Fair Debt Collection Act:
FTC Proposed Changes Affect Consumers and Businesses

The Federal Trade Commission (FTC) has recently proposed a number of changes to the Fair Debt Collection Act, more properly known as the Fair Debt Collections Practice Act, or FDCPA. These proposals can affect consumers and how third party collection agencies collect unpaid debts.

Here are some of their recommended FDCPA changes, the results of which came from an October 2007 workshop.

Some proposed changes could include:

• Restricting debt collection agencies from calling or texting debtors on their cell phones. While the FTC has recognized that debt recovery companies should make use of modern technologies to reach consumers, the proposed distinction is that cell phone contact be prohibited, unless the consumer has consented to such contact. This would also include texting via mobile phones, unless prior consent has been granted by the consumer.

• Statutory damage increases adjusted for inflation.While the FTC didn't recommend a dollar amount, it believes the $1000 cap for statutory damages enacted in 1977 should be adjusted for inflation. They did express that the 1977 $1000 cap would be more like $3600 in today's dollars (2008).

• Debt validation notices to consumers should provide better information, to include the name of the original creditor, the total of the principal, as well as interest, if any, and any other fees and/or charges.

Also, debt collection agencies must suspend all collection activities if consumers send a timely written dispute, challenging validity. They must suspend collection activity until they've provided written verification to the consumer. Also, debt collectors must comply to all consumer written requests to cease contacting them.

According to the language of the FTC, "debt collectors must undertake a reasonable investigation that is responsive to the specific dispute the consumer has raised."

Read the entire report to learn more proposed changes to The Fair Debt Collection Act.

The Federal Trade Commission is the enforcement arm of both the Fair Debt Collection Act (FDCPA), as well as the FCRA, or Fair Credit Reporting Act, which regulates the collection, dissemination and use of consumer credit information. These form the basis of consumer credit rights in the United States.