Consumer Rights under the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act regulates the debt collection industry. Specifically, it targets third-party debt collectors working with consumers. Commercial debts or creditors collecting their own debts are not subject to the FDCPA. Among other things, the Act forbids debt collectors from employing harassing, oppressive, or abusive practices; making misleading or deceptive representations; and using unfair or unconscionable means to collect debts.

Mandatory Validation Notices

Under the Act, debt collectors must send consumers “validation notices” containing certain information about their alleged debts and consumers’ rights. Id. § 1692g(a).  Debt collectors are required to send this notice within
five days after the initial communication with a consumer in connection with the collection of any debt,” unless the required information was “contained in the initial communication or the consumer has paid the debt.” Id. § 1692g(a). Most debt collectors will send the notice in the first written communication.

The notice must disclose:

1. “the amount of the debt” and
2. “the name of the creditor to whom the debt is owed,” and
3. must advise the consumer of her rights to dispute the debt and to request “the name and address of the original creditor, if different from the current creditor.” Id.

30 Days to Dispute Debt

You are allowed to dispute the debt. But more importantly if you file a written dispute within thirty days of receiving a notice from a debt collector, all collection activity must stop until the debt is verified and proof send to you.

In addition, if you make a written request for the name and address of the original creditor within that thirty-day period, the collector has to send you that information before resuming collection efforts.

Misleading or Deceptive Collection Practices

Debt collector’s actions may be misleading or deceptive under the FDCPA, if the “least sophisticated consumer” would be misled or deceived.  Another way to look at is how would an ordinary consumer understand the action is question. As you can tell, this is a pretty low bar intended to capture all consumers and thus afford protection for as many people as possible.

While clearly false statements are easy to identify as misleading so are omissions. Deception may be found where the collector only tells  part of the story or omits important aspects in its collection  efforts.

Debt Collector’s Claim it can Sue on Time-Barred Debts Violates the FDCPA.

Statutes of limitations tell the parties the drop dead date of when a certain type of action can be filed with the court. The idea being that parties ought to live without the never ending threat of litigation. Therefore, if you have a claim you must act before the statute of limitations expire or stand to lose the right to prosecute the claim.

Collection of debt has a statute of limitations just like bring a personal injury action does. Therefore, a creditor has to file a law suit within the time frame or lose the right to do. In Maryland, the statute of limitations requires that a law suit be filed within:

1. 3 years for written contracts,
2. 3 years also applies to credit card. To determine, the 3 years you need to look at the date of the last activity on the account or the date the account was written off as a bad debt.
3. Breach of contract under any sale of goods and services under the UCC: 4 years after the cause of action, even if the aggrieved party is unaware of the breach.
4. Promissory notes or instruments under seal, bonds, judgments, recognizance, contracts under seal, or other specialties: 12 years.

Keep in mind that debt collectors can collect debt after the expiration of the statute of limitations if they follow the FDCPA and other state laws. In Maryland and other states, the statute of limitations only provides a defense in the event of a law suit.  Therefore, letters and calls can keep coming long after the statue of limitations has passed so  long as those efforts do not violate the prohibitions in the FDCPA and other laws.Therefore, in our state “a debt collector may seek voluntary payment of a time-barred debt” without violating the FDCPA, even if the communication is silent as to the statute of limitations. Wallace v. Capital One Bank, 168 F. Supp. 2d 526, 528 (D. Md. 2001).

 Suing or threatening to sue on a time-barred debt violates the FDCPA.

It is well-established that threatening to sue on a time-barred debt violates the FDCPA. Kimber v. Federal Financial Corp., 668 F.Supp. 1480, 1488-90 (M.D.Ala.1987). Threats to sue (and actual lawsuits) are misleading because by their nature imply that the collector can win in court when in fact the statute of limitations having expired means that they cannot survive a motion to dismiss on that issue. As a result, it is both a deception and an improper threat both of which are violations of the FDCPA.

Attempts to collect time-barred debt may also violate the FDCPA or trigger an obligation to disclose in circumstances other than actual or threatened litigation.

There is concern that consumers need protection when debt collectors seek partial payments on stale debt for a variety of reasons among the the fact that paying a partial payment may restart the statute of limitations on the entire debt.