The Fair Debt Collections Practices Act (FDCPA) is a landmark federal law that protects consumers from unreasonable and illegal debt collection practices. Since its passage, many businesses have been made to pay for their breaches of its provisions. However, much confusion surrounds the FDCPA regarding its applicability. This piece explores the two questions — What is the FDCPA, and who isn’t covered by the law?
What Is the FDCPA, and Who Isn’t Covered by the Law?
The FDCPA is a federal law that was passed in March of 1978 in response to the outrageous conduct of debt collectors when collecting debts not their own. Harassment and stalking are two crimes that had become quite prevalent in the debt collection industry before the FDCPA was passed. Consumers faced incessant barrages of unpermitted collection attempts, including:
- Harassing phone calls at home and work
- Libel and slander
- Stalking and illegal surveillance
- Abusive or unfair practices.
Now in effect, the FDCPA gives consumers teeth to take action against particular businesses engaged in the collections game. The law confers various protections from debt collectors by establishing numerous boundaries such as:
- Limitations on how a debt collector may contact you
- Prohibition on posting on social media about the debt
- Limitations and prohibitions on communicating debt with third parties
- Prohibition on using false, misleading, or deceptive communications to collect debt
- Restrictions on forums for debt collector legal action against debtors
- Prohibition on all forms of harassment
- Requirements to speak only with the debtor’s attorney if one is retained.
The FDCPA also contains important notice requirements debt collection companies must provide to debtors. Debt collectors must notify debtors in writing and disclose the amount of debt in question and the name of the creditor. The debtor must also be informed that they have the right to dispute the debt’s validity.
Consumers whose FDCPA rights have been violated can seek actual and statutory damages. However, as mentioned, not all businesses attempting to collect debt are subject to FDCPA provisions. If you believe your business to be exempt from the FDCPA but are facing a claim under its provisions, reach out to an experienced business law attorney as soon as possible.
Don’t let your business remain exposed to FDCPA and other legal issues. Contact Weisblatt Law Firm for the peace of mind you need to successfully run your company. Call (713) 666-1981 for a free phone consultation.
Original Creditors
Original creditors are not required to follow the stipulations of the FDCPA. An original creditor is the party that originally generates a debt. For example, if a loan company loans you $50,000, the company would be considered to be the original creditor. This creditor would not be subject to the FDCPA when collecting on the loan.
However, an original creditor may be subject to the FDCPA under certain circumstances. If an original creditor attempts to collect the debt using a different business name, and the name gives the impression that a different company is involved, the original creditor may be subject to the FDCPA.
Credit Unions
Credit unions have been historically exempt from the provisions of the FDCPA because they are institutions collecting their own debt and not typically debt collectors. However, recent legal tides have been moving toward allowing consumers to take action against credit unions that violate the provisions of the FDCPA. Many states, including Texas, have their own debt-collection practices laws on the books.
For instance, under the Texas Debt Collection Act (TDCA), consumers are protected from abusive and unfair behavior from credit unions. Additionally, Texas also requires out-of-state credit unions to comply with the provision of the TDCA when attempting to collect its own debt from consumers in Texas.
Government Agencies
The FDCPA provides a clear exception for government workers at the state and federal levels. Government employees who collect debt as a function of the discharge of their duties are not required to comply with FDCPA collection rules. Other federal and state rules may apply, however. The FDCPA also does not apply to parties engaged in the service of process in connection with a financial judgment.
B2B Debts
B2B debt collection is a major industry in Texas. Numerous rules and regulations determine how these debts are collected, bought, and sold. The FDCPA, however, is not among these rules and regulations. It only applies to consumer debt. As such, businesses cannot claim its protections.
Houston businesses rely on Weisblatt Law Firm to help them remain in compliance with all federal, state, and local laws.
Meet With an Experienced Houston Business Law Attorney Today
Get the information and counsel you are looking for and find the peace of mind you deserve. Weisblatt Law Firm is ready to provide your company with tailored and effective representation and guidance to help you thrive.
Call Weisblatt Law Firm at (713) 666-1981 for help with compliance and other business issues. We offer free phone consultations. Call today!
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
