Why The Fair Debt Collection Practices Act Is Very Important To Your Business
Why The Fair Debt Collection Practices Act Is Very Important To Your Business
The Fair Debt Collection Practices Act was brought into being to address problems relating to harassing and threatening behavior by some debt collectors. Collection agencies do, however, benefit from this legislation. By acting in a professional manner when attempting to collect debts, collection agencies can avoid possible penalties.
Those that are in the business of extending credit have a reasonable expectation of being paid back. Whether a product is delivered with the agreement to pay upon receipt or an individual is issued tens of thousands of dollars in unsecured credit card cash advances, the lender is entitled to being paid back.
Clearly, there are instances when the lender is not receiving the payments they are due. There can be several reasons for this. Sometimes, the borrower may be experiencing financial difficulties and needs more time to pay their debt. However, at other times, they may simply be irresponsible about paying their debt and they default. Whatever the reason, the lender is fully within their rights to seek and expect payment.
This is where collections agencies come into play. Their goal is to acquire the payment due their clients. However, they may not take a Wild West style approach and do anything they wish to do in order to recoup a debt. This is where the Fair Debt Collection Practices Act comes into play.
The Fair Debt Collection Practices Act was enacted in 1978. There have been added amendments and modifications to the Act that have altered it in some ways. For example, a new clause to The Fair Debt Collection Practices Act states that a debtor in collections can request the collection agency to cease further contact with him/her, and the collections rep must comply with this request.
Keep in mind this does not prevent the collection agency from pursuing a valid debt. Collection agencies can still inform the debtor of their plans to pursue the debt through other legal means, namely through an attorney.
This can only occur if the debtor makes this request in writing. If communication has stopped because the collection agency can't reach the debtor, then it is legal to contact third parties in a courteous, non-harassing manner. In addition, the collections rep cannot disclose the nature of the call, so as not to violate the privacy rights of the debtor. While these rules can seem skewed towards the debtor in question, they also help the collection agency steer clear of trouble by engaging in unprofessional conduct.
As these laws and regulations clearly demonstrate, the aim of The Fair Debt Collection Practices Act is to curtail the abusive and unprofessional behavior on the part of some collection agencies. This behavior undermines the credibility and reputation of the business. It also makes it difficult to collect revenues. After all, no one wants to deal with rude, abusive collection agencies.
Those collection agencies that violate the Fair Debt Collection Practices Act can be penalized in a variety of ways, including legal actions, and up to license revocation. The most common would be a fine levied against the offending agency. Of course, it would also be possible for the collection agencies to appeal such fines since they are entitled to equal protection under the law.
The Fair Debt Collection Practices Act is both lengthy, and can be somewhat complex. Thankfully, it is posted in its entirety on the Federal Trade Commission's website.
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Why The Fair Debt Collection Practices Act Is Very Important To Your Business Anaheim