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Collection Laws
Creditors must comply with laws governing collection practices such as the Federal Trade Commission Act (FTCA) and the Fair Debt Collection Practices Act. These laws prohibit unfair or misleading practices to collect a debt.
What Acts Violate Collection Laws?
- Repeated phone calls and calling too early or late is against collection law. Calling after 8 a.m. and before 9 p.m. is accepted.
- Using intimidation (threats, violence, abusive language) to collect on a debt.
- Creditors or collections agents cannot pretend to be someone else such as a law enforcement officer. He or she must reveal his true identity to you.
- Creditors or Collection agencies cannot send out notices that look like official court summons or documents. Letters must have the appearance of normal business documents. They cannot give the appearance of being authorized, issued, or approved by a government agency or attorney-at-law.
- Collection agencies cannot demand any collection fees, attorney fees, court costs, or other expense unless it is justly due. An expense is justly due only if it has been set out in your contract with the creditor.
- A creditor cannot threaten to turn an account over to a collection agency or take legal action unless this is the usual course of business. This kind of action may not be used as a threat.
- Furnishing information about a debtor without permission, except to individuals and groups with a specific interest, such as credit reporting agencies, banks, and other creditors. You also cannot disclose or threaten to disclose information concerning a debt known to be disputed by the debtor without disclosing that fact.
Possible Remedies
If a creditor or collection agency violates collections laws, you could sue for causes of action such as libel or harassment.
What Can You Do if You Feel You Have Been Harassed Illegally by Creditors?
Many states also have their own laws governing collections. Speak with an attorney familiar with credit issues and the laws governing collections. He or she will be able to help you resolve such problems.
If You Are a Creditor Who is Being Accused of Violating Collections Laws, What Can You Do?
Failing to comply with collection laws puts you and your business at risk. Consult a lawyer experienced with collections law to explain your options and defenses.
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