Several types of laws regulate the debt collection industry. Regulations are intended to curtail the excesses of these debt collectors because where there are no laws, there are no offenders.
These regulations look out for consumers while keeping debt collectors in check. Consumers also know their rights and responsibilities regarding the different debts they owe.
And according to the Consumer Financial Protection Bureau (CFPB), there are four primary laws regulating the debt collection industry. Let’s look at these four laws that regulate the activities of debt collectors.
Fair Debt Collection Practice Act (1977)
The FDCPA sets guidelines on when, where, and how collectors can contact debtors. The act defines abusive practices and keeps collectors in check regarding disclosure requirements and notices. The FDCPA also spells out ways collectors can collect debts by enforcing mechanisms.
The FDCPA Covers Four Types of Debts
- Medical debts
- Credit cards
- Family, household, or personal debts
- Mortgages
Note that the FDCPA doesn’t cover business and student debts.
There are four types of debt collectors recognized by the FDCPA. These include:
- Debt collectors
- Debt buyers
- Collection agencies
- Legal practitioners who collect debts
What does the FDCPA 1977 Act mean to consumers?
First, that consumers have the right to be updated and informed by debt collectors on their rights to dispute a debt. Additionally, debt collections cannot communicate with consumers within 30 days of consumers submitting a written dispute. They also cannot initiate communication with consumers at their workplace and cannot rely on harassment to get consumers to pay their debts. Lastly, debt collections must cease to communicate with consumers when a consumer has legal representation.
Telephone Consumer Protection Act (1991)
The TCPA is why collectors can’t call debtors before 8:00 AM and after 9:00 PM in the local time zone where the debtor lives. TCPA ensures that every form of communication with debtors is regulated.
The act prevents debt collectors from using pre-recorded messages and auto-dialing systems to communicate with consumers. If they do, consumers have the right to file a complaint against them with the Federal Communications Commission (FCC).
The act doesn’t only apply to debt collection agencies but also to telemarketers. This act expects telemarketers to maintain “Do-not-call” lists. Lastly, the TCPA requires collectors to fully disclose their identity by telling debtors their entity, name, and organization address.
Fair Credit Reporting Act (1970)
The FCRA is an act that guides the reporting of credit information and establishes a principle on who is authorized to collect and distribute credit information.
Creditors and debtors are both required to provide accurate information and review consumer disputes based on the information they provided. This act helps consumers understand actions to be taken about the information on their credit portals. FCRA protects consumers’ rights by dictating who can access and use consumers’ credit information.
The FCRA also grants consumers the right to be updated and informed when their credit files are used against them to deny employment, insurance, or credit. Many consumers know and understand how their credit information determines specific outcomes regarding debts. Most importantly, consumers also have complete access to their credit reports and can approve access to people with a permissible purpose.
Health Insurance Portability and Accountability Act (1996)
In 1996, the US Department of Health and Human Services (HHS) issued the Health Insurance Portability and Accountability Act, also commonly referred to as HIPAA. HIPAA regulates healthcare coverage by employers for workers in their organizations. Under HIPAA, consumers can dictate how their health information is accessed and used. HIPAA is responsible for regulating the circulation of health information to consumers.
Types of individuals and organizations, also referred to as covered entities, subject to HIPAA include:
- Healthcare providers
- Healthcare clearinghouses
- Business partners/associates
- Health plans