What Types of Debt Collectors Can Be Sued for Abusive Debt Collection Tactics?

The Fair Debt Collection Practices Act (FDCPA) is a federal law the governs debt collection.  Essentially it says what a debt collector can and can’t do in trying to get people to pay them.

But many are surprised to learn that not all creditors are subject to the regulations of the FDCPA.  In this article I will discuss which debt collectors have liability and which ones won’t.

Debt Collectors Who Have Liability Under the FDCPA

Debt Collectors:  These are companies and individuals who do nothing but debt collection.  They are no the original creditor and don’t work directly for the original creditor but work for an outside collection agency.  If they violate the FDCPA then they can be sued for their wrongful conduct.

Debt Buyers:  The world of debt buying has exploded.  Debt buyers like Midland Funding, Portfolio Recovery, CACH, LLC, and Cavalry SPV filed thousands of debt collection cases in Arizona each month.  Debt buyers are subject to the FDCPA.  If they don’t follow the rules, they can be sued.

Lawyers:  Lawyers who primarily do debt collection can be held liable under the FDCPA.

Mailing Services or Letter Writers (Rare):  These are more rare – but if they design, compile or furnish false or deceptive collection letters which misrepresent who is actually collecting the debt, they can be held liable under the FDCPA.

Who Doesn’t Have Liability?

Original Creditors:  Original creditors do not have liability under the FDCPA.  This means if you owe money to Chase Bank or JCPenny and they are directly trying to collect a debt from you, they do not have to comply with the FDCPA and you cannot sue them under the FDCPA.

There are, however, many state consumer protection statutes that may provide protection and liability against original creditors.

Servicers (Including Mortgage Servicers):  Loan servicers are generally not covered under the FDCPA.  Some times a creditor will hire a servicing company to collect on the debt and so long as the debt was not delinquent at the time the original creditor hired the servicer the FDCPA will not be applicable to them.

So, if you are facing abuse from a creditor, it is important to understand who it is that is calling you, what laws apply to them, and if you have a claim under the FDCPA.