Demand Letter FDCPA Guidelines
Businesses Must Be Aware Of
(Including Sample Letters)
A demand letter is often a necessary tool a business owner may have to use in order to collect on an unpaid debt. Its also very important to be familiar with the Federal Debt Collection Practices Act, and how they regulate the language that can and cannot be used in a debt collection letter.The FDCPA regulates the debt collection industry, and protects consumers from abuses, to include harassing and threatening language, coercion and deception. It also provides legal recourse to consumers, including statutory damages up to $1,000, actual damages and attorney's fees for violations.
If your business is handling its own collections internally, make yourself familiar with these general guidelines when writing your demand letter.
- No part of your debt collection letter should communicate, or imply, that an outside debt collection agency is participating in the debt collection, if and in fact the original creditor is the only party collecting. Of course, this doesn't apply if you've actually hired a third party collection agency to collect on your behalf.
- This also means that you can't use a debt recovery company's letterhead when they aren't officially involved in recovering the business owner's debt. This rule isn't violated if the debt recovery company has been hired, and is meaningfully "participating in the collection of a debt."
- It also violates federal statutes to make your debt collection letter appear "official-looking", as if it came from a state or federal agency, or from a police agency or a court.
Other FDCPA violations include using language threatening a lawsuit, without the actual intention of following through with it. This language is considered bluffing and is forbidden. You also can't threaten to garnish a debtor's wages.
Violations of these could result in the damages stated earlier.
Learn additional debt collection letter secrets
Debt Collection Letter Samples
Click here for examples of a demand letter that meets federal guidelines.
Other bad debt collection letter samples can be found here as well.
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