The FDCPA prohibits debt collectors from harassing or misleading consumers while collecting debt.  However, the only debt that is covered under the Statute is Consumer debts.  The FDCPA defines Consumer debts as debts incurred primarily for personal, family or household purposes.  Therefore, if you incur a debt for your business, the debt collector is not covered by the FDCPA.  Congress assumed that if someone was sophisticated enough to run and operate a business, then they were most likely able to decipher when a collection agency was making false threats, etc.  If you have a question regarding whether or not the debt you have incurred allows FDCPA protection, feel free to contact us at 866-339-1156.

Jeffrey S. Hyslip

A lot of times we get calls from clients who complain about a collection agency harassing their family members, friends, neighbors, co-workers etc.  For example, we hear them say things like, “They called my brother who lives in Connecticut!  I don’t even know how they got that phone number!”  More often than not this is a case of skip tracing.  Skip tracing is a process of pinpointing a person’s whereabouts.  Collection agencies typically use skip tracing programs in order to locate a client to collect a debt.  Essentially, they are able to type in the client’s name and pull up information on the client, including contact information for family members, neighbors, place of employment etc.  The act of using a skip tracing program is not considered a Fair Debt Collections Practices Act violation.  Collection agencies are allowed to use skip tracing programs, however, who they contact, how frequently and/or what they say to that individual may be called into question under the FDCPA.  Sometimes, if the collection agency is already in communication with the client, but is having difficulty collecting on a debt, the agency may contact a third party person as a means of embarrassing or scaring the client into making a payment to them.

Under the FDCPA, a collection agency is only allowed to contact one third party person one time to obtain any contact information needed to reach the client directly.  Therefore, if a collection agency contacts a third party person more than once or multiple third party individuals, this would constitute a violation.  If the collection agency has already made contact successfully with the client, then at that point, it’s unnecessary for them to be contacting anyone else.

In our department, our logic is that, if a collection agency has the ability to utilize a skip tracing program to get in touch with a client’s friend, family member and/or neighbor, then they certainly have the ability to employ this skip tracing program to locate the client directly.  Nonetheless, if you get wind that a collection agency is calling anyone other than yourself regarding your debt, than I strongly encourage you to contact our department.

Megan F.

I recently attended a settlement conference on an FDCPA case somewhere outside of Chicago.  In this particular jurisdiction, the Judge had the parties split up into two different rooms and went back and forth between the rooms trying to get the parties to reach middle ground regarding the settlement figure.  Our case was what we considered to be a slam dunk.  Not only was my client steadfast in its recollection of the events, we also had recordings to substantiate her claims. 

Believe it or not, the parties were not that far off in their settlement figures; it wasn’t settling for another reason.  My client didn’t necessarily want money; she wanted an apology and for this collection agencies representative to promise they were going to change their ways.  When my client told this to the Judge the Judge, who has a lot of experience handling FDCPA cases, said something I will never forget.  He said, “Mrs. XYZ, you’re not going to get them to change their ways.  I see them getting sued day after day and their ways don’t change.  I guarantee you that I am going to see them again later this week.  There is nothing that will happen in this courtroom today that is going to make them act differently.  As we speak there is a collection agency violating the law”.

I have frequently reflected on this comment since I’ve returned to Chicago and its raised so many questions in my head.  First, how could this be?  How can someone or something constantly violate the law and their lawlessness be reduced to a simple nonchalant recognition from the Judge that its absolutely certainly going to happen again.   If the judges that are hearing these cases recognize that regardless of what takes place in their courtroom the defendant’s actions are not going to change, what difference am I really making? 

This incident, more than any other, has solidified my belief that the FDCPA needs amended.  I mean really; the statute that was supposed to prevent and deter collection agencies from stepping over the line has become a joke to the offenders.  The statute provides for damages up to $1,000.00 and actual damages if they can be proven.  The statute was written in the early seventies and the amount of damages has never been increased.  If the Judges that are hearing these cases can conclude that regardless of what happens the defendant’s behavior isn’t going to change then its pretty obvious we need a new mechanism for deterrence.   If the punishment doesn’t modify their behavior then you need to tailor the punishment to one that is effective.

Also, the thing that ……..oooh sorry, I need to answer my phone; a potential client is calling.  Guess the Judge knew what he was talking about…..

Jeffrey S. Hyslip

As previously mentioned on the FDCPA blog, times are tough for both consumers and Collection Agencies.  Often times Collection Agencies will offer consumers a significantly reduced “settlement” amount, if they are able to remit payment immediately.  This can either be an opportunity for the consumer to satisfy his/her obligation for a reduced amount, or an underhanded ploy used by unethical collectors to get a person to pay.

In order to protect oneself from the latter, ALWAYS obtain the proposed settlement offer in writing from the Collection Agency.  Keep detailed records of your transaction with the Collection Agency.  If everything was done on the up and up, then congratulations, your delinquent debt has been settled.

However, making a payment that you were led to believe was a payment in full does not always end your trials and tribulations with the Collection Agency.

There are two potential issues that could arise.

The first is that the same collection agency could continue to collect on what would have been the remaining balance of the debt.  We have heard stories of Collection Agencies offering a “Settlement Payment for 50% of the balance.”  After receiving the payment, the collection agency then tries to collect the other 50%, claiming that the settlement payment made by the consumer was for only half the debt.

If this occurs, then this collection agency has violated the FDCPA by making misrepresentations in an effort to collect a debt.

The second problem that we have witnessed arises when the Collection Agency offers a settlement for less than the entire debt but is not the owner of the debt and is not authorized by the holder of the debt  to eliminate the remainder of the debt not covered by the “settlement” payment.  After making a payment which the consumer was led to believe was a payment in full, the Collection Agency takes their commission and returns the remainder of the balance to the original creditor; often to have it passed to another Collection Agency, starting the process again.  Again, if this occurs, the first Collection Agency has violated the FDCPA through its misrepresentation.

If you feel that you have been misled into accepting a “settlement” payment by a collection agency, please complete our case review questionnaire at www.fairdebthelpers.com.

Not all Collection Agencies engage in these unfair and misleading practices, and often consumers are able to settle their obligations for less than the total balance owed.  This is a good way to see yourself out of a difficult situation.  Whenever dealing with Collection Agencies Caveat Emptor, buyer beware.

Matthew S.