The Importance Of The Fair Debt Collection Practices Act To Your Business PDF Print E-mail
Written by David P. Montana   
Thursday, 28 January 2010 18:41
The Fair Debt Collection Practices Act was brought into being to address problems relating to harassing and threatening behavior by some debt collectors. Collection agencies do, however, benefit from this legislation. By acting in a professional manner when attempting to collect debts, collection agencies can avoid possible penalties.
by DavidP.Montana


The Fair Debt Collection Practices Act was brought into being to address problems relating to harassing and threatening behavior by some debt collectors. Collection agencies do, however, benefit from this legislation. By acting in a professional manner when attempting to collect debts, collection agencies can avoid possible penalties.

Businesses that extend credit have a reasonable expectation of being paid back, and on time. No matter whether its a product or a service delivered with the terms of payment upon receipt, or someone takes out thousands in unsecured credit card advances, the lender expects and is entitled to get paid.

For sure, there are instances when the lender is not getting the payments he/she is due. There can be a number of reasons for this. Sometimes, the borrower needs more time to wiggle out of bad financial circumstances. At other times, they can simply be negligent and default on their obligation. Regardless of the reason, the lender is within their rights to seek payment.

This is where collections agencies come into play. Their goal is to acquire the payment due their clients. However, they may not take a Wild West style approach and do anything they wish to do in order to recoup a debt. This 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.

Consider though, that this does not prevent the collection agency from pursuing a valid debt. Collection agencies are still within their rights to inform the debtor of their intention to pursue the debt via other legal channels, namely through an attorney.

This will only occur if the debtor informs the collection rep in writing. If the communication has stopped because of the inability to reach the delinquent payer, then it is legal to pursue third parties in a courteous, non-threatening manner. Additionally, the collection rep will not be allowed to disclose the call is over debt issues so as not to invade the privacy of the delinquent payer. Do these rules seem somewhat skewed to help out the delinquent payer? To a degree, yes; however, they also help the collection agencies stay out of trouble by engaging in unprofessional conduct.

As these rules and laws clearly demonstrate, the purpose of the Fair Debt Collection Practices Act is to eliminate unprofessional and abusive behavior on the part of some collection agencies. Such behavior undermines the credibility of the business and also makes it difficult to collect revenues. After all, who wants to deal with collection agencies that are abusive?

Collection agencies found to be in violation of The Fair Debt Collection Practices Act can be penalized in a number of ways, to include legal actions. They can also have their license revoked. Most common are fines levied against offending agencies. However, collection agencies are within their rights to appeal these fines.

The Fair Debt Collection Practices Act is both lengthy, and can be somewhat complex. Thankfully, it is posted in its entirety on the Federal Trade Commission's website.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

David P. Montana has been an author, lecturer and business advisor in commercial collection agencies services for three decades. He provides more resources concerning The Fair Debt Collection Practices Act.