Fair Debt Collection Flashcards, test questions and answers
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What is Fair Debt Collection?
The Fair Debt Collection Practices Act (FDCPA) is a federal law created in 1978 to protect consumers from unfair, deceptive and abusive practices used by debt collectors. It applies only to third-party debt collectors and not creditors collecting their own debts. The FDCPA sets limits on when, where and how debt collectors may communicate with consumers, including the use of telephone calls and letters. It also prohibits certain collection tactics such as using profane language or threats of violence, as well as false statements about legal action that could be taken against the consumer. Under the FDCPA, a debt collector must provide written notice within five days of initial communication that outlines details regarding the amount owed, who is owed it and what actions will occur if payment is not received. This notification should include instructions for disputing debts and requesting validation from the creditor. If a consumer makes such a request within 30 days of notification then the collector must cease communications until they can provide proof that validates their claim.In addition to providing protection for individual consumers facing aggressive collection activities, the FDCPA also provides remedies for those who suffer damages due to violations of its provisions by allowing them to file civil lawsuits for actual or statutory damages; up to $1,000 per violation plus attorney’s fees are recoverable through this process. In some cases punitive damages may also be awarded if gross negligence or intentional wrongdoing can be proven by plaintiffs. The Fair Debt Collection Practices Act has been an effective tool in helping consumers fight back against unfair collections tactics while providing them with clear guidelines on how they can properly dispute claims made against them by creditors or their agents so that they have time to validate whether information being provided is accurate before payments are made in full or partially on disputed accounts.