Collection Practices Act has proven to be very useful to people in need of reducing problems associated with harassing debt collectors. And, yes, it also has many benefits for the collection agencies as well. Through the enactment of sensible laws, the Fair Debt Collection Practices Act compels collection representatives to act in a professional manner that will ultimately benefit them as well.
The Fair Debt Collection Practices Act has proven to be very useful to people in need of reducing problems associated with harassing debt collectors. And, yes, it also has many benefits for the collection agencies as well. Through the enactment of sensible laws, the Fair Debt Collection Practices Act compels collection representatives to act in a professional manner that will ultimately benefit them as well. Those in the business of extending credit have the reasonable expectation of being paid back on time. Whether its a product/service delivered with the understanding to pay upon receipt, or an individual is loaned thousands in unsecured credit card advances, the lender deserves repayment of the debt. Clearly, there are instances when the lender is not receiving the payments they are due. There can be several reasons for this. Sometimes, the borrower may be experiencing financial difficulties and needs more time to pay their debt. However, at other times, they may simply be irresponsible about paying their debt and they default. Whatever the reason, the lender is fully within their rights to seek and expect payment. This is the place where collection agencies become very important. Their aim is to collect the monies doe their clients. However, they cannot act in a reckless manner in attempting to collect these past due accounts. Here is where the Fair Debt Collection Practices Act comes into play. The Fair Debt Collection Practices Act is not a new law as it was first enacted in 1978. However, there have been amendments and modifications to the Act that have altered the law in many ways. For example, a new clause that has been added to the Fair Debt Collection Practices Act is that a borrower that is in collections can request the creditor no longer contact him and the collections rep must cease contact. Keep in mind this does not prevent the collection agency from pursuing a valid debt. Collection agencies can still inform the debtor of their plans to pursue the debt through other legal means, namely through an attorney. This can only happen if the debtor makes this request in writing. If communication has stopped due to the collection agency's inability to reach the debtor, then it is legal to contact third parties in a non-threatening, nor harassing manner. Also, the collections rep cannot disclose the nature of the call, so that it doesn't violate the debtor's privacy rights. The rep can only ascertain the whereabouts of the debtor from the third party. While these rules can appear skewed in favor of the debtor, they're also designed to steer the collection agency clear of potential trouble and from engaging in unprofessional conduct. As these laws demonstrate, the intent of The Fair Debt Collection Practices Act is to eliminate abusive and unprofessional behavior on the part of some collection agencies. Such behavior undermines the reputation of the business. It also makes it difficult to collect revenues. After all, no one wants to deal with abusive and rude collection agencies. Collection agencies that violate The Fair Debt Collection Practices Act can be penalized in a number of ways, to include legal actions, and up to a revocation of their license. Commonly, fines can be levied against the offending agency. Of course, they are within their rights to appeal these fines. The Fair Debt Collection Practices Act is both a lengthy law, and can be rather complex. It is posted in its entirety on the Federal Trade Commission's website. Those wishing to explore the entire treatise are invited to do so. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. David P. Montana, who has been a writer, speaker and business advisor in commercial debt collection services for three decades, offers more resources and information on The Fair Debt Collection Practices Act |