Collection Agency Law Explained

If you have ever been contacted by a collection agency, you know that it can be an unpleasant experience. A collection agency can turn simple acts, such as checking the mail or answering the phone, into dreaded tasks. However, it is important to know that there is a law in place intended to protect the people that collection agencies contact. The FDCPA (Fair Debt Collection Practices Act) was enacted to keep debt collectors from abusing, harassing, or deceiving a person when attempting to collect a debt. It also gives debt collectors strict guidelines to follow when collecting a debt. In this article, we will have this collection agency law explained in simple terms, to better inform debtors of their rights.

For starters, the FDCPA outlines very clear practices for debt collectors to follow when contacting a debtor. Debt collectors are only allowed to call during reasonable hours (usually 8:00 a.m. – 9:00 p.m.), but they are also allowed to call a debtor at work. However, if the debtor notifies the collection agent that their employer wants the calls to cease, the debt collector must stop calling the person’s place of employment.

There are also rules of conduct a collection agency must follow when collecting a debt. A debt collector is forbidden from harassing any person from whom they are trying to collect a debt. Examples of harassment include excessively calling, insulting the debtor, or using obscene language. A debt collector is also not allowed to make false statements when collecting a debt. Examples of false statements include posing as a government official, making threats (lawsuits, imprisonment, seizing of home and property, etc.), or telling the debtor they owe more than they actually do. In addition, a debt collector can not use unfair practices in attempting to collect a debt. These practices include collecting an amount larger than what the debtor actually owes, or suing the debtor for a debt they do not owe.

The FDCPA requires collection agencies to notify debtors of their rights, and any correspondence (mail or phone) has to contain the information that the contact is being used to collect a debt. The only reason a collection agency can contact a third party (family or friend) is to acquire the debtor’s phone number or address. If the collection agency has this information, they are forbidden to contact a third party. It is also illegal for collection agencies to tell a third party that they are attempting to collect a debt.

The FDCPA is in place to protect the rights of debtor’s while making a collection agent’s job clear and concise. If a person being contacted by a debt collector feels that they are experiencing the violations discussed in this article, it is important that these misconducts are accurately documented. The reason for this is so that the claims can be proven if the debtor decides to take legal action.

Now that you have had this collection agency law explained, you should feel more confident about your rights if you are ever contacted by a debt collector. It is best to avoid the situation altogether by staying current on your debts, but it is good to know that the FDCPA exists if ever find yourself on the receiving end of a collection call.

Collection Agency Laws That Benefit You

Did you know that there are collection agency laws? There are! It’s unfortunate that there is a need for these laws, but we are very lucky that they were created to protect us. These laws are called the Fair Debt Collection Practices Act. These are a godsend to people routinely harassed by a bill collector. I will give you a quick overview to give you a basic idea of what your rights are.

They are not allowed to threaten to arrest you. Unfortunately, there have been cases where this has happened. They will tell you that if you refuse to pay them, they will arrest you or have you arrested. Never panic if they say that to you. That cannot happen, and they are not allowed to tell you that. They are not allowed to verbally abuse you in any way. That includes calling you names, taunting you, or using profanity.

They are not allowed to place false or inaccurate information on your credit report. They are also not allowed to discuss your debt with anyone other than you, your spouse, or your lawyer. For example, they may not call your neighbors to tell them about your debt. This sounds obvious, but this has happened in the past, and it still does! They do this in order to shame you into paying them.

Never talk to a debt collector on the phone, except to tell them that you would like to communicate through mail only. Once you do that, send them a letter stating the same thing. Send it certified with the return receipt requested. You need to do this so that you have proof. It is illegal for them to call you once they get that letter.

So now you know that you are protected from debt collector abuse. To learn the best credit repair tips available, click the links below.

Collection Agency Laws and You

Have you ever wondered how Collection Agency Laws actually affect the way that Debt Collection Agencies conduct their business? I do, as I was recently contacted by a collection agency regarding a debt that I supposedly owed. And here’s the really bad part – I didn’t owe anything because I was a victim of identity theft. Funny, but I had never even worried or cared about collection law because my credit had always been very good, if not perfect. Enter my nightmare.

Not only did I have to deal with the major process of filling reports with the state Attorney General, local authorities, and credit reporting agencies, but I had to deal with this very persistent collection agency. Unfortunately, as I quickly found out, there are many times when an unscrupulous debt collector will try to circumvent the law in order to collect on a debt that you may or may not owe. Fortunately for people like you and I, there are laws in place to help protect us.

In all fairness, the collection agency had simply been given my overdue account (actually, some unknown scumbag’s account), and were simply doing their job. I completely understood what they were doing, but even after I explained my situation to them they still kept sending me letters and calling me at all hours of the day. They informed me that I would need to send them some sort of proof that it was not me on the account and that I was, indeed, a victim of identity fraud. What a complete and time consuming hassle that was — and is fodder for a completely different article.

As I continued to research The Fair Debt Collection Practices Act (FDCPA), a part of the Consumer Credit Protection Act, which is a United States statute that protects the consumer from unfair and abusive practices regarding the collection of a debt, I quickly realized that this particular collection agency was violating many of the laws as set forth by the above agency. The Fair Credit Reporting Act (FCRA) also goes hand in hand with the FDCPA, and I would strongly suggest that you, as a consumer, read the above mentioned statutes. Simply go online like I did and search using the keywords. You’ll find a ton of great articles and information about the subject.

For instance, did you know that the FDCPA has issued guidelines under which debt collectors conduct their business? That’s right. Some of these “rules'” include the hours that you may be contacted, trying to communicate with you while you’re at your place of employment, misrepresentation or deceit, publishing your name on a “bad debt” list, and so on.

Here are a few examples of what this particular collection agency was doing to me, and how they were in violation of the law:

1. They were calling me before and after the designated hours defined by law. They can only call during reasonable hours. I once received a call at 6:15 in the morning. On a Sunday!

2. They were in the habit of calling me at my place of business. They can’t do this if you tell them to stop.

3. The individuals representing their company were threatening me with a wage garnishment and a bank levy. Not! They can only do this if the original creditor had obtained a judgment against me. And in some states, these procedures are not allowed.

4. They told me that they were going to discuss the situation with my boss. They cannot discuss debts with people who have nothing to do with them.

5. They called my family members and did their best to pry information out of them. They can call and try to find out my physical location, but they cannot mention that they are collecting a debt.

The above is not a complete list by any means. As I continued to research the laws, I discovered that they were in violation of all five of the above listed methods of collection. My non-legal advise to you, if you ever encounter a situation involving debt like I did, is play hardball. Be strong but firm, document/record everything, and inform them that they are in direct violation of collection law and can be sued for their constant harassment.

There are plenty of hungry lawyers out there that love to sue collection agencies whore in violation of the law. Contact an attorney or the Federal Trade Commission (who enforces the FDCPA), and take action against those that are breaking the law. Life is too short to have to put up with this sort of funny business.

Questions Answered About Collection Agency Laws

Even though the Fair Debt Collection Practices Act (FDCPA) was put into place in order to protect consumers from bill collectors who would bend the law, many don’t understand exactly what their rights are. Here are some of the most common questions about collection agency laws, and the answers.

* Does the FDCPA apply to only consumer debt, or business debt also? The FDCPA was put into place for consumer debt, and those owing business debt don’t have the same rights as consumers do.

* Are bill collectors allowed to call me and day and night? No. Collection agency laws specify when debt collectors are allowed to call you. They aren’t allowed to call before 8 am or after 9 pm in your time zone. The law isn’t specific as to how many times a debt collector can call you, but it’s understood that they aren’t allowed to use the phone in an attempt to harass you into paying your debt.

* Can a bill collector have me arrested? Only a court of law can issue a warrant for arrest, not a debt collector. If a debt collector threatens to “dispatch” the police department or have you thrown in jail, they are acting against collection agency laws.

* Can a collection agency sue me? Yes, in some instances, a collection agency has a right to file a lawsuit against you. But unless they actually plan to file suit, or are legally allowed to do so, they can’t make the threat. For instance, if your debt is time-barred, they no longer have the ability to sue you.

* Can a bill collector harass me about an old debt? Each state has a statute of limitations regarding various types of debt. The statute of limitations typically ranges from 3 to 10 years. Once a debt has reached that stage, a debt collector is still allowed to pursue payment, but is no longer able to take a consumer to court for payment.

* Can a debt collector call my family or boss about my debt? No. The FDCPA is very specific about third party contacts. A debt collector can call a third party once in an attempt to contact you, but isn’t allowed to talk to them about your debt. They aren’t allowed to call again unless the person invites them to. Collection agency laws grant you the right to privacy when it comes to your personal finances.

* Can I make the debt collector stop calling me? Yes. The FDCPA gives you the right to send a cease and desist letter to the collection agency asking it to stop contacting you by phone, or even by mail if you don’t want to hear from them at all. This won’t stop their collection efforts, but it will give you peace from constant collection attempts.

Knowing your rights under the FDCPA can make all the difference in the world when it comes to debt collectors. If you don’t know yours, consider reading the entire bill before your next interaction with a debt collector. If they know that you understand collection agency laws, they’ll be less likely to break them.

Fundamentals of Agency Law

“Hello there, my name is James … James Bond and I am … well … a Realtor”. In the Greater Vancouver area there have been an abundance of famous real estate Agents at any given time, at least famous by name that is. In addition to James Bond and, of course, my own last name (‘ Frascati’ is one of the famous wines of Italy as well as the seventh hill of Rome ), we have had Agents the caliber of Omar Sharif, Vera Cruz, Charlie F. Brown and one Giuseppe Mussolini ( you could spot him on the street because he wore invariably a black shirt and had that certain martial … how should I say … goose step …). Not to mention Yuri Gagarin ( no relation to the astronaut ), Carl Marx, Richard (Dick) Nixon and – yes – Douglas MacArthur ( tough guy to deal with … ) with his newly-found pal John Yamamoto, to name some more. And, faithful to the oriental tradition that characterizes this neck of the woods, we have been sporting at various times a Ding Dong, a King Woo Kong as well as a Sing T. Sing, a Wu Win-chi Wu ( who used the initials WWW ) and two Ho Chi Minh’s. The longest name I have ever come across is Guillermo Oreporemotichovea ( but his friends called him ‘Cy’ … no wonder ) and the most memorable slogan ever adopted, to my knowledge, by a Realtor belongs to an Agent by the name of Bob Bye ( now defunct, possibly of starvation … ) who used to post ads on the paper the likes of ” List with Bob Bye – The Guy with the Tie “. Yet, despite the variety of names and walks of life, all Agents – especially in real estate – must abide to the axioms of the Law of Agency when it comes to fulfilling their professional mandates.

An Agent is a person who is authorized to act on another person’s behalf. The person for whom he acts is called his Principal. Because the Agent has authority given to him by the Principal, he can create a legal relationship between the Principal and a third party. For example, a purchasing agent can order goods from a third party on behalf of his principal, so long as the purchase is made within the scope of the agent’s authority. In such instance, the principal must pay for the goods because he is effectively bound by the agent in a contract with the third party. The agent, on the other hand, is not a party to the contract.

The relationship between an agent and his principal is created by contract. Under the Agency Contract the agent is given authority to do certain things in his principal’s place. In exchange for the service provided by the agent to act on his principal’s behalf, the principal pays the agent a fee or commission. Agents are not employees. The distinction between an agent and an employee is the degree of control and method of remuneration. A principal tells the agent what he wants and leaves it to the agent how to bring about the result. An employer, on the other hand, tells the employee what to do and how to do it. Furthermore, the agent is usually paid by way of a commission that becomes payable only when he brings in the result. An employee, instead, expects to be remunerated for the number of hours he works regardless of whether or not the result is accomplished. Real Estate Agents are a particular kind of agents. A real estate agent acts on behalf of his principal, almost always the Seller, but can also act on behalf of a Buyer and can, in fact, act on behalf of both Seller and Buyer at the same time subject to certain restrictions. The contract that spells out the terms and conditions of the authority confered by a Seller to the real estate agent is called the Listing Agreement. With the Buyer, the name changes to Buyer’s Agency Agreement.

Based upon the wording of the contractual agreement between the principal and the agent, the authority to act confered upon the agent falls into one or more than one of the following categories. The agent’s authority to act can be express, implied, , by ratification, , usual, and apparent, .

Express Authority

Express authority is the authority given by to the agent by the contract. The contract can be in writing or verbal. Real estate agents are given usually express authority under a Listing Agreement and here in British Columbia all listing agreements involving land or an interest in land ( such as a lease ) must be in writing in order to be enforceable, pursuant to the Real Estate Services Act . It must be understood that a listing agreement is not a contract to sell or otherwise convey an interest in land but, rather, an agreement by and through which one party ( the Agent ) agrees to market an interest in land and the other party ( the Principal ) agrees to pay a commission on completion.

Implied Authority

Even when precise words are used in the express authority, an agent may find himself in circumstances where the acts he wants to do are not covered by those words. It is sometimes possible to imply authority from the precise words. More specifically, an agent would have implied authority to carry out an act if the agent has no choice but to do it in order to fulfill his express authority. For example, a real estate agent’s authority may be only to sell a certain parcel of land or a certain house for his principal. The agent may wish to show the property to prospective purchasers during the owner’s absence. If the agent had no authority to do so both he and the prospective purchasers would be trespassers and, therefore, liable to the owner in damages. Because showing a property is necessary and incidental to effecting a sale, the agent can imply the authority proximately from his express authority, provided nothing in the contract states otherwise.

Authority by Ratification

Sometimes an authority can be created retroactively. For example, where an agent enters into a contract on behalf of his principal but the contract is beyond the agent’s express authority, he can be given authority in the past. This is done by ratification. If the principal consents after the fact to be bound by the unauthorized acts of his agent, he has ratified the contract. The end result is, therefore, that the principal is bound by the contract just as if the agent had been so authorized in the first place.

Usual Authority

Usual authority arises when an agent is engaged by the principal to act in a particular transaction and such transaction is governed by ‘customs of the trade’ . In such case the principal is considered to have consented to the agent acting in accordance with such customs, as long as they are lawful and reasonable and the principal has not indicated otherwise.

Apparent Authority

Under certain circumstances, furthermore, an agent can bind his principal to a third party even though the agent was not authorized to do so. This arises where a principal has acted in such a way that he leads third parties to believe his agent has authority to perform certain acts on his behalf. If the third party deals with the agent in the bona fide belief that the agent has the authority represented, it is called apparent authority.

In general, any person of sound mind can act as an agent, since the agent does not need to have the capacity to contract out that the principal must have ( refer to my Article entitled ‘Fundamentals of Contract Law’ for further information ). As a result, an infant agent ( i.e. an agent under the age of majority ) can negotiate a binding contract between the principal and a third party. The infant agent is, however, a party to the agency contract and could therefore use his own incapacity to contract out to repudiate the agency contract with his own principal.

Luigi Frascati

Debt Collection Agency Laws

Debt collection agencies have fairly loose parameters when it comes to collecting debts from those who owe them, however the tactics that can be used within the confines of the laws can vary considerably. The FDCPA or Fair Debt Collection Practices Act was instituted to provide some general structure and code of conduct to debt collection agencies.

Definitions

1) A debt collector is third person or party who attempts to collect debts owed to another party.
2) A debtor is the person or party who owes a debt.
3) A creditor is a person or party who has loaned or extended credit to another party and to whom a debt is owed.
4) FDCPA is The Fair Debt Collection Practices Act. This is the federal regulation that governs the practice of all collection practices.

Debt Collection Guidelines

The FDCPA does have some basic restrictions to ensure that third party collectors are conducting the practice of debt collection both legally and civilly. According to the FDCPA the following acts are prohibited by debt collectors.

1) Contacting a third party who has no ties to the debt. Debt collectors are able to legally contact co-signers in an attempt to settle debts.
2) Threaten action without intention to follow through. Third party collectors are prohibited from threats to harm credit ratings, pursue legal action or garnish wages unless they have the power or plan to do so.
3) Send letters that appear to have come from a court of law, legal representative or court of law. Debt collectors may not threaten arrest if the debt is not settled or pursue legal action in courts remote from the debtor’s area of residence.
4) Harass the person who owes the debt. Collection agencies may not make repeated phone calls or calls at inconvenient times or to unnecessary numbers such as work or relatives homes. If creditors do contact these places the person owing the debt may request for them to stop or contact your attorney if you have one. Once a request is made of a debt collector to contact your attorney all communication directly with the debtor should stop. Obscenity insults or threats made by debt collectors are never permitted.
5) Falsely representing someone else including an attorney or a government official.
Impersonating another party such as a surveyor in an effort to gain information about the person who owes the debt.
6) Attempting to obtain fees interest or charges not associated with the debt or requesting post dated checks.

The FDCPA governs the practice of debt collection from a federal standpoint. In-house collections such as store credit cards are typically considered a separate entity and may not be covered by these regulations. It is estimated that more than 25 of the 50 states have additional laws beyond those instituted by the FDPCA that govern the practices of debt collection.