The main difference between an own collection agency and an external collection agency and collections in general are the regulations that organizations follow. The language of the FDCPA addresses external collection agencies directly in its regulations, which helped to solidify these commonly used definitions. Under the FDCPA, direct collections are not subject to the same rigorous regulations that external agencies must comply with. The scope of application of the NPRM is wide; it includes the proposal of rules relating to voice messages with limited content to prevent disclosure by third parties, the controversial limits on the frequency of contact by debt collectors and a variety of other proposed rules.
At the beginning of the NPRM, the CFPB explains that it relies primarily on its authority to issue regulations that implement the FDCPA and, therefore, the proposed rules “would impose requirements on debt collectors, as that term is defined in the FDCPA (NPRM at. This language would suggest not extending the rules to first-party creditors, who are generally not “debt collectors” under the FDCPA. However, the passages included in the NPRM suggest otherwise. The highlighted parts of this footnote should refer to the original creditors, since the NPRM suggests that the CFPB may seek to enforce the illegal practices defined in this NPRM by virtue of its powers to regulate “unfair, deceptive or abusive” acts or practices under of section 1031 of the Dodd-Frank Act.
Such enforcement, if actually carried out, would cover not only debt collectors as defined by the FDCPA, but also any “covered person” or service provider subject to the scope of the CFPB, including first-party creditors. It's also important to recognize that, in the absence of an explicit exception for first-party creditors, a more idealistic administration than the one we currently have could try to penalize past conduct that violates the NPRM using a UDAAP theory. This is particularly true given that, in essence, the CFPB has already done the exercise of defining behavior covered by the NPRM as “behavior whose natural consequence is to harass, oppress, or abuse.” The Court agreed with the debt collector and held that the FDCPA did not apply to him or to the letters he sent him. The Fair Debt Collection Practices Act (FDCPA) is a federal law that limits what debt collectors can do when they attempt to collect certain types of debts.
The Federal Fair Credit Reporting Act (FCRA) regulates how debts are reported on credit reports. In addition, there are state laws that provide protection against unfair and deceptive practices. As demonstrated by cases such as AMG, Payday Financial and Cash Today, false or misleading practices under Article 807 of the FDCPA (false claims of government affiliation or false threats of legal action, to name but a few) are also likely to infringe Section 5.Section 803 (of the FDCPA) defines a “debt collector” as “any person who uses any interstate commerce instrument or the mail in any business whose primary purpose is the collection of any debt, or who regularly collects or attempts to collect, directly or indirectly, debts due or overdue or that he claims to owe or owe to another. Some creditors and others may not realize that certain courses of conduct can place them directly within the jurisdiction of the FDCPA.
Current law excludes original creditors, such as the hypothetical auto lender, from the scope of the FDCPA. Therefore, for those accounts, Green Tree donned the extra “debt collector” hat subject to the FDCPA. The FDCPA prohibits debt collection companies from using abusive, unfair, or deceptive practices to collect your debts. FDCPA coverage changes the calculation of compliance, so creditors should know if they are subject to that law.
The FTC has gone to court to challenge FDCPA violations committed by companies that used other names to collect their own debts. The Fair Debt Collection Practices Act (FDCPA) is the primary federal law governing debt collection practices. In addition, the FTC has taken action under Section 5 when first-party creditors engage in other practices that are expressly prohibited by the FDCPA, for example, by disclosing the existence of a debt to anyone other than the debtor. The debt collector defended the lawsuit by claiming that the debt was not in default when its client assigned it and, therefore, the FDCPA did not apply.
The consumer paid the debt after the second return, but later filed a lawsuit alleging that the collector had violated the FDCPA. On January 22, 2012, a consumer filed a lawsuit against a debt collection agency for letters sent that allegedly did not meet FDCPA requirements.
