Top Fair Debt Collection Practices Act Violations

In the field of debt collection, there is a fair bit of communication required to ensure you have established a trusting and clear relationship with your client. Experienced or not, your first mode of business should be to adhere to the laws laid down in the Fair Debt Collection Practices Act.

When it comes to compliance, you can understand the laws that dictate fair practices around debt collection, but more than knowing what to do, it is important to know what NOT to do so here we will break the common points on the list of FDCPA (Fair Debt Collection Practices Act) violations and how to avoid them for debt collectors.

In the event of any issues that may arise, it is your job as a collector to make sure that every interaction you have is legitimate and cordial. Read through to know if there are any mistakes you might be committing within this FDCPA violations list and how to nip them in the bud.

What Would Be Considered an Unfair Practice in Debt Collection?

If you are working on a new claim and you are unclear about what boundaries to establish, right out the gate, look at what you should not do to maintain trust and increase compliance.

Collecting on additional charges unless allowed by law

You can always consult the FDCPA laws when learning to conduct a fair debt collection strategy. But a big NO in the field would be to collect on any debt that is unlawful or not clarified within the contract that was established from the start. If there is a chance that you might be in violation of this law, you need to take a step back and re-evaluate what you can do to rectify that.

Connecting with a client through a general, public platform

There is no reason that something as confidential and encrypted as a debt collection contract should be disclosed or even discussed on social media. If you are going out of the way to contact a client on their social media or open-source platform, you are violating the terms of confidentiality within your agreement with the client.

Threatening your client through illegal practices

This is an unsaid rule but still must be reiterated. If you are a debt collector, you have the responsibility to dispense the challenges of debt collection with fair practices. If you are committing illegal actions and threatening your clients with taking illegal measures to coerce them into paying, that is a clear violation.

Impersonating another debt collector

If you are using any address, postage, or identity that impersonates another debt collector, you are in violation of the FDCPA laws. Under no circumstances should you assume the identity or position of another debt collector to approach a client.

Which Statements Can Be Deceptive when Interacting with Clients?

It is all in the way you communicate, right? If you are relaying unfair, or false information to your clients to hoodwink them into paying, that is clearly an unethical way to acquire debt and will be flagged under FDCPA violations. You need to be transparent in your dealings and ensure that, as a debt collector, you do not do the following.

Imply that you are a state representative or attorney

If you are interacting with a client and you need to convince them to pay, it will be incredibly questionable if you imply your status is what it is not. If you imply that you are an attorney or a state representative to intimidate them, you are held in violation of the law.

Threaten arrest or imprisonment of your client

There may be cases where you might need to take drastic measures to collect debt if the debtor is unwilling. In the event of such a situation, however, it would be unethical to threaten your debtor with arrest or imprisonment, when you clearly do not have the authority to assume or declare so.

Imply seizure of property or wages for non-payment

Again, it is imperative that your dealings are legitimate and ethical. So, if you have a debtor who is unwilling to pay or has shown hesitation in paying, threatening them with the danger of losing their wages or property is unfair and unlawful.

The Price to Pay for Non-Compliance – FDCPA Violations Penalties

The laws are transparent around debt collection and what is considered a fair practice. Deviation from or disobedience of those principles can have repercussions for your career and for the reputation of your company.

There are two major entities that are responsible for upholding the ethics of the FDCPA and issuing penalties in case of breach: the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). If a consumer raises a claim against a debt collector who violates the FDCPA, these two entities will act upon that individual and issue notices and penalties accordingly.

As a company, upholding the codes of conduct that are outlined in the act should be your priority, and instilling those values within your employees should be just as vital. As an individual, adherence to the laws laid down within that document will impact your career as a collector and will enable you to work ethically, proficiently, and confidently. But if a debt collector’s practices are deemed unfair or unethical, there are necessary measures in place to police and remedy that.

Here are some of the prevalent measures that can be taken against you in the form of the Fair Debt Collection Practices Act violations penalties:

1. Penalties and Fines: If a debt collector is found to be in violation of the FDCPA, they can be fined for their malpractice. The fines can rack up to about $1000 in statutory damages based on the extent of violations that are committed.
2. Issuance of a Cease-and-Desist Letter: This action can be taken against any collector who has engaged in illegal behavior against their clients. The Federal Trade Commission and the Consumer Financial Protection Bureau are authorized to issue a cease and desist against any collector found in violation of the FDCPA.
3. Class Action Lawsuits: If a particular consumer has been subjected to a violation by a collector, they can pursue a lawsuit against them to seek damages for the actions that are committed. In many cases, these lawsuits can also become class action lawsuits where multiple people will band together to present a case against a certain organization or individual, in this case, the debt collector who is in violation.
4. License Revocation: If a debt collector has engaged in illegal activities to coerce the consumer into paying, there are serious repercussions that can be taken against them, including dismissal or revocation of their licenses. This is in the case that the offense has been proven serious enough that it resulted in a great loss for the consumer.

Empathy, not Abuse – 4 Correct Ways to Interact with Your Clients

• Empathize with your clients – One of the key points to remember is that compassion and empathy maintain healthy communication with your clients. You are in the business of recovering debts which is a slippery slope riddled with financial distress and pitfalls. Anyone facing that will struggle with meeting deadlines for debt recovery. If you are struggling to communicate with your clients, appeal to their human side and see how you can get through to them without disparaging social conduct.

• Set up regular reminders for debtors – It is completely probable that your debtor has simply forgotten to meet their deadlines. If they are unresponsive or non-punctual in making their payments, think of ways to regulate that communication before jumping the gun. You can still get your debtors to come around without resorting to threats.
• Utilizing digital tools and automation to fast-track collection – In most cases, interacting with debtors via multiple communication channels might be more impressionable. You will meet people that are intimated by constant attempts at communication. They might simply be averse to attending calls that are demanding payments. Resort to automated reminders to be sent to the clients, so they do not face the embarrassment of turning down an actual human being on the other end of the phone call.
• Always stating your true intent and purpose – transparency is one of the strongest pillars of debt collection when interacting with your debtors. If you oversee retrieving funds from a debtor, show tact and integrity in your collection strategies. No matter what happens, do not impersonate another person, especially in the law or legal capacity. Make sure that you are firm but honest about who you are and why you intend to contact the debtor.

Establishing A Relationship of Trust with Your Clients

As a company, upholding the codes of conduct that are outlined in the act should be your priority, and instilling those values within your employees should be just as vital. As an individual, adherence to the laws laid down within that document will impact your career as a collector and will enable you to work ethically, proficiently, and confidently.

If you abide by the rules, ensure lawful interactions with the debtors, and remain compassionate, and cordial, you will develop long-lasting relationships with consumers and establish yourself as a trustworthy and professional individual within the field of debt collection.